2019 Beef Cutout Ratio Suggests $136 Fed Cattle

 

By Greg Henderson, Drovers   

April 6, 2021

 

If the 2019 ratio between wholesale beef prices and cash fed cattle prices existed today, cash cattle prices would be $136 per cwt. That would amount to an additional $252 for a 1,400-pound fed steer.

 

Unfortunately for cattle feeders, cash fed cattle prices are not tied to USDA’s reported boxed beef prices.

 

Altin Kalo, chief economist at Steiner Consulting Group, analyzed the relationship between USDA’s reported Choice boxed beef prices and fed cattle prices, developing a ratio of the market’s past performance. Kalo notes that a sizeable portion of the supply of hogs is priced off the pork cutout and examined how that might apply to cattle. However, he also notes cattle prices do not have a strong relationship to beef values, and in recent years the industry has seen fed cattle values and wholesale beef prices diverge.

 

Kalo’s analysis found that between 2010 and 2016, fed cattle prices and the Choice cutout were extremely well correlated, with the price ratio of fed cattle and the Choice cutout at 1.61. Using that ratio today would translate to a cash fed cattle price of $161 per cwt.

 

“Clearly,” Kalo said...

 

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