Beef demand the last few years has been phenomenal, pushing fed cattle prices sharply higher from their COVID lows, said Nevil Speer, owner of Turkey Track Consulting in Bowling Green, KY.
Weekly USDA five-area weighted average fed steer prices rose $95 per cwt from July 2020 to June 2923, going from $94.87 per cwt to $188.75, Speer pointed out.
LMIC RETAIL BEEF DEMAND INDEX STRONG
Second- and third-quarter demand for beef and pork showed significant drops from years earlier but are held strong index values, the Livestock Marketing Information Center said in a release called Livestock Monitor.
The LMIC’s demand index calculated at 115 for all fresh beef in the second quarter of 2023, slightly higher than 2019’s 111, but lower than 2020, 2021 and 2022, the LMIC said.
A similar trend happened in the third quarter, the LMIC said. However, third-quarter demand saw an extreme jump in 2020, when the index moved from 104 in 2019 to 124 in 2020.
Since then, it has been lower every year, and 2023’s value calculated at 110, is in-line with 2014’s third quarter value.
But Speer pointed out that weekly beef production has grown sharply since 2014, with the 25-week moving average through the week ending Nov. 17 went from 445 million pounds to 505 million.
So, had beef demand remained the same, fed cattle prices should not have shown such a response, Speer said.
PORK DEMAND INCONSISTENT
Pork demand has been more inconsistent in recent years surging to a 20-year high in 2019 and then out-pacing that high again in 2022, the LMIC said.
However, the years in between have seen it drop back to levels seen over the most recent decade, the LMIC said. Second-quarter pork demand in 2023 calculated to 92, which was the lowest value since 2019, but a large drop from 2022’s 114 value.
Third-quarter values did not improve, and in 2023 fell even further…down to 86, the LMIC said. Third-quarter in 2020 was very strong – 124, the highest third-quarter index by more than 15 points in 20 years.
Following years of 2021 and 2022 remained above an index value of a 100 in a way second quarter did not see, but 2023 showed a bleak 86 on the scale, the LMIC said.
BEEF DEMAND RESETTING
The demand index for beef appears to be resetting closer to pre-pandemic levels, but may lose further ground as price increases are expected to continue in the next few years, the LMIC said.
The retail pork demand index has shown more volatility and inconsistent response since 2020, and appears that it may be worse off than in the last decade in the third quarter, the LMIC said. Longer timelines are needed to confirm if this is a consistent trend.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers last week ranged from $178.40 per cwt to $178.72, compared with the previous week’s range of $178.00 to $186.00 per cwt. FOB dressed steers, and heifers went for $283.47 per cwt to $283.84, compared with $283.24 to $292.15.
The USDA choice cutout Monday was up $1.88 per cwt at $295.75 while select was up $0.25 at $270.95. The choice/select spread widened to $23.17 from $23.17 with 105 loads of fabricated product and 30 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.35 to $1.40 a bushel over the Dec corn contract, which settled at $4.69 1/2 a bushel, up $0.02 1/2.
The CME Feeder Cattle Index for the seven days ended Friday was $225.92 per cwt, down $2.72. This compares with Monday’s Nov contract settlement of $229.57, up $1.07.