Negotiated cash fed cattle trade was mostly inactive on very light demand in the Southern Plains through Wednesday afternoon, according to the Agricultural Marketing Service. Live prices there on Tuesday were $2 lower than last week at $108/cwt.
Elsewhere, trade was slow on light demand. There were a few live trades in Nebraska at $107 and a few in the western Corn Belt at $104.50-$105.00, but too few to trend. There was some early dressed trade in both regions at $168, but also too few to trend. Last week, live prices were at $110 in Nebraska and at $109-$110 in the western Corn Belt; dressed trade at $172-$174.
Cattle futures mostly edged higher by the close Wednesday, helped by firming Lean Hog futures.
Live Cattle futures closed an average of 25¢ higher except for 47¢ lower in spot Dec.
Feeder Cattle futures closed an average of 41¢ higher except for 55¢ lower in spot Jan.
Choice boxed beef cutout value was $6.76 lower Wednesday afternoon at $218.26/cwt. Select was $3.77 lower at $201.65.
Corn futures closed mostly 3¢ to 5¢ higher through Sep ’21 and then mostly fractionally higher to 1¢ higher.
Soybean futures closed mostly 11¢ to 12¢ higher through Jly ’21 and then mostly 5¢ to 7¢ higher.
Major U.S. financial indices closed lower Wednesday, pressured by big tech stocks and stalled federal stimulus talks.
The Dow Jones Industrial Average closed 105 points lower. The S&P 500 closed 29 points lower. The NASDAQ was down 243 points.
“While many of the food prices have come back down off the spikes in late spring and early summer, it remains the case that retail food prices are significantly higher now than at the same time last year,” says Jayson Lusk, agricultural economist at Purdue University, in his Food Price Outlook. “In October (the last data available), prices of food at grocery were 4% higher than the same time last year. It’s been almost a decade, since 2011, that we observed this rate of annual food price inflation. Despite the restrictions on eating out, the price of food away from home was 3.9% higher in October 2020 than in October 2019; this year-over-year change is higher than has been observed in at least a decade.”
He notes meat, dairy, and egg prices are the primary drivers of higher retail food prices.
“In June 2020, prices of these products at grocery were 12.8% higher than the same time in 2019; as of October 2020, prices of these products were still running 6.1% higher than in 2019. However, the price increases are not just limited to meat and animal products. Cereal and bakery product prices were 3% higher in October 2020 compared to October 2019; Fruit and vegetable prices were 2.6% higher in October 2020 than in 2019,” Lusk says.
Closer to home, according to the Livestock Marketing Information Center (LMIC), stronger ribeye prices are supporting higher carcass cutout values.
“Wholesale ribeye (roll, 2-in lip-on) prices accelerated to new weekly record highs during the weeks of Nov. 28 and Dec. 5, reaching $1,256/cwt. This price series dates back to 1995, and the previous record high was set earlier in 2020, due to pandemic-driven supply limitations during slaughter plant closures,” say LMIC analysts, in the latest Livestock Monitor. “These new record highs are thought to be supported by better than expected demand this holiday season. It is likely retailers were under-stocked for the demand seen late in the year. The rib primal cuts have become a feature in recent years. The wider availability of Prime graded beef and the inclusion of it at certain major retailers across the country has made a difference and elevated home meal use.”
Moreover, the LMIC folks point out that through last week the Chuck gained an average of 3.4% for the last five weeks, while the Round increased an average of 2.5%.
“Usually, Chuck primal values decline heading into the end of the year before increasing in the first quarter,” LMIC analysts explain. “Similarly, Rounds and Loins also do not typically have high points around this time of year but all are above a year ago and showing strength. Demand for beef seems to be what is helping these products, but other beef cuts have faded into the background. Lean beef trimmings have declined significantly since summer and have not recovered, even though total cow slaughter is down. It seems demand for ground product has eroded significantly as the pandemic has persisted.”
Looking ahead, Lusk says USDA’s Economic Research Service projects food inflation to moderate in 2021—1-2% for food at home compared to the 20-year historic average of 2.8% and 2-3% for food away from home, compared to 2.3% for the 20-year historic average.
“Even if food price inflation reverts to historical norms, this just means that prices have stopped increasing as fast as in 2020. Price levels remain higher than they were previously. As such, it will be important to keep an eye on food affordability and measures of food insecurity in 2021,” Lusk says.