That moment when your body launches to the top of the seesaw at top speed? Beef packers, please remind us what that feels like.
Beef prices are going nuts. Choice boxed beef prices teetered over $300/cwt. And the wholesale Choice price is up 33%, second only to the record prices reached last year during the pandemic pan!c buying and supply chain meltdown.
Working overtime: To take advantage of markets, packers are gettin’ while the gettin’s good. In 2021, Saturday slaughters have been up 58% over 2020 and more than 92% over 2019.
The other end of the teeter-totter…
Cattle feeders can’t say the same. Fed cattle markets lost their early April rally and tottered down below $120/cwt.
Producers’ margins are tightening as feed grain prices rise sharply. Livestock Economist Scott Brown says for every 10-cent increase in feed costs, there’s an 80-cent decrease in feeder cattle prices just to break even.
And then there’s the d-word. The Drought Severity and Coverage Index is at 180 for the U.S. It’s never been this high in April or May in any year.
With diminishing pasture and hay production potential, there’s little incentive to grow the herd this year; signs point to accelerating beef cow liquidation.