CAB Insider: Carcass Premium Structure Advanced in 2021

 

By Paul Dykstra, Drovers  

January 5, 2022

 

The two weeks encompassing the Christmas and New Year holidays were relatively predictable in terms of fed cattle market price performance. Weekly average prices drifted lower from the early December $140/cwt. mark to the month’s low of $135/cwt. during the week of December 20.

 

This pattern has been similar in three of the past five years, where the fed cattle market declined beginning in early December only to catch an upward trend again in the second half of the month. The repeat of this pattern seemed predestined given that the run-up in early was the apex of a nine-week continuous bull run.

 

A $3/cwt. recovery developed last week, generating a $138/cwt. six-state steer average as packers purchased cattle to resume full slaughter this week.

 

Steer carcass weights finally dropped five pounds in the latest report the week of December 13. The previous week’s high of 929 pounds was just two shy of the October 2021 record high of 931.

 

The heaviest carcass weight in 2021 came quite late in mid-December. The historical pattern shows carcass weights typically topping in October and November.

 

Exceptionally dry and warm weather patterns in the cattle feeding regions kept cattle weight gain above expectations, pushing average weights higher into December. This, coupled with the premium in the futures market, also prompted cattle feeders to hold cattle longer as the price outlook was positive.

 

Cutout values in December also followed suit...

 

Carcass Premiums Structure Advanced in 2021 ...

 

Carcass-Friendly Management Remains Key ...

 

more, including tables

https://www.drovers.com/news/beef-production/cab-insider-carcass-premium-structure-advanced-2021