Kentucky Beef Cattle Market Update

Kenny Burdine, Livestock Marketing Specialist, University of Kentucky

The Kentucky fall calf market appears to be bouncing on the bottom as prices for 5 weight steers were virtually unchanged from October to November, while 7 weights slid by about $1 per cwt. Prices for the first week of December were also steady, suggesting that prices are not likely to reach the low levels of 2008. But, they sure came close.

As we look ahead to 2010, the outlook hasn’t changed a great deal from where it was this summer. Supplies remain tight and beef production has been low. Cow slaughter and on-feed numbers suggest that the size of the US cow herd is likely to decrease once again by January.

To see much improvement in cattle prices, we need to see some strength in the box. Cutout values have really struggled to sustain anything above $140 per cwt. since spring, and slaughter cattle prices have struggled to break out of the low $80’s. It appears that movement of upper-end beef products has been slow at the retail level, making it difficult to build much value into cattle. If the economy improves in 2010, consumer spending on beef will increase, supporting prices through the entire beef system.

I’ll end 2009 on a positive note. While even the best macroeconomists struggle to predict how long this economic downturn will last, most agree that some positive signs are out there. When the US economy does turn around, and beef demand improves, cattle numbers are going to be at levels we haven’t seen since the 1960’s. When that happens, tight supplies and increasing demand should equate to some attractive prices for feeder cattle.