SPRING HILL, Tenn. – Finished cattle prices remained strong going into the first week of trade for 2022, and are trading with a positive basis relative to February live cattle futures, according to Andrew P. Griffith, University of Tennessee associate professor of agricultural economics.

“A positive basis is good for cattle feeders as they are enjoying profitable prices, and any of those who hedged cattle may be able to collect a little on the futures market as well,” he said.

But he said prices will probably not see much action until the spring when prices seasonally strengthen in April and May.

“The downside to this story is that prices are expected to soften for finished cattle over the next few weeks, based on the futures market,” he said. “Softer prices the next few weeks may or may not be realized as prices are not expected to move much one direction or the other.”

Based on weekly data, however, he said federally-inspected beef production in 2021 was about 3 percent higher than 2020.

“With increased beef production and higher wholesale and retail beef prices, it is fairly easy to conclude that beef demand has strengthened over the past year, which is really saying something, considering the increase in beef demand from 2019 to 2020,” he said.

Whether the increase in beef demand can be attributed to COVID-19 or not would take some statistical work, he said, but the increase in beef demand does coincide with the start of the pandemic.

“It appears one of the worst health challenges in recent memory has been a good thing for moving beef products,” he said. “The shutdown of restaurants led to an increase in at-home consumption of food and less travel.

“Thus, consumers had more disposable income for food with the reduction in travel expenses and food consumed away from home,” he added. “As restaurants and travel have slowly opened, it appears consumers have maintained purchasing beef items for at-home consumption with their recently acquired cooking talents.”

He said week-to-week trends were not able to be established toward the end of last year due to most markets being closed in observance of the Christmas and New Year’s Day holidays.

In addition, he said feeder cattle and slaughter cattle marketings were relatively light a couple weeks ago in Tennessee due to multiple snow events that moved across the region.

“These snow events prevented producers from being able to get trucks and trailers in pastures, as well as making it difficult to travel many of the roadways,” he said.

“Despite these challenges, a few cattle were traded through the weekly auction markets,” he said. “Given the light test, 525-pound steer prices appear to be heading toward the $165 per hundredweight mark, while 575-pound steer prices are not far behind, and near $160 per hundredweight,” he added. “These prices are certainly higher than the last week of trade in December, which bodes well for higher prices moving through the next 90 to 120 days.”

He said the higher prices on a light test are not a surprise, given the strength feeder cattle futures displayed the last few weeks.

“The only hiccup in feeder cattle futures occurred (the first week in January) when corn futures expressed some interest in increasing,” he said. “Similar to the feeder cattle market, the slaughter cow market is showing signs of strength and gaining momentum.

“Both slaughter cattle and lightweight calf prices would typically be expected to seasonally increase as the market approaches spring calving and the spring stocker grazing season, which seems certain to occur,” he added.

However, he said the price increase is shaping up to be stronger than the seasonal tendency.

“Lightweight calf prices could easily push as high as $180 per hundredweight by the end of March and early April, while slaughter cow prices may push the $75 per hundredweight price mark,” he said.