Home   News

Big Fed Cattle Price Rally to End Year

By David P. Anderson
And kept it going to begin the new year. Rising fed cattle prices continued their run into the first week of the new year, hitting $124-125 per cwt.
Fed cattle prices tend to increase seasonally from late summer lows to the end of the year. It’s also not uncommon for prices to weaken between Thanksgiving and Christmas and again in February before the Spring rally. Fall’s price rally has been stronger than average. Over the 2013-2017 5-year period the average rally has been about $11 per cwt, or 8.8 percent, from the last summer low to the end of the year. The Fall rally in 2018 totaled $15 per cwt or a 14 percent increase. The ongoing rally that began in the Fall of 2019 increased just over $22 per cwt or a 22.6 percent increase. The fed cattle market gained another $2 per cwt in the first week of the year.
Rising prices have occurred as slaughter has risen, as well. For the fourth quarter of 2019, fed steer and heifer slaughter were just barely above a year ago, about half a percent higher. Fed heifer slaughter was up about 4 percent from the 4th quarter of 2018. Fed steer slaughter was down about 4 percent from a year ago during the 4th quarter. Fed cattle movement ramped up in December with total steer and heifer slaughter up about 5 percent. It’s worth noting the reopening of the fed cattle plant in early December. That has contributed to packer demand for fed cattle helping to boost fed cattle prices and slaughter. All cow slaughter was up almost 7 percent. All of the increase in cow slaughter during the quarter came from beef cows, as dairy slaughter declined from a year ago.
Both steer and heifer weights are higher than a year ago with some double-digit weekly increases. Combined with slaughter levels results in an increase in beef production. The weight increases have likely contributed to more cattle grading Choice. Increased Choice beef production has pushed the Choice-Select spread down to under $5 per cwt. Only a few weeks ago the spread was over $25 per cwt.
With more cattle on feed than a year ago, we should expect large levels of fed cattle slaughter to continue into the new year. Weights continuing above a year ago will keep beef production higher in the coming weeks, as well.
Source :