Market Highlights: Middle Meats Drive Boxed Beef Prices Up

FED CATTLE: Fed cattle traded $3 to $4 higher compared to last week on a live basis. Prices on a live basis were mainly $114 to $115 while prices on a dressed basis were mainly $180.

The 5-area weighted average prices thru Thursday were $111.25 live, up $1.29 from last week and $175.06 dressed, up $1.17 from a week ago. A year ago prices were $110.53 live and $175.00 dressed.


The finished cattle market finally broke out of its six week stagnation, but it is yet to be determined if this is a violent surge or a moderate price increase as mentioned last week.

If the market has follow through next week with strong gains then a violent surge it is. However, market participants have been waiting on this positive price movement in the finished cattle market for several weeks, and it is adding $40 to $50 of value to each head.

The increase in prices can only be positive for cattle feeders while packers are no worse off with stronger beef prices. The market will wait in angst to see if this week’s higher prices can be sustained and improved upon moving into November.

BEEF CUTOUT: At midday Friday, the Choice cutout was $213.72 up $0.62 from Thursday and up $5.50 from last Friday. The Select cutout was $199.33 up $1.02 from Thursday and up $5.47 from last Friday. The Choice Select spread was $14.39 compared to $14.36 a week ago.


The Choice boxed beef cutout price has increased more than $10 in two weeks. The price surge the back half of October is being driven by middle meats. Middle meat purchases in October are generally due to entities preparing for the holiday season and trying to purchase inventory before rib and loin prices reach their apex. Thus, restaurants and retailers are trying to avoid being short bought and forced in to high priced spot market purchases.

At the same time, this purchasing habit generally leads to increases of beef in cold storage which generally peaks in the fourth quarter. Based on the latest cold storage report, beef in cold storage at the end of September totaled more than 508 million pounds, 12 million more pounds than one year ago and 55 million more pounds than the five year average (2012-2016).

Pork in cold storage at the end of September was nearly 589 million pounds which is below year ago levels and the five year average. Chicken in cold storage remains elevated and sits at 959 million pounds as of the end of September.

OUTLOOK: Based on Tennessee weekly auction market averages, steer prices were $1 lower compared to last week while heifer prices were $2 to $4 lower compared to a week ago. Similarly, slaughter cow prices were steady to $1 lower while slaughter bull prices were $1 to $2 lower than last week’s prices.

The minds and thoughts of many cattle producers are focused on calf and feeder cattle prices through the end of the year and maybe into January. However, it is not too early to be thinking about summer feeder cattle marketings for 2019 and capitalizing on a strong price. It may be difficult to forward contract feeder cattle for the third quarter of 2019, but the futures market can be used to protect a strong price.

The August 2019 feeder cattle contract peaked on October 2nd at $157 per hundredweight and is currently trading a little over $152. With the nearby November contract trading near $154, some people may be skeptical of pricing cattle for a lower price ten months down the road especially if they expect prices to increase. However, if one looks back to the August 2018 contract, the 2018 contract traded in a range of $136 to $159 over the entire year.

Additionally, the range for the August 2018 contract from June through expiration was $143 to $155 with an average daily close just shy of $150 per hundredweight. With that understanding, a price of $152 for August 2019 would seem fairly strong.

One could easily purchase a put option or sell a futures contract today and likely come out on the positive side, because prices are likely to fluctuate above and below the current price between now and expiration. In making this move, one does not have to hold their position until expiration. If prices move lower and the producer thinks the market price will go back up then they can simply exit their position on the futures market and pocket the gains which will then leave the producer completely subject to the cash market but with cash in hand.


ASK ANDREW, TN THINK TANK: In the past few weeks, several questions concerning cover crops and sod drilling winter annuals have surfaced. There are several crop producers who graze cover crops while there are even more cattle producers that graze sod drilled winter annuals. Both of these grazing alternatives can be advantageous if planted early, adequate moisture is received, and fertilizer application occurs. Grazing of winter annuals can be a great alternative to feeding hay, and it is often less expensive than feeding hay. Though winter annuals can still be planted, the overall benefit of grazing will likely be less than for those planted in September. Producers considering grazing winter annuals should consider yield potential, plant maturity, potential stocking rate, need for termination, and cost. It may even be beneficial to determine the daily cost of feeding an animal with a winter annual versus hay. Back of the feed sack math says winter annuals cost about half as much as hay.

Please send questions and comments to or send a letter to Andrew P. Griffith, University of Tennessee, 314B Morgan Hall, 2621 Morgan Circle, Knoxville, TN 37996.

FRIDAY’S FUTURES MARKET CLOSING PRICES: Friday’s closing prices were as follows: Live/fed cattle –October $113.88 +0.53; December $118.40 +1.33; February $123.45 +1.23 Feeder cattle –November $154.80 +0.85; January $149.70 +0.65; March $147.83 +0.33; April $149.33 +0.40; December corn closed at $3.68 up $0.07 from Thursday.



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