​Weekly Livestock Comments by Dr. Andrew P. Griffith                                       November 13, 2020



FED CATTLE: Fed cattle traded $3 higher compared to last week on a live basis. Prices on a live basis were primarily $108 to $110 while dressed prices were mainly $171 to $174.

The 5-area weighted average prices thru Thursday were $109.46 live, up $3.11 compared to last week and $171.88 dressed, up $6.58 from a week ago. A year ago, prices were $115.15 live and $181.95 dressed.
The week containing Friday the 13th was not frightening to cattle feeders. The finished cattle market has started to move in a favorable direction for cattle feeders as large gains were evident this week. The value of cattle this week compared to last week represents a $35 to $40 per head increase, which makes hitting the $115 per hundredweight price that much more achievable before the end of the year. The strong margins at the packer level and good beef demand have packers salivating for cattle. Some of the strong margins up stream have been passed down to cattle feeders, and cattle feeders are doing the same when purchasing feeder cattle. Optimism in the market is strong heading toward December.

BEEF CUTOUT: At midday Friday, the Choice cutout was $226.44 down $0.06 from Thursday and up $13.13 from last week. The Select cutout was $209.81 up $1.57 from Thursday and up $12.05 from a week ago. The Choice Select spread was $16.63 compared to $15.55 a week ago.

It would appear that end of the year holiday beef purchasing has started to take off. Choice beef box movement is fairly strong and showing a few signs of trying to outpace Select beef boxes. However, Select grade beef continues to see fairly decent demand during a time when Choice grade prime rib and other holiday cuts take center stage. There is no doubt some holiday purchasing is taking place, but the strong prices for boxed beef could just be simply demonstrating that beef prices are being supported by good demand at the consumer level. There always seems to be concern that consumer discretionary spending may move away from beef when things get tight. However, due to the pandemic, many consumers have more than ample discretionary dollars, because they are not able to participate in many of their extracurricular activities. Thus, lower incomes may be evident in many households, but leisure expenditures have also been reduced. It will be interesting to see if consumer expenditures revert back to pre-pandemic tendencies moving forward.

OUTLOOK: Based on Tennessee weekly auction market price averages, steer prices were $4 to $6 higher compared to last week while heifer prices were $2 to $5 higher compared to a week ago. Slaughter cow prices were steady to $2 higher while bull prices were steady to $4 higher compared to last week’s prices. October was a tough month for calf prices, but if the first two weeks of November is any indication of what is to come then cattle producers should be seeing the light at the end of the tunnel. Steer and heifer calf prices have surged the past two weeks based on Tennessee weekly auction market average prices. It is clear that stocker and backgrounding operations still have a strong demand for weaned and preconditioned cattle, but calves being weaned on the truck have also seen a price boost. The average value of 525 pound freshly weaned steers in Tennessee has increased $27 per head the past two weeks. This may seem as a small price improvement to some, but this is a significant price improvement given that the fall run of cattle is still in full force. It is tough to imagine that the gains the past two weeks will be replicated the next several weeks, but there tends to be positive price movement following the Thanksgiving holiday. With that said, there is only one full week of trade before the Thanksgiving holiday. There is a good chance that freshly weaned calf values increase $20 to $30 per head before the end of the year if there is any bounce in the market at all heading into December. The slaughter cow market remains relatively strong for this time of year as well. However, this comes as no surprise given that the slaughter cow market has been strong most of the year. The demand for ground beef continues to be strong, which will continue to support slaughter cow and bull prices. It is unlikely cow prices will move much lower than they already have. They will begin to see value increases after the first of the year.

ASK ANDREW, TN THINK TANK: I had the opportunity this week to give a presentation for the virtual Tennessee Master Beef Course on farm business succession planning. Due to time limitations, I did not have much time to answer questions. In reality, I doubt I could have answered many of the questions, because I am not an authority on the subject but rather a novice. However, as I was speaking on the subject matter that I knew a little about, several questions came to my mind. Some of those questions included, how many farm business owners die without any type of estate and succession plan, or how many farm business owners die thinking they have a pretty good plan but it turns out to be fair at best. Even more questions came to mind after those as I thought about what it cost if a poor plan or no plan was in place. There is no doubt that it will have a high monetary cost if no plan is in place, but it could also result in family conflict, which may result in more than monetary loss. Succession planning is important, and it is important for farm businesses to have a plan.

Please send questions and comments to agriff14@utk.edu 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 – December $109.93 -2.05; February $112.23 -2.58; April $116.20 -2.15; Feeder cattle –November $137.48 -2.60; January $137.88 -2.88; March $137.15 -2.55; April $138.63 -2.40; December corn closed at $4.11 up 2 cents from Thursday.