Slaughter cow prices are up and challenging June’s record highs after a brief decline in the first week of July as fewer cows come to market amid a desire to rebuild the nation’s herds.
The latest USDA prices for 85% to 90% lean Southern Plains slaughter cows was $117.97 per cwt on a live basis. This is up 50.18% from last year’s $78.55 and 88.75% from the five-year average. What’s more, the trend is upward while the seasonal trend is lower.
A consequence of fewer cows coming to slaughter is a steep rise in boneless beef prices. Ninety percent boneless beef prices have been above year-ago and average levels all year and have marked two distinct rallies to new highs this year.
The first rally occurred from the last week of February when fresh, 90% lean wholesale boneless beef prices jumped 6.01% in one week to $243.13 per cwt from $229.34. From there, prices rose 8.70% to peak at $264.28 the last week of March.
Prices then slid 7.78% to the most recent bottom of $243.72 before rising 19.86% to the latest peak of $292.36. The latest high, is 46.03% higher than the $200.21 level reported in the same week a year ago and is 64.65% above the five-year average.
Fifty percent boneless beef also is above a year ago and the average, although not as dramatically, as more 50% lean beef is available via fed cattle slaughter. Prices have held in a sideways pattern since late April when they passed above $120.00 per cwt. Since then, the market has held between $120.00 and $134.04, only breaking this sideways top in the latest week with an 11.26% pop to $137.05 from $123.44.
The latest rally in 50% lean beef puts prices 24.36% above year-ago levels of $110.20 and 83.62% above the five-year average.
END CUTS ALSO STRONG
As the industry searches for grinding beef, the price of end cuts also has risen and is above a year ago. The USDA’s latest weekly price for boneless two-piece wholesale beef chucks is $283.59 per cwt, 25.89% higher than last year’s $225.26 and 55.86% higher than the average of $181.95.
The trend in chuck prices is upward but at a steeper angle than the average.
Wholesale bottom round prices also are up sharply from last year and the average, although they took a dip in the latest week. The last reported week price for 18- to 33-pound bottom rounds was $248.18 per cwt, 35.84% higher than last year’s $182.70 and 47.24% above the five-year average.
MIDDLE MEATS NOT AS STRONG AFTER HOLIDAY
But while lean beef and end cuts show unusual strength, middle meats are taking a hit after the Independence Day holiday. Boneless, light ribeyes are a good example. Because of lower slaughter rates and lower availability of slaughter cattle, prices for this grillable item rose to a record weekly high of $845.13 per cwt the first week of July. However, since then, they have dropped 14.44% to $723.07.
The rise and fall followed the seasonal path but at much steeper angles. Prices remain well above year-ago and average levels, and given tight supplies of cattle and beef in cold storage likely will remain so. Besides Labor Day and then year-end holiday demand is nearing.
CASH CATTLE TRADE QUIET
No fed Cattle trading was reported in the Plains yet this week, but bids are near $156 per cwt on a live basis and $255 to $256 dressed. Last week, cattle traded at mostly $155 to $156 with instances of $157 live and $244 to $248 dressed.
IN OUR OPINION
–Polls show feeder cattle placements into feed yards in June likely declined about 3.4% as healthy pastures allowed extended grazing. There is no reason to argue with this unless it would be to think the decline could be even greater.
–Rising transportation costs as carriers prepare for a bumper harvest likely is limiting farmer selling interest of old crop. This could come back to bite if Allendale Inc.’s estimate of a 174.1-bushel corn crop is anywhere near accurate.
–Predictions for a summer surge in fed cattle supplies based on first-quarter placements have not panned out, and may not. Feedlot managers may have stretched out gains to avoid such an event.
–China’s flash Manufacturing PMI, at an 18-month high of 52.0, beat trader expectations and could be good for imports.