Cash fed cattle prices ended up mainly steady in late trade last week with live sales at mostly $126.00-$126.50/cwt. and dressed sales at $200.
The higher cash trade last week on lighter volume and another day of gains in outside markets helped lift Cattle futures to strong gains on Monday.
Live Cattle futures closed an average of 97¢ higher (60¢ to $1.37 higher).
Feeder Cattle futures closed an average of $1.37 higher (82¢ to $1.82 higher).
Choice boxed beef cutout value was $1.72 higher on Monday afternoon at $208.24/cwt. Select was $1.23 higher at $203.97.
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Major U.S. financial indices closed sharply higher again on Monday, extending gains from the previous session as the market seeks a new equilibrium following the recent steep and wild gyrations. At least part of the correction is tied to rising treasury yields, tied closely to interest rates, and the likelihood they will accelerate inflation.
Support on the day included news that the White House will roll out a plan for the federal government to spend $200 billion on infrastructure over the next decade.
The Dow Jones Industrial Average closed 410 points higher. The S&P 500 closed 36 points higher. The NASDAQ closed 107 points higher.
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“Beef purchasing decisions have become less sensitive to retail beef prices,” says Glynn Tonsor, agricultural economist at Kansas State University (KSU). “While prices will always matter, this reinforces the importance of industry focus on beef quality aspects of taste, appearance, convenience and freshness.”
That’s one of the conclusions of a newly released study commissioned by the Beef Checkoff Program, Assessing Beef Demand Determinants. The study summarizes the current knowledge of consumer demand for beef and identifies the best opportunities for the industry to influence demand positively.
Among other things, the research updated elasticity estimates (sensitivity of purchasing behavior to prices). In other words, if the price goes up by 1%, how many fewer pounds are purchased? This study showed that a 1% increase in price has a smaller impact on beef consumption than it used to.
“What I believe that signals is that beef quality issues such as taste, appearance and freshness have elevated over time,” Tonsor says.
Beef quality, consumer incomes, attention to beef in health articles in medical journals and the general media, and shifts in race composition of the U.S. population are key determinants affecting beef demand in the long term, according to the report.
Authors of the new study include Tonsor, fellow KSU agricultural economist, Ted Schroeder, and Jayson Lusk, distinguished professor and head of the Department of Agricultural Economics at Purdue University.
As beef supplies increase, beef demand is positively positioned to utilize the report’s findings.
“Both beef supplies and cattle prices increased in 2017 relative to 2016 – an outcome only possible with demand growth,” according to the report. “A perpetual industry priority is to better understand and monitor beef demand, and to inform stakeholders because demand directly influences overall industry success.”