Boxed beef values this week are defying seasonal norms – moving higher when they should be declining, causing futures markets to rise and challenge contract highs.
The USDA reported its choice cutout value Tuesday at $252.80 per cwt, a gain of $2.28 on the day and the second straight increase this week. It falls $0.01 short of getting back to prices seen a week ago.
The USDA’s select cutout was reported at $245.79 for a daily gain of $1.71. It continues an uneven trend higher, ending up $2.33 for the week.
The USDA said Tuesday’s gains were based on good demand and moderate offerings.
Weekly slaughter last week was estimated at 577,000 head, barely above the previous week’s kill of 576,000. That followed a holiday-shortened weekly slaughter of 492,760 head.
Weekly slaughter also falls short of last year and the five-year average. Slaughter last year was 653,100 head, compared with the average of 656,260.
In addition, since slaughter weights are following last year very closely, beef production is running in line as well, meaning beef production and demand may be pretty well matched currently.
There were predictions that increased first-quarter feedlot placements would depress beef and slaughter cattle prices by now, but that is not what is happening. Even last week’s dip in the choice cutout was marginal in terms of following a predicted consumer backlash once the Independence Day holiday was past.
And time is running out for a summer dip. A weekly graph of the choice beef cutout value shows a seasonal inclination for a bounce the first week of August as Labor Day and school lunch program buying begins anew. That’s only two weeks away, and beef this week is stronger so far.
CHICKEN CONSUMPTION UP 17% IN TWO YEARS
However, even while beef prices remain strong, indicating resilient consumer demand in spite of higher prices, more chicken is crossing consumer plates, according to research by the National Chicken Council.
Presented at the Council’s Chicken Marketing Seminar in Greensboro, GA., the research showed the number of meals or snacks that contained chicken eaten by survey respondents in the two weeks prior to the survey was 6.1, up 17% from 5.2 in a 2012 survey.
Millennials, those ranging from 18 to 34 years of age, were most likely to eat chicken meals or snacks. This age group should be some of the largest consumers of meat products.
What’s interesting is that respondents did not list price as the main reason for choosing chicken. Health and nutrition along with taste topped cost as a reason for consuming more chicken.
CASH CATTLE TRADE QUIET
Fed Cattle trading in the Plains remains quiet at midweek as cattle owners expect higher prices following Tuesday’s limit-up session in Aug futures Tuesday, which, in turn, were sparked by higher beef prices reported by the USDA.
No bids were posted by packer buyers through Tuesday as seller expectations rose along with futures.
Asking prices also were hard to find, but most analysts expect them to surface at around $158 to $160 per cwt on a live basis and at $250 or more on a dressed basis. Last week, cattle traded at mostly $155 to $156 with instances of $157 live and $244 to $248 dressed.
FEEDER CATTLE CONTINUE UPTREND
Feeder cattle prices continue to rise, keeping many potential buyers sidelined. Expectations for lower numbers, strong live cattle futures prices and continued declines in corn prices were cited by traders for the strength.
The CME Feeder Cattle Index for the seven days ended Monday was $210.48, down $0.40. This remains below Tuesday’s Aug futures settlement of $216.02, up the daily limit of $3.00.