The cattle industry, like everyone else, is more than ready to move past 2020 and into a new year. While the industry will start the year with a new slate, there are numerous factors in place that will shape markets for, at least, the first few months of 2021. Cattle markets face a mix of opportunities and challenges as the New Year begins.
The pandemic continues and seems likely to face the worst conditions to date in the next few months. For cattle markets, this means a continuation of a limited food service sector and more challenges in food product markets. Boxed beef prices at the end of 2020 were just about exactly equal to one year earlier but that obscures the continuing variation in food service and retail grocery product demands. Primal chuck and round prices were higher year over year along with ribs, while loins were down. Food service dependent products continue to be noticeably affected by limited demand with, for example, prices for tenderloin down 14 percent; Petite tender prices down 25 percent and brisket prices down four percent, while strip loin steaks (popular in retail grocery) are up 12 percent year over year. Overall beef demand has been, and continues, strong but the challenges to food supply chains will continue.
Cattle prices struggled through much of 2020 but ended the year with some momentum. Calf prices in Oklahoma were close to year earlier levels at the end of December and increased nearly 20 percent from lows earlier in the fall. Prices for heavier feeder cattle remained about 7 percent below year earlier levels at the end of the year but similarly increased roughly 13 percent from fall 2020 lows. Fed cattle prices finished the year with strength that represented a roughly 18 percent increase from summer lows but were more than 8 percent lower year over year.
Strong beef demand and tightening cattle supplies provide cautious optimism for cattle markets in 2021. Higher feed prices and continuing drought conditions are threats to individual producers and perhaps to overall market conditions in the coming year.