Analysts are watching trends in fed cattle prices and what impact boxed beef prices and purchasing trends are having. Andrew Griffith, ag economist for the University of Tennessee, says prices are not in a bad spot.
“Finished cattle prices stalled this week, but current price levels are not a bad place to stall,” he says. “The steady to softer prices this week are likely due to the lower boxed beef prices and a shift in the cuts being purchased.”
Looking ahead, Griffith says fed cattle markets could see some support to begin the new year.
“Fed cattle prices are not likely to push higher prior to the end of the year as there will be two consecutive weeks of reduced slaughter and beef production,” he says. “However, the market is expected to find support in January with more support arriving with the spring and summer grilling season. April live cattle futures is pricing finished cattle near $142, but there may be more upside potential than what the futures market is expecting if domestic and international demand remain strong.”
Boxed beef prices peaked in late August, but Griffith says historical context is good to keep in mind.
“Boxed beef prices have essentially been on a downhill trend since the end of August when prices peaked for the year,” he says. “The decline in prices has definitely been noticeable, but it has also been obscured by the sheer magnitude of prices from a historical perspective.”
“As the market has been moving through late November and early December, there appears to be some seasonal tendencies to the market,” he says. “The primary seasonal tendency is the softening of Choice beef prices relative to Select beef prices.”
Looking ahead, he expects more seasonal action and positioning.
“As the Choice-Select spread has narrowed considerably the past several weeks, it would appear beef buyers are attempting to secure some of their winter beef needs to stock shelves for January and February,” Griffith says.
“There may still be one more run on high-quality beef for the holiday season, but the bulk of most product moved will be for post-holiday consumption.”
He is looking for good things for the calf market in the new year.
“The strength in the yearling market has set the tone for a stronger calf market, which is already present,” Griffith says.