Deflated Midwestern Finished Steer Prices – 03/31/2022

Steer prices showed little impact from inflation in the first two decades of the 21st century as general price upward creep was very slow. But the recent surge in inflation has begun to impact cattle prices more robustly. The accompanying scatter studies display deflated Midwestern finished cattle values as a function of per capita domestic beef supplies. We have included the now complete January/March quarter to illustrate the deflated price/beef supply relationship in real time. The second scatter displays April/June data. 

In the period just ended deflated steer prices averaged about $4/hundredweight premium  to the regression line. The USDA forecasts second quarter average prices nearly right on the regression line. Nearby Live cattle futures prices are trading about three dollars premium to the USDA forecast for April/June of $139 (2022 prices).

 For the  near term large cattle on feed inventories will keep spring/summer cattle prices in check. Longer term the declining cattle herd inventory projected will exert a more bullish impact on the cattle futures market.