Contrary to average trends, choice wholesale beef prices are not likely to move slowly and unevenly higher for the rest of the year. There is too much production coming and too much competition from other meats for that to happen.
Some market analysts have said beef prices were near an annual low, and if beef production weren’t growing with a rising cattle population, it might be safe to say such a thing. As it is, choice beef prices will almost certainly remain under pressure for the year.
That’s not to say cattle producers and feeders should stop aiming for selling a high percentage of choice or even prime grading cattle. Such premiums still make such goals profitable, but beef in general is on the defensive.
On average, choice beef prices do climb into the end of the year, beginning with the last week of February.
Last year, however, prices made a January peak, fell away through February, rose into the third week of May, only to fall off unevenly for the rest of the year.
This year’s price trend was following last year closely through the second week of March when it peaked at $231.77 per cwt. Since then, it has diverged, moving mostly lower when prices last year continued moving higher.
Bruce Longo, boxed beef market reporter at Urner Barry, said, “Certainly grilling season has not commenced as the grills stay covered.” Beef markets since last week have seen further erosion due to stalled demand.
Certified Angus Beef “ribs and loins have devalued to the point where current prices are approaching levels seen in early 2014,” Longo said.
BEEF PRODUCTION UP TO AVERAGE AS FEEDLOTS CLEAR
Federally inspected beef production has risen the last three weeks as feedlots clear their inventory of heavy cattle. As a result, weekly beef production has risen, and now is above the 2010-2014 average at 485.8 million pounds, compared with the average of 478.54 million.
Pork production continues to decline seasonally, but remains on par with last year’s above-average level.
And weekly broiler production, at 1.004 billion pounds, is the second highest this year and is on track to surpass last year’s record of 1.022 billion.
As a result, there’s every reason to believe the beef price trend for the year will be bearish.
CASH CATTLE MARKET QUIET
Cash cattle markets Wednesday were quiet with bids of $120 per cwt on a live basis in Iowa against $124 asking prices. In dressed markets, bids were $188 to $190 with asking prices undefined.
Markets last week traded at $124 per cwt on a live basis and $195 to $197 on a dressed basis. Both were down $3 to $5 from the previous week.
The USDA’s choice cutout Wednesday was sharply lower at $204.74 per cwt, off $1.20, while select was down $1.37 at $195.65. The choice/select spread widened to $9.09 from $8.92 with 179 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Tuesday was $143.38 per cwt, down $0.16. This compares with the May settlement Wednesday of $144.92, up $1.52.