October 6, 2020 | Vol. 13 : No. 9
Cattle prices have been on a roller-coaster ride in 2020 thanks in part to COVID-19. While there are still a few unknowns, University of Kentucky agricultural economist Kenny Burdine sees potential for a stronger fall calf market than we saw in fall 2019.
Ahead of major reports, we like to suggest our students study pre-release or trade estimates to get an idea of what to expect. Then, they can observe any change in prices as the markets react to new information from the reports. Before last week’s Cattle on Feed report, I studied the trade estimates to see if they were rational — that is, did they make sense? The average of estimates for cattle on feed on Sept. 1 was 103.4. When the report came out, the number was 11.4 million head, suggesting a slight disconnect. However, the estimates are usually a percent of the prior year’s figures. The National Agricultural Statistics Service rounds its stated percentage changes to whole numbers, too, so one needs to use more detail to assess any disparity.
This year’s fall calf run is in full swing, so it is a good time to take a step back and see if the marketplace is sending any clear signals. There are several trends emerging loud and clear in this pandemic-driven market. I think many of these trends are permanent, but none more so than the trend of looking at the value of genetics differently in the marketplace.
Now is a good time for beef producers to take advantage of stronger-than-normal prices for culled cattle, says Wesley Tucker, University of Missouri Extension ag business specialist.
Even without a worldwide pandemic, economic shutdowns and disruptions in food processing, Dan Basse would have covered demand drivers at the 15th-annual Feeding Quality Forum.
For the last full week of August, as reported by USDA’s Agricultural Marketing Service, the national price of live cull cows sold directly to packers was $57.65 per hundredweight (cwt.), which was about $2 per cwt. above 2019’s. That price was more than $15 per cwt. below the prior 5-year average (2014-2018).
What does “value” mean exactly?
Is it a Black Friday sale you wait four hours for to hopefully get a deal? Or maybe it is when the dealership offers “0% interest, details apply.”
Marketing is powerful. That 0% interest deal, or sometimes the Black Friday deal, can save you money; however, for the deal to have true value, each individual has to make it fit their situation.
The Cattlemen’s Beef Board will invest approximately $39,380,000 into programs for beef promotion, research, consumer information, industry information, foreign marketing and producer communications during fiscal year 2021, subject to USDA approval.
