As the cattle market embarks on a new quest in the new year, cattlemen from all sides of the industry are ready for a change. Most hope for higher prices, others yearn for an undisturbed marketplace; nevertheless, everyone is ready for a change to some degree.
Looking at how 2019 rounded out the year before handing the baton to 2020 oddly shares some similarities with how 2020 concluded before 2021 took over, at least in some respects. Even with the lack of the food-service industry through most of 2020, choice cuts rounded out the year on Dec. 31, 2020, at $209.95 and select cuts at $195.65. In 2019, choice cuts closed the year out at $209.42 and select cuts at $202.12. The difference between the two years in choice cuts is a mere $0.53, and $6.47 in the select cuts. Given how different the two years were (2020 compared to 2019), it's truly amazing that boxed beef prices ended up being where they were at the end of 2020.
While the market's boxed beef prices may see some correlation between the years, feedlots aspire to get to 2020 levels early in 2021. As you can see from the prices below, dressed cattle prices in 2021 are lagging around $20 behind 2020 levels and live cattle prices are behind by $10 to $13.
|Dressed Formula||Dressed Negotiated||Live Formula||Live Negotiated|
|2021 Price Levels||$174.66||$175.57||$112.04||$111.56|
|2020 Price Levels||$194.85||$198.87||$122.94||$125.26|
Thankfully, in the last few weeks of 2020, feedlots scraped and clawed to move the cash cattle market higher, and hope to do so in the nearby months of 2021, while packers still have strong incentives to process cattle. The market's biggest hinderance in the short term continues to be the pressure from COVID-19 as well as the corn market's recent jump. Monday afternoon (Jan. 4, 2020) the spot March corn contract closed the day at $4.83/bushel, which touts to be the highest prices the markets have seen since 2014. With a large run of backgrounded calves and yearlings expected to hit the market in the next month, feedlots are under pressure with these hefty corn prices.
Regardless of what year the market faces, challenges and opportunities will always be present. Trying to analytically avoid the traps that hinder you in the marketplace is always an everchanging and sleep-robbing problem if you're invested in the cattle market.
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