Weekly Livestock Comments for March 13, 2020

By : Dr. Andrew Griffith, Assistant Professor, Department of Agricultural and Resource Economics, University of Tennessee

 

FED CATTLE: Fed cattle traded $3 to $4 lower compared to last week. Prices on a live basis were mainly $109 to $110 while dressed prices were mostly $173 to $175.

The 5-area weighted average prices thru Thursday were $109.35 live, down $3.96 compared to last week and $174.20 dressed, down $6.85 from a week ago. A year ago, prices were $126.98 live and $204.03 dressed.

Most markets in the cattle and beef complex are moving contra-seasonally due to world heath issues and the economic slow-down that comes with it. When relief finally comes is anyone’s guess, but there should be just as strong of profits on the other side of this market as there are losses in the current environment. This appears to be the opposite scenario compared to what happened to markets from 2014 through 2016. The current situation is not expected to play out over three long years, but the market is expected to rebound at some point in the near future and provide big profits for cattle feeders who make feeder cattle purchases at these low prices. It is beginning to look like several feeder cattle producers are going to own cattle in the feedlot.

BEEF CUTOUT: At midday Friday, the Choice cutout was $206.85 up $0.84 from Thursday and down $0.72 from last week. The Select cutout was $203.29 up $4.23 from Thursday and down $1.18 from a week ago. The Choice Select spread was $4.74 compared to $4.28 a week ago.

The question as it relates to beef is where will it be consumed if it is consumed at all? As more and more events are canceled, suspended, or postponed, fewer patrons will be making their way to restaurants and eating meals away from home. This includes baseball stadiums where hamburgers and hotdogs are the center of most participants meals while many other events involve restaurant and hotel meals that often include beef items. As consumer movement declines, there will likely be more meals consumed at home. Will these meals include beef as the main course or will consumers move to other meats such as poultry and pork? Regardless of what meats are consumed at home, record meat production is expected in the United States this year, and clearing the market will take increased consumption domestically and moving meat overseas. This is a tough pill to swallow as we head towards the beginning of grilling season, but the current situation is setting the market up for another drastic price escalation at some point.

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