Fed cattle prices finally surged higher last week to $108-110/cwt. in many cash markets, according to Texas A&M AgriLife Extension Service professor and extension economist David Anderson.
“High beef live-to-cutout spreads over the last couple of months, seasonal trends and seemingly overdone price declines all indicated prices should be higher,” he said.
The wholesale market, as measured by the Choice beef cutout, has been higher as well, starting this week up almost $3/cwt. to $185.68. The primal rib cut led the way, climbing to $368.39, its highest value since June 14, Anderson noted. Cattle slaughter to date in November was 9% above November last year, using the estimated daily slaughter.
Feeder cattle and calf prices climbed along with the fed cattle market.
“While the calf market has had a very small to nonexistent price slide in recent months, this surge in prices has started to widen out the slide,” Anderson noted. “Those who held back their calves to hold them over the winter or bought stockers might pay very close attention to these calf market developments. The widening slide might provide some new opportunities.”
It’s likely to remain important to plan now for marketing feeder cattle in the spring, he added.
Iowa State University livestock economist Lee Schulz said the markets have been closing with some of the most optimism seen in a long time.
“This is really coming at a time when we’re also getting other indications that we are starting to stabilize these prices, and we could see some support of the markets,” he said.
Schulz said a decline in the carcass weights likely signals that the top of those weights have been reached. Moreover, he said it begs the question of whether the market has priced in the winter weather, which will also provide a market boost.
“I think we have some seasonal pressure that could help support this market over the next couple weeks,” he said.
Prices of feeder cattle have mirrored the increase in the fed cattle price gains. Schulz said lower prices in August, September and parts of October caused producers to hold on to calves a little longer, which helped support the feeder cattle market.
Despite some positive signals, the U.S. still has a mountain of beef to work through the retail channels.
Schulz said there has been considerable effort for movement of beef at retail to help the demand situation. Additionally, both domestic and international demand has been fairly strong, which has helped support the value increases.
Schulz said it is important and encouraging to note that retailers have been featuring rib roasts during the holidays. “This hasn’t been something done in the last several years, and really that was due to the wide spread between beef and other protein sources,” he explained.
U.S. Department of Agriculture reports show that the feature rate of beef has increased, which Schulz said “shows that retailers believe beef can compete -- even during this holiday season -- and maybe compete with some of those high-end products."
Schulz said he expects the markets to be fairly quiet post-holiday.