U.S. cattle and beef markets continued to set records last week, blowing through the sharply higher prices set the week ending Jan. 10.
Feeder cattle, slaughter cattle and beef cutout values were all at record prices and climbing.
Feeder cattle and calves sold firm to $5 per hundredweight higher last week with the exception of lightweight steers and bulls under 550 pounds, which were $5 to $15 higher per hundredweight, especially around the Southeast, USDA Agricultural Marketing Service reported.
That’s after feeder markets moved $3 to $10 higher per hundredweight the week ending Jan. 10, compared with the last good market test before the holidays.
“The feeder cattle marketing balloon continues to drift farther out of sight and there are yet to be any signs that it may pop or start to lose altitude,” agency economists stated in the report.
Prices for 600- to 700-pound steers averaged almost $189 per hundredweight in the North Central region and nearly $197 per hundredweight in the South Central region, the agency reported.
Live fed steers for slaughter for the week ending Jan. 17 averaged $142.45 per hundredweight. That’s up almost $3 from the previous week, $10 above December’s average and $18 above a year ago.
Cutout values for choice boxed beef averaged $224.62 last week, up nearly $14 from the previous week and almost $32 above a year ago, according to USDA.
High prices are impressive but no surprise, market analysts said.
“While the rapid advance in these markets happened quicker and more dramatically than anticipated, the overall price levels are not at all unreasonable relative to conditions that have been building for months,” said Derrell Peel, Oklahoma State University livestock market specialist, in the University’s Cow-Calf newsletter on Monday.
Tight beef supplies were sensitive to any market disruption, and that came with the large winter storms during the holidays that negatively affected cattle production, slaughter and retail distribution, he said.
Some of the recent jump in prices could be attributed to the harsh winter weather, but cattle supplies are tightening and cattlemen are also looking for replacement heifers or holding back heifers, said Wilson Gray, extension livestock economist with University of Idaho in Twin Falls.
Prices keep going higher; it just shows the industry is really tight on supplies. Fed and feeder cattle prices have been at record highs for the last several months, he said.
Climbing prices are part of a lengthening trend, said Ron Plain, an agricultural economist at the University of Missouri.
Last year was the fourth consecutive year of record high cattle prices, and 2014 should be the fifth, he said. The number of cattle is down, reflecting a calf crop that has declined for 17 years in a row, he said.
Prices in 2014 should push even higher with beef production down 5 percent compared to a year ago, strong exports to meet a growing global demand and an improving U.S. economy, he said.
John Nalivka, owner of Sterling Marketing, a Vale, Ore., consulting firm for the red meat industry, said continued strong markets are not hard to fathom but he has a little trouble believing they will continue to escalate.
“I just don’t see these prices going higher, higher, higher. Markets are going to have to take a breather,” he said.
Feedlots are back in the black with margins of $122 a head for the week ending Jan. 11, compared with $80 a head the previous week and losses of $48 a year ago at the same time. But the high fed steer prices make it a little tough for packers, which are doing better but still losing almost $44 a head the week ending Jan. 11 compared with about $76 the previous week .
Even with per-head profits or narrowing losses, things are tough for feedlots and packers, which are doing less business with far more capacity than there are cattle to slaughter, Plain said.
Prices could back off in 2015, as competing meat producers are growing production, and 2014 could be as high as prices get in this cattle cycle, he said.