Negotiated cash fed cattle trade ranged from a standstill to mostly inactive on very light demand with too few transactions to trend, according to the Agricultural Marketing Service. Last week, live prices were at $110/cwt. in the Southern Plains and Nebraska and at $108-$110 in the western Corn Belt. Dressed prices were at $172.
The five-area direct average fed steer price last week was $109.62/cwt. on a live basis, which was $3.29 more than the previous week, but $5.57 less than the previous year. The average steer price in the beef was $171.87, which was $6.52 more than the previous week, but $9.85 less than the same week last year.
Cattle futures firmed Monday, after early pressure on Feeder Cattle, closing mostly higher amid relatively light trade after the previous session’s selloff. Presumably, technical support and higher outside markets helped pave the way.
Live Cattle futures closed an average of 29¢ higher, except for 20¢ lower in near Feb.
Feeder Cattle futures closed an average of 47¢ higher, except for 20¢ lower in spot Nov and unchanged in Sep.
Choice boxed beef cutout value was 97¢ higher Monday afternoon at $226.95/cwt. Select was $2.89 higher at $212.35.
Corn futures closed mostly 2¢ to 4¢ higher.
Soybean futures closed mostly 4¢ to 6¢ higher.
U.S. financial indices closed higher Monday, on news that another Covid vaccine candidate, this one from Moderna, proved more than 94% effective in a preliminary, late-stage trial.
The Dow Jones Industrial Average closed 470 points higher. The S&P 500 closed 41 points higher. The NASDAQ was up 94 points.
By most measures, domestic consumer beef demand remained resilient in the face of multifold challenges posed by the pandemic. Heading into winter, though, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University expects challenges to increase.
“Loss of outdoor dining in cold weather will further aggravate restaurant challenges. Food service demand is likely to be additionally affected with worsening public health challenges. Macroeconomic concerns will grow as consumers go forward with less unemployment support,” Peel explains, in his weekly market comments. “Ample supplies of beef, pork and poultry increase market price pressure, though disruptions in supply are a threat as well.”
By way of review, Peel points out unparalleled beef supply and demand disruptions characterized the first half of 2020. By the end of June, cattle slaughter—packing capacity—was mostly recovered.
“Beef demand, however, continues to be challenged with restricted food service. Restaurants have recovered somewhat from the initial lockdown with more emphasis on takeout and delivery. Retail grocery demand remains robust and numerous adjustments have helped to shift some food service supply chains to support retail grocery supply chains,” Peel explains. “There are indications that retail grocery demand is being boosted again by consumers stocking up in the face of increased uncertainty. The shift from summer beef demand to winter raises additional concerns. Food service is typically more emphasized in winter months, which may be an additional challenge. The pandemic is resurging and additional restrictions on food service are a growing risk.”
Currently, domestic beef demand is difficult to assess, according to Peel. Although Choice boxed beef cutout values increased sharply the past two weeks, they remain 9.2% less than the same time last year.
“Ribeyes are a key market this time of year with strong demand for Christmas and New Year’s holiday. So far, Ribeyes are following close to a typical seasonal increase with current Ribeye prices close to year-ago levels and up over 9% the last two weeks,” Peel says. “Other food service-dependent beef products are less encouraging. Beef tenderloins are currently averaging 25.6% below year-ago levels and were down 1.5% in the last two weeks. Sirloin Top Butt is up 6.0% the last two weeks but down 18.4% year over year. Other beef products heavily dependent on food service demand include brisket, down 13.9% from one year ago and the Petite Tender, down 20.7% year over year. Strip Loin, more frequently used in retail grocery, is up 7.8% year over year.”
As well, Peel says prices for most chuck and round products are down 5% to 10% compared to last year. Exceptions include Chucks (2-piece), which are up 7.0% the past two weeks and up 13.7% year over year, which may indicate more demand for grinding for retail grocery ground beef.
“In contrast, 50% trimmings are down 55.7% and 90% trimming are down 15.8% year over year, although both are up the past two weeks. 50s and 90s are more commonly used for food service ground beef,” Peel explains.