Drovers TV: Feedlots Losing $50-60/Head as Fed Cattle Market Tightens

Drovers 10/25/18

The fed cattle market has traded in a tight range at about $111 per cwt for the past six weeks, which results in cattle feeders losing an average of $50 to $60 per head. But there are growing signs cash prices are due to strengthen in the coming weeks.

Winter and early spring cattle futures prices have gained significantly over the past three months, and those gains are supported by wholesale beef prices. The Choice cutout price is trading at 6% higher than this time a year ago, and beef rib prices are trading 14% higher than a year ago. Those prices reflect strong consumer demand and retail interest in securing beef ahead of the holiday season.

Analysts note that robust beef prices are supported by America’s booming economy, and the low unemployment rate. Cattle carcass weights are down about 1.5% over a year ago, while beef exports are 9% higher than a year ago. Those factors, coupled with strong demand, lend fundamental support to the optimism for higher short-term cattle prices.