If inflation really is hurting consumers, beef markets don’t seem to show it.
Wholesale prices are holding strong at higher levels than the 2017-2021 average, although many cuts are running at levels that are lower than a year ago at the same time.
PRODUCTION IS AN ISSUE
In US meat markets, production often is the deciding factor in pricing. Consumer and export demand is related more directly to price than to supply since neither buyer really sees the supply. Supply rules from backstage.
Besides, demand is hard to measure. Prices can be measured. Volumes sold can be measured. But it’s hard to put a quantifiable number on demand.
Since the third week of January, US beef production has been less than the same week last year, but it has been more than the previous five-year average in all but the first week of the year, according to data from the USDA’s National Agricultural Statistics Service and plotted by the Livestock Marketing Information Center in Denver.
Last week’s federally inspected beef production was 522.1 million pounds, down 9.8 million, or 1.84%, from 531.9 million in the same week a year ago but up 13.54 million, or 2.66%, from the five-year average of 508.56 million.
WHOLESALE PRICES STRONG
Wholesale boxed beef prices remain strong as a whole. NASS’s weekly boxed beef price last week was $286.48 per cwt, up $32.78, or 12.9%, from $253.70 in the same week a year ago and up $66.96, or 30.5%, from the 2017-2021 average of $219.52.
Plotted on a line graph, weekly beef prices appear to be working counter to major price movements last year.
In a broad sense, this year’s weekly wholesale carcass price is following the seasonal trend of the 2017-2021 average. If it continues to do this, beef packers can expect to see a significant price increase beginning in April. The average goes up to the annual high the third week of May.
BETTER CUTS SHOW MORE STRENGTH
The better cuts are seeing more action in wholesale markets. Light, boneless ribeye prices, for instance, last week were pegged at $1,057.52 dollars per cwt, up $235.39, or 28.6%, from $822.13 last year and up $280.25, or 36.1%, from the previous five-year average of $777.27.
In addition, boneless wholesale beef loin strip prices last week were listed by NASS at $867.39 per cwt, up $132.26, or 18.0%, from $735.13 a year ago and up $203.78, or 30.7%, from the 2017-2021 average of $663.61.
Conversely, 18- to 33-pound bottom round prices last week came in at $257.30 per cwt, down $17.32, or 6.31%, from last year’s $274.62 but up $47.97, or 22.9%, from the previous five-year average of $209.33.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $161.55 to $167.74 per cwt, compared with last week’s range of $164.13 to $166.59. FOB dressed steers, and heifers went for $259.52 to $266.29 per cwt, versus $258.17 to $264.02.
The USDA choice cutout Thursday was down $0.32 per cwt at $283.95 while select was down $0.87 at $271.76. The choice/select spread widened to $12.19 from $11.64 with 109 loads of fabricated product and 28 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.60 to $1.70 a bushel over the May corn contract. Bids in Kansas were steady at $0.75 over May, which settled at $6.32 3/4 a bushel, up $0.06 1/4.
The CME Feeder Cattle Index for the seven days ended Wednesday was $188.71 per cwt, down $0.70. This compares with Thursday’s Mar contract settlement of $189.50 per cwt, up $1.30.