Wholesale beef prices continue to support higher-than-expected fed cattle prices, surprising many noted market analysts who saw early year declines being prophetic for the rest of the year.
Beef values have struggled a bit this week, a seasonal reaction to increased slaughter and weakening demand from grocers and restaurants getting their early April and post-Easter feature needs filled.
From the average weekly low so far this year of $188.93 per cwt the third week of February, the price for choice boxed beef rose to last week’s 223.19, a gain of $34.26, or 18.1%, in five weeks.
Seasonally, boxed beef prices should turn lower either last week or this week. Last year, the turn came last week, while the 2011-2015 average has the turn coming this week.
And if prices this year more closely follow the average then February’s low should be the low of the year. However, if prices more closely mirror last year for the rest of the year, a new low will come in the fall, most likely around October.
GAINS COME DESPITE HIGHER FED SLAUGHTER
This year’s gains in boxed beef prices have come in spite of higher slaughter of fed cattle, the very types that comprise choice beef production. Unusually strong product demand was credited with the strength.
Federally inspected weekly fed steer slaughter data shows the slaughter gains over last year and the previous five-year average using data from the USDA’s AMS and National Agricultural Statistics Service.
The weekly steer slaughter for the first week of April was 307,583 head, up 25,732, or 9.13%, from 281,851 in the same week last year and up 20,663, or 7.20%, from the five-year average of 286,920.
Fed heifer slaughter is up from last year but well below the five-year average, so inferences to the boxed-beef price aren’t as easily drawn. Weekly heifer slaughter the first week of April was 162,620 head, up 15,433, or 10.5%, from 147,187 in the same week a year ago, but down 14,380, or 9.12%, from the five-year average of 177,000.
The difference in heifer slaughter rates between this year, last year and the 2011-2015 average is that the five-year number still contains heifer slaughter during years of drought and herd liquidation.
Current demand points to firm beef and cattle prices this year, but demand is fickle.
CASH CATTLE DOWN $2.34
Average fed cattle exchange auction prices Wednesday were $2.34 per cwt lower at $130.97, versus $133.31 a week earlier.
Little trading was reported Wednesday in cash cattle markets with a dressed-basis trade of $210 per cwt reported in Iowa, steady with last week and up $2 from one sale Tuesday. Otherwise, asking prices of mostly $132 to $134 on a live basis and $215 dressed were reported.
Cash cattle markets last week were steady to up $5 with trading at $128 to $134 per cwt in the Southern Plains and up $2.50 to $5 in Nebraska at $133 to $136.50, mostly $134. Dressed-basis trading was up $2 at $212.
The USDA’s choice cutout Wednesday was down $2.65 per cwt at $216.92, while select was off $2.76 at $210.26. The choice/select spread widened to $6.66 from $6.55 with 99 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Tuesday was $133.36 per cwt, up $0.10. This compares with Wednesday’s Mar settlement of $133.30, up $0.95, and the Apr settlement of $134.40, down $1.45.