Analysts are watching trends in the amount of beef in cold storage and what it might mean for beef prices and cattle markets.
The latest monthly cold storage report, released in late August, showed beef in cold storage totaling 401.3 million pounds. Andrew Griffith, University of Tennessee ag economist, says this is the lowest amount in cold storage in a while.
“This is the lowest quantity of beef in cold storage since November 2014, when slaughter levels were extremely low and beef prices were extremely strong,” he says.
Robust beef prices have been limiting the amount of beef in cold storage, Griffith says.
“Strong beef prices in the current market are again what is reducing the quantity of beef in cold storage,” he says. “Generally, 91% or more of the beef in cold storage is boneless beef, which is primarily made up of grinding beef. As is evident in wholesale beef prices, beef demand remains strong and continues to support higher prices.”
Griffith expects these demand and price trends to continue, keeping beef cold storage numbers lower, although he does anticipate some seasonal increase.
“This strong demand and strong prices will likely continue to result in beef in cold storage remaining below year-ago levels,” he says. “However, beef in cold storage will seasonally increase throughout the remainder of the year as cattle weights increase and more animals enter the slaughter mix.”
Looking down the road, Griffith wonders how long prices can stay so high, although he does not expect any dramatic decline, given that demand remains good.
“The big question is how long can wholesale beef prices remain at such strong levels,” he says. “The answer is not clear, but prices are not expected to collapse in the near future.”
Both the feeder cattle market and slaughter cow market have seen good prices, which has given a boost to producers selling cattle in recent weeks. Producers and analysts are sorting through seasonal trends as well as the idea that markets should remain strong late in this year and into early 2022.
“Continued strength in the feeder cattle market and the slaughter cow market has been beneficial to producers marketing cattle the past several weeks,” Griffith says. “The feeder cattle market continues to maneuver through a time period when prices are seasonally strong, but the futures market is indicating further strength in the fourth quarter of 2021 and into 2022.”
