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Cattle markets won’t see much action until spring

Cattle markets won’t see much action until spring

Cattle in winter

Fed cattle prices have continued to show strength to begin the new year, University of Tennessee ag economist Andrew Griffith says.

“Finished cattle prices remain strong in the first week of trade for 2022 and are trading with a positive basis relative to February live cattle futures,” he says in his weekly market update. “A positive basis is good for cattle feeders as they are enjoying profitable prices, and any of those who hedged cattle may be able to collect a little on the futures market as well.”

However, Griffith expects those prices to come back down somewhat in the coming weeks.

“The downside to this story is that prices are expected to soften for finished cattle over the next few weeks based on the futures market,” he says. “Softer prices the next few weeks may or may not be realized as prices are not expected to move much one direction or the other.”

Overall, Griffith does not expect major price movement until spring arrives.

“Prices will probably not see much action until the spring when prices seasonally strengthen in April and May,” he says.

Looking back at 2021, it was a year of increasing beef production.

“Based on weekly data, federally inspected beef production in 2021 was about 3% higher than 2020,” Griffith says. “With increased beef production and higher wholesale and retail beef prices, it is fairly easy to conclude that beef demand has strengthened over the past year, which is really saying something considering the increase in beef demand from 2019 to 2020.”

He says it is difficult to know how much the pandemic impacted the increase in beef demand, although it is possible consumers had more money to spend on food since there were reductions in travel expenses and somewhat in food consumed away from home.

To begin this year, other cattle markets are looking strong. Griffith is expecting seasonal price action this spring, but he also thinks the price increase could be more robust than just seasonal activity.

“Similar to the feeder cattle market, the slaughter cow market is showing signs of strength and gaining momentum,” Griffith says. “Both slaughter cattle and lightweight calf prices would typically be expected to seasonally increase as the market approaches spring calving and the spring stocker grazing season, which seems certain to occur. However, the price increase is shaping up to be stronger than the seasonal tendency.”

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Ben Herrold is Missouri field editor, writing for Missouri Farmer Today, Iowa Farmer Today and Illinois Farmer Today.

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