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Fed cattle prices continue to rally

Article-Fed cattle prices continue to rally

Beef cowherd expansion is still happening saysnbspDon Closenbspof Rabo AgriFinance But just how big is it expected to getquotWhen this whole rally started back in late 20132014 my early number was between 3233 million on beef cow numbersquot Close said quotWith the econometric modeling that we39re doing we39ve really revised that back and in 20182019 we39re looking for a beef cow number of 31312 million We39ve trimmed that back pretty hardquot he tells the Oklahom
The risk management opportunities available to cattle producers has not been seen in several years.

Fed cattle prices pushed higher last week and set another record weekly average price. The weekly 5-area average price two weeks ago was $173.10 per cwt which surpassed the previous peak price from November 2014. The average price last week rose even higher to $180.44 as cattle markets continued to gain strength.


Fed cattle prices are up over 14 percent since the start of the year. Shown in the chart above, fed cattle prices have been in an uptrend since 2020 when prices dropped to a weekly average low of $94.87 in July 2020. Fed cattle prices were highest last week in the Nebraska and Iowa/Minnesota regions where prices averaged around $183 per cwt. Prices in Kansas averaged $176.09 per cwt while fed cattle prices in the Texas/Oklahoma/New Mexico averaged $174.52.

The boxed beef cutout also picked up steam last week and the choice cutout was was up nearly $10 per cwt from the week prior. Average retail beef prices have been mostly steady for over a year, but tighter beef supplies could put upward pressure on beef prices if consumer demand does not erode.

Feeder cattle prices are also being pulled up. Prices for feeder cattle and calves in most southern states are up 30 percent or more from a year ago (table below). CME Feeder cattle futures contract prices are around $230 per cwt for the fall contracts. There are price risk management opportunities to consider. In a market like this one where prices are rising, producers may be interested in not limiting their market upside. Put options and Livestock Risk Protection (LRP) are both tools that can help protect downside price risk while also leaving producers open to benefit from higher prices. Each of these tools has their own design and tradeoffs to understand before jumping in, and there are certainly other risk management strategies out there. However, all tools are currently offering risk management opportunities at price levels not seen in the past eight years.


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