CPI Heightens Inflation Concerns For Cattle, Beef

Someone once said everybody works for someone else, and in the food-production industry, that someone is the consumer, and the trend could have bearish implications for cattle and beef producers.

Paying attention to the consumer’s point of view is instructive, a market analyst said.  One of the ways market participants and analysts in the US can do this is to look at the Consumer Price Index published monthly by the Bureau of Labor Statistics.  This data is compiled, graphed and republished by the Livestock Marketing Information Center in Denver.

The analyst said rising prices could make beef prices too high for many consumers unless the government keeps pumping more money into consumers’ hands or consumers get overall better-paying jobs to compensate.




The base Consumer Price Index for all items last week was rising, as it has been all year.  In fact, consumer prices all last year (during the COVID shutdowns no less), was above the 2015-2019 average, and this year has been above 2020 and rising.

Using 1982-1984 as the base, CPI was at 271.696 in the June report, up 2.501, or 0.93%, from 269.195 in May, up 13.899, or 5.39%, from 257.797 in June 2020 and up 25.143, or 10.2%, from the 2015-2019 average of 246.553.

The CPI has a tendency to slow its rate of gain in the summer months and even decline a bit in the last quarter.  So far, however, there is no indication of a slowdown this year.




The CPI for the broad category of food and beverages also was up in June, continuing a trend toward higher costs that began last year and continued into 2021.

The food and beverages CPI for June was 275.38, up 1.939, or 0.71%, from 273.441 in May, up 6.329, or 2.35%, from 269.051 a year ago and up 24.65, or 9.83%, from the previous five-year average of 250.73.

The food and beverages CPI tends to rise slowly into October and then fade in November and December.  However, as with the overall CPI, there is no hint of a slowdown yet this year.




During the height of pandemic-related packing plant closures last year, the meat CPI spiked and retreated after plants reopened.  But this year, prices still rose to near the 2020 high without the closures.

The June meats CPI was 296.597, up 10.606, or 3.71%, from 285.991 in May, down 1.436, or 0.48%, from 298.033 a year ago but up 40.995, or 16.0%, from the previous five-year average of 255.602.

This line tends to peak in August but seems to be following 2020 more closely.




Fed cattle traded last week at $119 to $125 per cwt on a live basis, steady to down $1 from the previous week.  Dressed-basis trade was at $196 to $201, steady to down $1.

The USDA choice cutout Monday was down $1.45 per cwt at $266.49, while select was off $2.30 at $249.49.  The choice/select spread widened to $17.00 from $16.15 with 96 loads of fabricated product and 28 loads of trimmings and grinds sold into the spot market.

The USDA reported Monday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.07 to $1.15 a bushel over the Sep futures and for southwest Kansas were unchanged at $0.70 over Sep, which settled at $5.56 a bushel, unchanged.

The CME Feeder Cattle Index for the seven days ended Friday was $150.73 per cwt down $0.66.  This compares with Monday’s Aug contract settlement of $157.37 per cwt, up $1.75.