They’ve fallen by around 11% this year.įeed costs have softened due to bigger crops in South America and expectations of bigger crops in the U.S. “Until the western drought retreats, corn prices are likely to stay high, which can help support live cattle prices, he said.Ĭorn futures on the Chicago Board of Trade ended Wednesday with the most-active July contract at $6.08 a bushel, above the trading range of around $3 to $5 from mid-2014 to early 2021. Meanwhile, supplies of corn, a key feed input for cattle, in cattle feeding states such as Texas, Kansas and Nebraska, are tight and cost of inputs is high, he said. However, as moisture enters these states, the upstream cow and calf producers will want to retain female animals for breeding and as that “scenario hastens, we believe that the supply of feeder cattle will contract and push both live and feeder cattle prices higher,” said Kunisch. Kunisch believes that at some point this year, “mother nature will deliver a drink of rains and moisture to key cattle breeding states” and that will help repair pasture conditions. Pasture conditions are expected to improve but that won’t soon alleviate the tight cattle supplies. “The higher prices seen in the futures markets are not all about tighter supplies.” year-to-date through last week, compared with $270 last year through the same period.įrom January to April 2022, wholesale beef demand marked a 30-year high and while indexes tracked by Rabobank suggest demand through the same period this year is 8% softer, that still ranks as the second-highest demand from January to April, he said.ĭespite the economic headwinds facing consumers, “they are still supporting a healthy and strong beef and cattle market,” said Zimmerman. Zimmerman said the USDA boxed beef cutout price, which represents the wholesale price of the beef carcass, has averaged $287 per cwt. “The futures markets have taken more of a ‘prove it to us’ stance relative to beef demand, and the cash market continues to prove that demand for beef and fed cattle remains relatively strong,” he said.
or hundredweight, which is equal to 100 pounds, and making new all-time highs of $182 per cwt., said Zimmerman. The cash market for fed cattle, also referred to as live cattle, rallied from late March into early April and last week, averaging a week-over-week gain of $4 per cwt. The high prices are a reflection of tighter supplies as well as “continued exceptionally strong demand for beef,” said Lance Zimmerman, Rabobank senior beef analyst, adding that the strength in consumer beef demand appears to have “caught futures market participants by surprise.” Prices trade around 33% higher so far this year.Īugust live cattle settled Tuesday at an all-time high of 175.5 cents a pound based on data as far back as November 1964, with prices up roughly 11% year to date.ĭemand has also been a key factor leading to record high prices for cattle. cattle complex,” he said.įeeder cattle for August delivery settled at 243.25 cents a pound Tuesday on the Chicago Mercantile Exchange, a record high for the most-active contracts based on data going back to November 1971. “As feeder cattle cash and futures prices soar to record levels, we have a hard time seeing an end to the secular bull market for the U.S. Ultimately, feeder cattle become live cattle so higher feeder cattle prices can cause high prices of live cattle, said Kunisch. Prices for feeder cattle, which are cattle purchased for the feedlot market, and live cattle, which have reached slaughter weight in the feedlots, marked record-high settlements on Tuesday, according to FactSet data. Cattle supplies have fallen about 5% since peaking in 2019 due to “poor pasture conditions caused by drought, elevated feed costs, and poor margins.” The drought in the Southern Plains meant that there was less grass for the cattle to feed on, said David Maloni, president of foodservice supply chain consultancy Datum FS. Department of Agriculture’s biannual Cattle report. 1 of this year totaled 89.3 million head, down 3% from the Jan.
that encompasses prime cattle breeding operations-in Texas, Oklahoma, Kansas and Nebraska-led to a culling of female animals over the last one-and-a-half years, said Walter Kunisch, Jr., senior commodities strategist at HTS Commodities. The “intractable” drought in the southwestern U.S. Cattle futures have climbed to their highest prices on record as drought conditions in the southwestern United States devastated the animals’ feeding grounds, contributing to a drop in the size of the domestic cattle herd to its smallest in eight years.
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