The end-of-year holidays are approaching, and wholesale beef ribeye prices are showing it. The annual fall push to higher prices has begun.
USDA-Agricultural Marketing Service weekly average price quotes for boneless light wholesale beef ribeye prices actually made a seasonal bottom the third week of July at $666.87 per cwt. However, it was difficult to make much of the turn since it came only a week before the 2012-2016 average.
Last year saw the wholesale ribeye price hit a seasonal bottom later than normal at $637.57 per cwt during the second week of September. From there, it had a sharp rise to an earlier-than-usual fall top at $888.07 per cwt the third week of November.
Normally, the fall top comes the first week of December. The 2012-2016 average weekly top price is $878.62 per cwt.
After the fall top, ribeye prices drop precipitously into the first week of the following January.
RIBEYES SUPPORT CUTOUT
Without holiday support from the ribeye, the USDA’s beef cutout price might be weaker. Wholesale beef chuck prices show the most fall strength with a peak in late October, but other cuts tend to be weak.
Wholesale chuck prices this year held above last year and the previous five-year average until the second week of September when they extended a weaker trend that began in late August or early September.
Given the seasonal push to an annual high in the fall, it would be reasonable to expect wholesale chuck prices to turn higher once more before fading into late December, an analyst said.
WHY THE PUSH ON RIBEYES?
But why the early push on ribeyes? After all, it’s well known that beef production is up this year, so availability should be less of a problem than in other years.
All the increase in beef production in recent weeks came from heifers and cull cows, said David Anderson, professor and Extension Economist at Texas A&M University in the LMIC’s letter to extension agents called In the Cattle Markets.
Over the last 25 years, the cattle industry has focused on production of higher quality and more consistent beef, Anderson said. This is evident in the higher percentage of carcasses grading choice and prime versus a decade or two ago.
However, some large differences in quality grade can occur from week to week, he said.
“In fact, compared to a year ago, the percent of carcasses grading choice is down 2.6 percentage points, from 73.02% to 70.42%,” Anderson said.
Retail and restaurant buyers are in the process of securing product for expected fall demand, and if they are being met with tighter supplies, prices could be pushed, the analyst said.
CATTLE, BEEF RECAP
No fed cattle sold Wednesday on the Livestock Exchange Video Auction, compared with 280 that traded six weeks previous at $109.50 per cwt.
The USDA reports cattle sold this week in the five-area range at $111 to $112 per cwt on a live basis, up $1 from last week, and at $174 dressed, steady to up $1.
The USDA choice cutout Thursday was down $0.56 per cwt at $203.86, while select was off $0.32 at $191.98. The choice/select spread narrowed to $11.88 from $12.12 with 81 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Wednesday, was $157.81 per cwt, down $0.03. This compares with Thursday’s Oct settlement of $156.97, down $0.90.