By Derrell S. Peel
The first quarter of 2014 saw unprecedented prices for all classes of cattle and beef. Retail beef prices moved sharply higher in March for both Choice and All Fresh beef. The March retail Choice price was up 6.7 percent over December levels while the All Fresh retail price was up 6.5 percent compared to December. The Choice retail beef price was up 8.7 percent year over year and the All Fresh retail beef price was up 9 percent from one year ago.
Retail beef prices did not advance as much as wholesale values in the first quarter of 2014. Choice boxed beef price was up 19.6 percent over December, 2013 levels while Select boxed beef was up 23.7 percent. Compared to one year ago, Choice boxed beef price was 23.3 percent higher and Select boxed beef price was up 21.5 percent from year earlier levels. Boxed beef prices have been much more volatile and have increased more than retail beef prices so far this year. This indicates that retail margins have been squeezed and that wholesale price increases have not yet been fully passed on to retail markets.
Fed cattle prices increased 14.4 percent from December to March. March average fed prices (5-Mkt) were 18.9 percent higher than March, 2013 levels. Larger increases in boxed beef prices compared to fed cattle prices suggests that packer margins generally improved over the period. However, the extreme volatility in boxed prices meant that packer margins were similarly volatile. Choice boxed beef dropped to roughly $226/cwt. currently, suggesting packer margins are in the red and implying more pressure on fed cattle prices. Reduced volume continues to plague packers. Overall steer and heifer slaughter is down 5.5 percent for the year to date with steer slaughter down 3.5 percent and heifer slaughter down 8.6 percent.
700-800 pound steers (Oklahoma market average) were 6.7 percent higher in March compared to December and were up 27 percent year over year from March, 2013. Feedlots enjoyed better margins in the first quarter of 2014…the best in many months. However, high feeder cattle prices and seasonally weaker fed prices are likely to erode feedlot margins through the summer and may temper feeder cattle demand in the second and third quarters. Developing corn market conditions could have a big impact on feeder markets. 400-500 pound steer prices were up 8.7 percent from December through March. These calf prices are up 27.5 percent compared to the same period last year despite lingering drought conditions in many regions that is tempering summer grazing demand.
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