In looking for an advance hint that wholesale beef prices are set to bounce and lead the beef and cattle industry into a seasonal rally, little can be gleaned by checking out the action of individual cuts. Some may be turning up, but there is little consistency.
All cuts examined were above the average of 2009 through 2013, but this is already baked into the current market structure.
The USDA reports that the weekly wholesale price for boneless, light ribeyes last week, at $714.73 per cwt, were only slightly above the previous week’s $714.53 and $8.34, or 1.15%, below the $723.07 reported in the same week a year ago. And even if it does break above a year ago, the tendency for this cut it to move gradually higher through most of September. It could be argued that this cut has already begun to break out of the summer slump.
END CUTS MIXED
End cuts get more retail advertising play beginning in August as school lunch programs purchase cheaper, but nutritious, meats for service to students. Home shoppers also lean toward the cheaper cuts as school expenses cut into spendable income and the weather begins to inhibit grilling desires.
Weekly wholesale chuck prices, always a volatile item, moved down sharply last week to $271.25 per cwt from $305.76 the previous week, a drop of 11.3%. In doing so, chucks dropped below the $193.01 price of a year ago. It was the first time this year that chuck prices were below last year.
However, since chuck prices are so volatile from week to week, a bounce this week would fit right in with the normal pattern. There is a tendency for the average price of chucks to gain ground in September but a push by grocers to feature more pork in October causes a noticeable dip in chuck values then.
The National Pork Board at one time designated October as National Pork Month and subsidized retail advertising costs to promote pork for the month. This is no longer practiced, but many grocers are in the habit of pushing pork in October to get shoppers ready for holiday items in November and December.
Wholesale bottom round prices likely set their annual low the first week of May, which is a little early, but two weeks ago the price dipped below last year. Last week’s price increase was relatively minor but remained below last year.
LOIN PRICES FALL
Boneless wholesale loin strip prices fell to their lowest point in the year last week at $579.07 per cwt, continuing a rapid decline from a record high of $948.81 in the third week of April. This product fell below last year four weeks ago, and it appears it will remain there for another few weeks.
The five-year average has the annual peak for these middle meats coming in the last week of May as buyers recover from the Mother’s Day observance and gear up for Father’s Day and the Independence Day holiday. Once that push is done, the market fades, with a small bounce in early August ahead of the Labor Day holiday, which is considered the end of the grilling season.
CASH CATTLE MARKET QUIET
Cash fed cattle markets Wednesday remained undeveloped, with bids posted at $143 per cwt on a live basis in Kansas and asking prices of $145 to $148. Bids were scarce in Nebraska’s dressed market, but asking prices held around $236.
Prices last week were lower, with live-basis sales at mostly $145 to $148 per cwt, mostly $3 lower. On a dressed basis, cattle traded at $230 to $232, down $4.
The USDA’s beef cutout values Wednesday were higher, with the choice cutout at $232.62 per cwt, up $0.47. Select was $229.07, up $0.20. Volume was active with 140 loads of fabricated cuts being sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Tuesday was $214.89 per cwt, up $0.06, compared with the Aug settlement of $211.47, up $0.22.