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Kentucky Beef Cattle Market Update for November 1

By Kenny Burdine
October has not been kind to cattle producers and traditional seasonal factors have been amplified this year by uncertainty over the election and back-and-forth discussions about another round of stimulus funds. Federally inspected cattle slaughter remains around 2019 levels. Beef cow slaughter has remained pretty high since summer, but dairy cow slaughter has been down over the same time. Dressed steer weights continue to run about 3% above last year. Seasonally, weights tend to peak in late November or early December.
Fed cattle prices decreased slightly from the first of the month, which is a counter-seasonal move. Spring CME© live cattle futures also dropped sharply throughout the month, which worked to pressure heavy feeder cattle prices in KY. Consistently rising corn prices have also weighed on feeder markets as that impacts feed costs this winter. It really wasn’t until the last two weeks of the month that full price impact was felt in Kentucky markets, so figure 1 really doesn’t show the extent of the drop over the last couple weeks. On a state average basis, an 850 lb M/L #1-2 steer has moved into the low-mid $120’s. Groups and higher quality feeder have not fallen as much and remain in the $130’s.
Source: USDA-AMS, Livestock Marketing Information Center, and Author Calculations
Figure 1: 850 lb Medium / Large Frame #1-2 Steers
Kentucky Auction Prices ($ per cwt)
Our flat calf market finally broke below $140 per cwt on a state average basis for the month of October. Declining spring CME© feeder cattle futures and higher feed prices are also affecting calf markets as they impact winter backgrounding returns. Much like the discussion of figure 1, figure 2 doesn’t show the extent of the drop in calf prices that largely occurred during the second half of October. On a weekly basis, calf markets are very close to where they were during this time last year. Market reporters continue to describe separation between weaned calves and green calves, which is very common as weather patterns change in the fall.
Source: USDA-AMS, Livestock Marketing Information Center, and Author Calculations
Figure 2: 550 lb Medium / Large Frame #1-2 Steers
Kentucky Auction Prices ($ per cwt)
The year 2020 has been a year of constant transition and adjustment, which tends to weigh on any market. As I look to 2021, I see no reason to think that beef cow numbers won’t be down again. And, a smaller calf crop will help improve prices somewhat. As the economy recovers from COVID, beef demand should also improve. In truth, I really don’t think consumer demand has been a major issue this year, but the impact on the foodservice market has been felt on upper end meats. We learned this spring that the biggest COVID-related threat to cattle markets was processor shutdowns, so avoiding those this winter will be key.
Finally, I continue to hear from folks who are unaware of the direct payments in the Coronavirus Food Assistance Program (CFAP) and have not signed up for the second round of these payments (CFAP 2.0). If you are reading this, you are most likely aware, so spread the word to other producers that they should take advantage of this program.
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