Meat price trends may be revealing consumer resistance, even though the holiday season is approaching, and the market may not attain to previous performance levels.
A graph of wholesale ribeye prices through Oct. 14 shows that this cut, from which the rib roast and ribeye steak are formed, remains above a year ago and well above the previous five-year average yet significantly below its early July peak. And while showing the beginnings of a seasonal price rise into late November, the market has faltered in late September and early October.
ECONOMY MAY BE PLAYING A PART
The market may be seeing the results of an economy that generates jobs but at lower wages with more part-time positions and few raises. Consumers felt good about being back to work, but the limitations of their economic status may be hampering their enjoyment of the good life.
Since peaking during the first week of July at $845.13 per cwt, boneless wholesale beef ribeye prices fell to a seasonal low of $649.11 by the last week of July. Since then, the price rose to a near-term high of $753.42 by the second week of September but fell away to test the mid-summer low.
A small price bounce since then has been unconvincing since it seemed to level in the latest reported week.
It’s likely, though, that the market is more closely following the five-year average than last year’s trend, which showed an early September hump followed by s steady rise to record highs that peaked at $806.97 the first week of December.
LATE-YEAR HIGH MAY NOT MATCH JULY PEAK
Seasonal trends are there for a reason, but this year’s holiday market may not set the annual high. If it does, price gains the next six weeks could be epic.
The average, which is meant to smooth out yearly anomalies, shows a price dip the first week of October followed by another the third week of the month. After this, the price of ribeyes ascends to its annual high.
Using the five-year average, the percentage gain from the annual low to the annual high is 42.2%. Starting at this year’s low of $567.56, a similar gain would put the annual high at $807.07, well below the actual high of $845.13, which came in July.
In addition, the average gain from the Independence Day high to the Thanksgiving high is 19.2%. Applying that to this year’s prices would mean a holiday record of $1,007.39, compared with last year’s record of $806.97.
Yet last year also showed an early summer high for ribeyes that exceeded the post-Thanksgiving average peak and still went on to set a record high in the traditional holiday period.
BOXED-BEEF STEADY
Wholesale beef prices Tuesday were about steady after being up only slightly on Monday. Rib cuts were steady to firm while chucks and rounds, the largest portions of the carcass, were weak.
The USDA reported its choice cutout value unchanged at $249.84 per cwt and select down $0.24 at $234.93. The choice/select spread widened to $14.92 from $14.67, and there were 109 loads of fabricated cuts sole into the spot market.
No trading was reported in the Plains cash markets through Tuesday. No bids were posted, but asking prices ranged from $167 to $168 on a live basis and $260 on a dressed basis.
Feeder cattle prices continue dropping with futures showing a sixth straight day of limit moves on Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was off $1.04 to $240.80. The Oct futures contract settled Tuesday at $238.95, down $1.80.