Daily and weekly choice boxed beef values are moving higher, and some market advisors are making much of the move, but the strength may not last.
Average prices remain below a year ago and the 2010-2014 average and may even surpass them sometime in December or January, but the seasonalities of the price leaders likely will fade, taking the averages along with them.
Daily choice boxed beef cutout values advanced to their highest level since late September last week, reaching $190.50 per cwt on Dec. 1. But rib and brisket primal values are the only cuts showing year-over-year increases in daily values, and rib values will fade with the new year, the LMIC said.
Chucks, rounds and short plate prices were expected to play a larger role in average cutout price movement after the first of the year, and these values currently are down 9% to 15% compared with last year at this time.
SEASONALITIES OF RIBS, LOINS
Rib and tenderloin (loin) values tend to be seasonal, tied to Thanksgiving, Christmas and New Year’s demand. This year the seasonal rally was later than usual.
Given larger beef supplies and low prices, retailers did not pre-buy items until consumer demand was more apparent and specials/features/ads were fully fleshed out, LMIC said.
As a result, rib pricing reached the highest value of 2016 on Dec. 2, of $387.26 per cwt, rallying from its lowest point of the year in October of $290.17 per cwt, and increasing 33% since mid-October.
Loin values were up over recent weeks, but have not shown strength relative to ribs, the LMIC said. Loins hit their lowest prices in mid-October as well and have climbed 6% to $234.31 per cwt over the last six weeks.
Brisket prices also have contributed to the increase in cutout over the same period. Brisket prices were up 14% since October, adding $69 per cwt.
CHUCKS, ROUNDS SHORT PLATE LOSING GROUND
Chuck, round and short plate prices have lost ground from highs set earlier in the year, moving opposite the cutout on Dec. 1. Still, chuck, round, and short plate prices are off their lows set for the year and are up 3% to 6%.
Flanks have been the only primal setting an annual low in the last six weeks. The lowest price of the year is $83.30 per cwt, set the week of Nov. 28.
Seasonally, chucks, rounds and flanks tend to be used more in winter months as roasts and stews. Short plate cuts are more dependent on export markets, which were slow in the first half of the year but picked up in the third quarter.
CASH CATTLE MARKETS QUIET
After selling in the Superior auction last week at an average of $112.48 per cwt, in a range of $112.75 to $114.25 in the south and at $110 to $113.25 in the north, cash action got underway at $113.25 to $115.50 on a live basis. Dressed-basis trading was reported at mostly $175.
The previous week cattle sold at mostly $112 per cwt live and $170 dressed.
The USDA’s choice cutout Tuesday was $0.88 per cwt lower at $190.51, while select was unchanged at $173.23. The choice/select spread narrowed to $17.28 from $18.16 with 88 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Monday was $131.07 per cwt, down $0.17. This compares with Tuesday’s Jan settlement at $126.85, up $2.52.