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Weekly Livestock Comments by Dr. Andrew P. Griffith

FED CATTLE: Fed cattle traded $2 to $3 lower compared to last week on a live basis. Live prices were mainly $100 to $103 while dressed prices were mainly $164 to $167.
The 5-area weighted average prices thru Thursday were $102.31 live, down $4.31 from last week and $166.19 dressed, down $5.43 from a week ago. A year ago prices were $107.89 live and $169.57 dressed.
It is said that a shark can smell blood from miles away which does not seem logical with all of the other smells in an ocean. However, it is not hard to smell the blood that is freely flowing from the finished cattle market. In actuality, how can the market have any life left in it given the precipitous price decline in the last month? Unfortunately, there is likely more downside in the finished cattle market as late September and October are always tough months for cattle feeders. The only thing a cattle feeder can do at this point is ride the tough times out. Any other plans will likely lead to even greater losses. The market will improve over the next four to six months and profits should be favorable.
BEEF CUTOUT: At midday Friday, the Choice cutout was $228.16 down $1.26 from Thursday and down $3.42 from last Friday. The Select cutout was $203.02 down $1.45 from Thursday and down $9.29 from last Friday. The Choice Select spread was $25.14 compared to $19.27 a week ago.
Boxed beef prices have spent the last couple of weeks retreating from their post Tyson fire high. The two weeks following the fire, the Choice cutout value escalated nearly $34 to just shy of $240 per hundredweight. This was an unexpected price boom for packers who generally have to fight the market in late summer and fall. However, they continue to benefit from the sudden price escalation as prices this week remain a good $12 per hundredweight higher than where they were prior to the fire. Boxed beef prices will eventually fall back into place, but packers would do well to take advantage of the time they have left to push higher prices. Another market that has seen continued strength thus far is the fresh 90 percent lean market. This is primarily beef from slaughter cows. This market has been trading over $220 per hundredweight since the end of April and has held there all summer. Market participants are waiting in anticipation for this market to break as is seasonally expected, but the market has shown no signs of such a break.
OUTLOOK: Based on Tennessee weekly auction market averages, steer prices were $1 to $5 lower compared to last week while heifer prices were unevenly steady compared to a week ago. Slaughter cow prices were steady compared to last week while bull prices were $1 higher. What else is there to say about this market? The first adjectives that come to mind are dismal and tough. There are sure to be other words that could be used, but they would be negative for the most part. There is no reason to add fire to a structure that has already burned. No pun intended in that statement as it relates to Tyson’s slaughter facility fire, but the market plummeted following the fire and now has a new steady state where prices are $3 to $5 lower based on feeder cattle futures. Worse than feeder cattle futures being lower, cash prices at the local level have declined as much as $10 per hundredweight during that time period. The market price movement from the middle of April to the beginning of September has been a violent ride from a futures standpoint. A quick glance at the September contract shows a decline from $162 per hundredweight at the peak to below $134 recently. The cash prices have not seen as violent of a movement, but they have not benefited from this type of action. The readers of this analysis would like to hear some good news, but finding that can be difficult. The bad news is that the market may still get worse before it gets better. The good news is that the market has to get better. It can only get so bad before it begins to improve. The unfortunate part is that the market may take several months to improve. It would appear the cattle markets of today are finding a way to take back all the profits that were garnered in 2014 and 2015. It will be interesting to see who can and cannot weather the storm that is upon the market. Maybe there will be some optimism next week.
ASK ANDREW, TN THINK TANK: It is common for Extension specialists to be invited to a farm to evaluate an operation and then provide advice and suggestions to improve the efficiency of the operation. Directly working with producers and county Extension personnel may be the most enjoyable and rewarding part of working for Extension. It is likely the best part of the job because one can often see the outcome of some of their input on an operation. Despite wanting to take credit for all of the successes a producer has after assisting them in some manner, it is fairly common for a producer to not take all of a specialist’s advice. This is actually very wise because no one person can provide perfect advice by only stepping on a producer’s farm once. There is a unique set of resources on each operation and a system should be built around those unique resources. On the flip side, it may be useful for a producer to use some critical thinking skills to determine how some advice can be adjusted to fit the system.
FRIDAY’S FUTURES MARKET CLOSING PRICES: Friday’s closing prices were as follows: Live/fed cattle – October $94.88 -3.00; December $99.75 -2.48; February $106.40 -2.00; Feeder cattle – September $133.35 -1.05; October $130.90 -1.43; November $130.38 -1.20; January $128.48 -1.03; September corn closed at $3.42 down $0.04 from Thursday.