Cattle and beef markets the past two years have conditioned us to expect the unexpected. Several fundamentals are “upside down” in the total beef complex, but a few are behaving in relatively seasonal fashion.
The beef industry finds itself in another odd position as market values are adjusting swiftly. Feed grains continue to react to global supply-and-demand dynamics with a bias toward even higher corn and soybean futures prices.
The shift away from larger availability of yearlings to the new crop of spring 2020 calf-fed cattle is beginning. This is the early stage of this seasonal trend, with more to come as April progresses.
Demand for quality is good, based on elevated quality premiums in the past year. The advantage will potentially be back in the hands of feeders with genetically higher-marbling cattle, rather than cattle that must be highly managed through the feeding regimen to reach the premium grades and CAB.
The Choice/Select spread and CAB/Choice spreads narrowed in last week’s trade as ribeye and strip loin prices fell. Higher than normal first-quarter middle meat prices were responsible for some of the wider quality price spreads since the first of the year.
So far in 2021, Choice carcasses are at a higher premium to Select than in any of the previous five years. This is important, not because Choice carcasses are the production target, but because the producer’s share of the Choice premium is the foundation on which CAB and Prime premiums are added.
Extreme winter conditions and temperatures well below zero have been widespread across the country impacting most of the major central cattle feeding region. History in our CAB data shows us that grade generally improves, rather than declines, during periods of extreme cold.
When cattle prices and producer sentiment are lackluster, sometimes it’s nice to look to a bright spot in the market. At CAB, a recent snapshot of December export data provides some interesting fodder, and something to get excited about.
The large shift to retail business, accompanied with stifled restaurant and export trade, subtly show in the shifts in dollar contributions of each primal. Where customers purchased beef influenced which beef cuts outperformed or underperformed last year.
Supply factors took center stage for cattlemen in the past year as COVID-19 ravaged the marketplace. The backlog of finished cattle, carcass weights and price discovery have been such burning issues for months now it’s been hard to free up mental space for anything else.
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