The USDA January 1 cow herd inventory, published this Monday, confirmed a 2% decline in the beef cow herd, along with a 1% decline in feeder cattle supplies.
Fed cattle markets have seen challenges in January. The Omicron variant is pressuring packing plant efficiency through increased worker absence, resulting in much smaller slaughter totals so far this month.
Cattle and beef market dynamics the past year were nothing if not volatile, and in some ways, unprecedented. Supply chain imbalances and processing sector issues have been the focal point of beef price inflation.
December has started off on a high note in the fed cattle sector and all of us on the cattle side of the supply chain should be made well aware of what’s ahead in 2022.
Packers have margin to spread back upstream to the feedlot sector at their discretion, and it appears that their need to fulfill orders for high-quality product for upcoming holidays is likely a motivating factor.
All parties upstream of the packing sector are elated, and likely relieved, to see the price break free from the furrow between $120 and $125/cwt that the fed cattle trade had been digging for 19 weeks.
The fourth-quarter seasonal price pattern over five years has seen a 12% increase from September through year end. Weekly carryover must shrink before packers see a supply incentive to move bids significantly higher.
Wholesale beef values continue to fall rapidly in a fall pattern that’s grossly overdue. Much remains in flux in the 2021 market, with record-high seasonal beef values inflated alongside so many other commodities.
Fed cattle prices remain locked within a range of $120 to $125 over a long 16-week period. Market-ready steers and heifers have, in total, been readily available throughout this extensive timeline.
The modern protein buyer has been forced to become accustomed to much higher prices across beef, pork and chicken as price inflation hasn’t waned. Demand outstripping supply seems to be the theme across each sector.
