NASHVILLE, Tenn. (RFD-TV) — Record-high cattle prices are creating significant opportunities for producers willing to market strategically. That is, according to livestock economist Dr. James Mitchell with the University of Arkansas. Mitchell says even in this strong market, some producers are leaving money on the table by not following proven marketing practices.
“In today’s cattle market, prices are at record high levels. There’s also quite a bit of variability in those prices depending on the day of the week you sell, where you sell, and those types of things,” Dr. Mitchell said. “And so, talking about how pushing back against some of the ‘I can make money selling anything right now,’ and how there’s still a lot of money on the table that can be captured by marketing cattle, and doing the types of things that we know pay.”
Mitchell says cattle producers are guaranteed to make money if they follow typical channels that keep the markets flowing.
“So, selling, marketing uniform lots of cattle, putting together truckloads, weaning and vaccinating those calves, cash trading those bull calves, dehorning, if necessary -- all those things that are well documented to pay, and walking through the steps of what the market’s offering in terms of premiums for doing those types of things.”
Mitchell also points to lot size and small producers as a hurdle, but preconditioned sales and programs like the beef quality networks help overcome those limitations.
“We looked at the kind of volatility in the market and how there are still some pretty big swings in either direction -- plus $15 a hundred weight, minus $15 a hundred weight, depending on the week and the location you’re talking about,” he said. “So maybe taking some of that risk off the table is still an important consideration—lots of ways to do that. As you mentioned, for livestock risk protection, futures markets, options, and forward contracting are available. In the past couple of years, with LRP, they’ve increased the subsidies to make the premiums a bit more affordable for producers, which is good. But again, cattle prices are really, really high.”
With strong demand and volatile markets, Mitchell urges producers to capture premiums today. He suggests they reinvest in their operations to ensure future success.
Beef Cutout Remains Elevated Despite Usual Seasonal Decline
The beef “cutout” is the wholesale value of a standard box of beef, quoted per hundredweight (cwt). It helps signal how much packers can pay for cattle and informs retail prices. This fall, the Choice cutout peaked in mid-September at around $413.60/cwt and has eased with normal seasonality, finishing last week near $365.25/cwt.
The USDA-AMS continues to publish daily and weekly reports even while some other federal reports are delayed, so these figures reflect current market conditions.
Even after the recent pullback, the cutout is still strong compared with history, explains Charlie Martinez with the University of Tennessee Institute of Agriculture.
Last week’s level was about $56.82/cwt (18.4%) above the same week the previous year and roughly $113.57/cwt (45.12%) above the five-year average. That suggests shoppers are still paying up for limited beef supplies, keeping overall demand firm rather than weakening.
Grades tell a similar story. Since March, Prime, Choice, and other graded cutouts have trended higher through September, and the spread between Prime and the different grades has widened in the last two months.
This year, consumers may purchase less beef due to availability, but higher prices will guide different cuts and grades to the shoppers who value them most.
