Wholesale beef values ââwill continue to be a major indicator of the livestock market over the coming months, with current losses in demand for food services severely limiting the ability to move additional product through the system. In the hopes that aggressive vaccine deployments will create a return to normal trading activities in the coming months, the potential to test the bullish side of this market range in the spring and summer of 2021 is a strong possibility.
There is no argument that the events of the past 18 months have created any significant changes in the beef and cattle markets, and this is evident in the live and cash cattle price charts (red and blue lines ). Given all of the market uncertainty over the past few months, even livestock prices have been well contained within a price range of $ 10 per cwt (parallel blue lines) during the last half of 2020.
The hope is that price levels may become more stable in the weeks and months to come, but concern over recent ranges in early 2021 could limit the potential for cattle prices to rise.
With each cycle of back and forth between live cattle and cash cattle over the past eight months, prices have experienced greater stability, with the possibility that a “flatter” and less volatile market structure will emerge. develops at the end of the year. As we move past the extreme volatility in livestock prices seen between September 2019 and July 2020, the focus on getting back to “normal” has helped not only to minimize price changes, but also to create projections of. longer term market for the weeks and months to come.
While record or near-record numbers are still expected in the next Cattle on Feed report on Friday afternoon, growing demand for beef will help phase out the product at an even faster rate in 2021. Current estimates from the Long-term beef demand is not indicating a significant change in the market over the next year, but given the current market situation and the desire of most consumers to return to a sense of reality (more burgers and steaks with friends and family), the potential for a market rebound is likely once restrictions are reduced or lifted.
While current market ranges hold up – and in the case of livestock prices, they show that we are in a better position than seen for most of 2020 – the possibility that new market ranges may be established in the future. 2021 creates both hope and excitement in the industry. . The ability of stability to develop in boxed beef values ââin the coming weeks will be closely watched, with anticipation that this will set the tone for the direction of livestock prices through early 2021.
Among the many things that 2020 will be known for, cattle and beef markets moving outside of ranges will long be held in market traditions, but as the last few months have shown, established ranges can create comfort and stability … even in cattle. Marlet.
Rick Kment can be contacted at [email protected]
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