Negotiated cash fed cattle trade was slow on light to moderate demand in Kansas through Wednesday afternoon. Live trades were unevenly steady with last week at $110/cwt. Trade was limited on light demand in the Texas Panhandle, where there were a few live sales at $110, but too few to trend. Elsewhere, trade was inactive with very light demand, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $1.42 higher Wednesday afternoon at $218.91/cwt. Select was 84¢ higher at $207.28.
Live Cattle futures edged lower again Wednesday as the week’s cash outlook appears either side of steady, despite continued strength in wholesale beef prices. They closed an average of 39¢ lower, except for from 2¢ higher in spot Feb.
Feeder Cattle futures extended gains Wednesday, helped along by another day of retreat in grain futures. They closed an average of 79¢ higher, from 40¢ to $1.12 higher.
Corn futures closed 4¢ to 6¢ lower through Jly ‘22 and then mostly 1¢ to 2¢ lower.
Soybean futures closed 16¢ to 21¢ lower.
Major U.S. financial indices closed higher Wednesday, amid stronger than expected quarterly earnings reports from the likes of Netflix and Disney. President Biden’s inauguration likely removed a layer of investor uncertainty, as well.
The Dow Jones Industrial Average closed 257 points higher. The S&P 500 closed 52 points higher. The NASDAQ was up 260 points.
Retail beef prices for 2020 were 9.7% more than the prior year, the steepest increase since 2014, when prices climbed 13.4% year over year, according to David Anderson, Extension livestock economist at Texas A&M University.
Anderson explains price increases in 2014 stemmed from tight supplies fostered by the drought. This year, much of it had to do with disruptions caused by the pandemic.
“Most of the increase in beef prices in 2020 occurred in the second quarter of the year, with price increasing 18% year over year. Beef prices also increased by 11% in the third quarter over the prior year,” Anderson says, in the latest issue of In the Cattle Markets. “In the aftermath of the drought, beef prices registered five consecutive quarters of year over year increases as supplies continued to decline and demand grew. In case anyone wondered, 2016 and 2017 were the last years that average all fresh retail beef prices declined compared to the prior year.”
Anderson notes All Fresh retail beef prices last year were above 2019 the entire year. The pre-pandemic price in March averaged $5.96/lb. and finished the year at $6.23. It peaked in June at $7.38.
“Several factors may be contributing to higher reported retail prices when wholesale and live cattle prices have been at or below last year’s levels,” Anderson says. “The data reflects only grocery store prices. Grocery stores have sold more beef, in volume and value, compared to the year before, due to restaurant shutdowns. It’s also likely that costs have increased between wholesale and retail levels due to compliance with coronavirus restrictions and constraints in processing. It may be difficult to get average retail prices below pandemic levels in coming months as beef production is expected to decline cyclically this year and, hopefully, the economy is able to fully open expanding restaurant demand.