Supply Crimps Beef Cutout

Increased availability of beef resulting from higher slaughter levels appears to be taking a toll on beef cutout values.

The USDA World Agricultural Supply and Demand Estimates report Tuesday estimated total 2018 beef supply at 30.888 billion pounds, up from 2017’s 30.001 billion but not up to the 2019 estimate of 31.598 billion.  Most of the estimated supply gains came from production increases.

Buying interest also may have fallen off from a year ago as the USDA’s Agricultural Marketing Service weekly average carcass cutout value appears to have peaked earlier than last year and the 2012-2016 average and at a lower level than last year.  However, buying interest and demand are harder to measure than supply.

The USDA/AMS’s weekly beef cutout value peaked the last week of May at $23.74 per cwt.  It peaked last year at $30.38 per cwt around the first week of June, and the five-year average peak comes at $14.45, also around the first week of June.




The average monthly cutout values for the prime categories of beef, not the cuts, were up in May from April but remained well below a year earlier.

The average May value for prime beef was listed at $234.58 per cwt, up $12.81, or 5.78%, from April’s $221.77 but $61.03, or 22.3%, below the $273.55 of a year earlier.

Branded beef’s value was placed at $228.81 in May, up $10.63, or 4.87%, from $218.17 in April but $16.57, or 6.75%, below last year’s $245.38.

Choice beef’s cutout value in May was averaged at $224.25 per cwt, up $10.96, or 5.14%, from $213.29 in April but $11.73, or 4.97%, below the $235.98 of a year earlier.

May’s select cutout average came in at $205.53 per cwt, up $2.67, or 1.32%, from April’s $202.86 but down $9.86, or 4.58%, from the May 2017 average of $215.39.

The average May cutout value for ungraded beef was $196.32 per cwt, up $1.26, or 0.65%, from April’s $195.06 but down $12.60, or 6.03%, from May 2017’s $208.92.




The difference between choice and select wholesale prices usually peaks in early June.  This year, it may have peaked a bit early.  The peak was significantly above the 2012-2016 average but well below last year’s record peak.

From here, the spread usually narrows into late July where it begins the fall rally into December.  Last year, the bottom came in late August or early September with a more pronounced fall rally.

It can be surmised that the choice/select spread will put in a mid-summer low and follow with a fall rally until the Christmas and New Year’s preparations are made.  But with more beef available, only steady demand will mean weaker prices.




No fed cattle sold Wednesday on the Livestock Exchange Video Auction, versus sales two weeks previous at $110 per cwt.

Limited cash trade was reported at $180 per cwt on a dressed basis Wednesday, down $4 from last week.  More limited cash action was seen on a live basis at $110 to $112, down $3 to $4.

The USDA choice cutout Thursday was down $1.82 per cwt at $222.08, while select was off $0.33 at $201.97.  The choice/select spread narrowed to $20.11 from $21.60 with 93 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Wednesday, was $140.70 per cwt, down $0.32.  This compares with Thursday’s Aug settlement of $143.67, down $1.97.