Category: Livestock Marketing

Cattle ranchers continue to have a significant interest in direct-to-consumer marketing of their own beef. These ranchers are typically aiming to build their own brand and integrated business from the land: from their cattle, to the beef, and on to the consumer.  Some of this beef might be grain finished in a feedlot or grass fed and finished.  Those looking to start selling to consumers often struggle for a bit to figure out pricing their product.  USDA’s Agricultural Marketing Service (AMS) publishes some price data on wholesale, direct-to-consumer retail, and carcass prices for grass fed beef.  

Grass fed, direct to consumer retail prices for whole, half, and quarter carcasses were $8.08, $8.28, and $9.30 per pound in April.  All were higher than April 2022 but, whole and halves were lower priced than in March of 2023.  Ribeye steaks were quoted at $31.12 per pound, the highest price in the data which goes back to 2013.  Almost all the reported cuts were higher in price than a year ago ranging from $17.28 per pound more for filet mignon to $0.95 higher for skirt steaks.  

There is also some carcass price data through the Small and Very Small (SVS) Producer verified program. The weighted average grass fed carcass price reported under this program was $4.31 per pound in April.  As you might suspect, the weighted average price was the highest, $4.99 per pound in 2020 during the pandemic.  A range of prices are reported and the range at the peak of the pandemic was from $3.20 to $6.75 per pound.  In recent months the range was $3.15 to $5.45 per pound.

The last report we’ll mention here is the National Monthly Negotiated Grass Fed Beef Report.  These prices represent negotiated grass fed wholesale beef prices for a variety of cuts.  Ribeye steaks in April were reported to be $28.65 per pound slightly higher than the $27.79 per pound last April.  Ninety percent lean bulk ground beef was $16.20 per pound, a $6.24 increase over a year ago.  

This data, while perhaps not well known, should be a good resource for folks moving into the direct-to-consumer area.  The data allows you check your prices compared to some national average pricing trends and plan for pricing future products.  

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Anderson, David. “Grass Fed Beef Prices.” Southern Ag Today 3(22.2). May 30, 2023. Permalink

Low hog prices and losses are causing significant financial stress in the hog industry.  Farrow to finish returns as estimated by Iowa State University have been negative for the last 6 months and were as large as -$36.04 per head in January.  This string of monthly losses has been the largest in at least a decade.  It’s interesting to note that financial losses have been reported by hog producers worldwide.  European and Asian producers have reported significant breeding stock culling due to losses.

Barrow and gilt slaughter is 1.7 percent larger than last year through the first week of May.  When combined with lighter barrow and gilt weights, pork production is just under 1 percent larger than last year, but with a rebound in exports so far this year, means that there is slightly less pork on our domestic market than last year.  

Tighter pork supplies after netting out trade have not translated into higher hog prices.  Slaughter weight hog prices, net of premiums and discounts, were $79.11 per cwt in mid-May compared to $100.35 last year at this time.  While $79 per cwt is about equal to the 5-year average price, costs are higher.  Feeder pig and early weaned pig prices have declined dramatically since the first of the year, down 50 and 64 percent, respectively. Extremely low prices for feeders don’t indicate a lot of hope for higher prices in the future.

The pork cutout value in mid-May was $82.48 per cwt compared to $103.57 last year.  Most primal cuts are well below last year’s prices as well, including bellies which are 50 percent lower than this time last year.  Some bad news for those interested in BBQ, prices for pork butts are 9.9 percent higher than last year. However, on the positive side, the primal rib is about 41 percent lower than last year.

There are several things to watch for in this market in the coming weeks.  Sow slaughter should increase as breeding numbers are reduced.  Fewer gilts may be held back also lending a boost to slaughter numbers.  USDA’s June quarterly inventory report should help confirm some direction for future farrowing and breeding herd inventory.  We should start to see slaughter decline seasonally boosting prices.  A seasonal price rally would be welcome news for producers.  

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Anderson, David. “Low Hog Prices and Red Ink.” Southern Ag Today 3(21.2). May 23, 2023. Permalink

Photo by Mark Stebnicki: https://www.pexels.com/photo/groups-of-pigs-in-pigpens-6791938/

As cattle prices and the boxed beef cutout have increased, so have briskets.  Higher brisket prices are starting to hit restaurants and home BBQ’ers.  Fewer cattle going to market and tighter beef supplies will pressure beef prices for all cuts, briskets included. 

For the year, through the week ending May 13^th, beef production is down 4.7 percent compared to last year.  Steer slaughter is 4.7 percent below last year and heifer slaughter is 0.3 percent more than last year.  The number of cattle going to market is important for briskets because each animal has two and briskets are a cut that is often sold as the whole primal.  In addition, steer and heifer dressed weights are below a year ago, so total pounds of brisket available is further reduced. 

Prime grade briskets were $2.43 per pound for the week of May 12^th.  Even though price has come down 6 cents over the last 3 weeks it is 16 percent higher than the first of the year and 11 percent higher than a year ago.  Choice, branded, and Select quality grade brisket prices are up similar percentages to Prime since January and compared to a year ago.  

Typically, branded briskets (briskets like certified angus beef or other brands) have the highest price meaning that other quality grades, including Prime, trade at a discount in the wholesale market.  Since February, Prime briskets have commanded the highest price in the market.  That price strength is likely related to slightly fewer cattle grading Prime and more Choice than a year ago.  Many smaller, high end BBQ restaurants source Prime and branded briskets due to their cooked qualities.

What might we expect in our favorite brisket BBQ spots in coming months?  Tight beef supplies and reduced slaughter will keep the pressure on for higher prices.  Restaurants will face higher costs and their ability to pass those on in the form of higher prices might be limited.  Even though less beef is produced leading to higher prices, fears of a recession, reduced consumer incomes, and spending may limit the ability to pass on higher costs. 

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Anderson, David. “Brisket Prices on the Rise.” Southern Ag Today 3(20.2). May 16, 2023. Permalink

Photo by Hayden Walker: https://www.pexels.com/photo/a-person-slicing-barbecue-beef-brisket-9397270/

The number of feeder and stocker cattle sold during the first four months of 2023 was about four percent higher than during the same period in 2022 according to data from the USDA-AMS National Feeder and Stocker Cattle Summary.  Strong prices, persistent drought in some regions, and the timing of wheat pasture cattle movement likely contributed to these higher totals despite the smaller calf crop in 2022. 

Shown in the chart above, receipts have generally followed the seasonal pattern of declining sales through the first four months. This dataset includes auction, direct, and video/internet sales that are reported to USDA. It does not capture all feeder and stocker cattle transactions and the report notes that “receipts vary depending on the number of auctions reported” – but comparisons over time can be informative when considering current market dynamics to previous years.  

On the surface, the stronger receipts totals are at odds with the 2 percent smaller calf crop in 2022 than in 2021. However, the data are most likely indicating market timing differences instead of changes in total cattle inventory. Cattle prices have been significantly stronger this year as compared to a year ago and drought continues to be a key issue in Texas, Oklahoma, Kansas, Nebraska and other areas which is limiting grazing opportunities. These factors have likely led to more cattle moving into feedlots or grow yards earlier than normal. Compared to the 5-year average from 2017-2021, receipts are one percent lower so far in 2023.

The report also gives information about the mix of steers and heifers and weight ranges and suggests slightly fewer heifers and lighter cattle have been sold this year.  Heifers represented 40.9 percent of the stocker and feeder cattle sold during the first 4 months of 2023. This is about one percentage point lower than in 2022. The percent of cattle sold weighing above 600 pounds is also lower at 72.6 percent compared to 73.9 percent a year ago.

Looking ahead, auction receipts will increase seasonally as summer arrives. However, overall supplies this year are expected to be smaller. The estimate of the expected calf crop for 2023 will be released on July 21st as part of the mid-year USDA Cattle Inventory report.

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Maples, Josh. “National Feeder and Stocker Cattle Receipts Higher to Start 2023.” Southern Ag Today 3(19.2). May 9, 2023. Permalink

Photo by Mark Stebnicki: https://www.pexels.com/photo/brown-cattle-2253553/

USDA released the April Cattle on Feed report on Friday, April 21^st. This monthly publication estimates the number of cattle on feed at feedlots with a capacity of over 1,000 head and serves as a measure of likely beef production over the next several months. While the cow herd has been decreasing in size for several years, an increase in the number of heifers in the beef system kept on-feed numbers running relatively high for much of 2022. Finally in the fall, the long-expected shift occurred, and on-feed numbers have been running below year-ago levels since then.

In Friday’s report, April 1, 2023, on-feed inventory was estimated to be down about 4.5% from April 1, 2022. While this might not immediately raise any eyebrows from casual observers, this on feed number was higher than expected and really came down to March placements being greater than most pre-report estimates. The net effect was that total on-feed inventory was virtually unchanged from March 1 to April 1, which was counter to what many expected. 

Heifers continue to make up a historically large proportion of cattle on feed.  Fewer heifers were reported on feed than on April 1, 2022.  While steers on feed declined by 6 percent, heifers on feed were only down about 1.7 percent from last year.  That indicates that there has not been a large movement in holding back heifers yet. 

There are some possible explanations for the larger-than-expected March placements number. First, March is a month when cattle are often moved off wheat pasture and continued dry weather combined with high wheat prices, likely impacted movement of feeders. Secondly, live cattle imports from Mexico were higher in March. So far this year, feeder cattle imports from Mexico are up about 95,000 head from last year.  But it’s worth remembering that feeder cattle imports in 2022 were the fewest since 2008.  Finally, there is still a lot of carry on the feeder cattle board, meaning that feedlots have been aggressively buying feeders ahead, in anticipation of the rising price levels suggested by deferred live cattle futures. Put simply, I absolutely think that feedlot placements bears watching in the coming months, but I suspect the larger placement number last month has more to do with timing than a major shift in market fundamentals.