US domestic beef demand remains strong with the rib and loin primals the heroes of the day.
Andrew Griffith, agricultural economist at the University of Tennessee, wrote in the “Tennessee Market Highlights” that “there is no doubt consumer demand for middle meats is beginning to hit its stride as spring and summer like temperatures have people on the patio grilling choice grade beef.”
For the second week of May, wholesale beef ribeye prices were listed at 856.60 cents a pound, up 13.11, or 1.55%, from 843.49 cents the previous week. The latest price, however, was down 46.13 cents, or 5.11%, from 902.73 cents in the same week a year earlier but up 143.80 cents, or 20.2%, from the 2012-2016 average of 712.80.
While there almost always is a spring rise in demand for the ribeye, last year’s price pattern showed a significant increase over the average. The weekly wholesale ribeye price last year peaked at 769.10 cents the third week of June.
After that, the price fell sharply through July.
QUARTERLY RETAIL DEMAND INDEX UP
It might be expected that consumer demand would remain strong enough to push prices up near last year’s peak. The LMIC’s quarterly retail all fresh beef demand index for the first quarter of this year showed an increase to 92 from 88 in the first quarter of 2017.
The LMIC’s index uses Bureau of Labor Statistics data along with data from the USDA’s Economic Research Service.
The latest demand index reading, however, is down a bit from the fourth quarter of 2017. In the 2017 quarter, the index was listed at 94, compared with the 92 of the 2018 first quarter.
DEMAND WIDENS CHOICE/SELECT SPREAD
The spring grilling season is one of the primary reasons the choice/select spread begins to widen, Griffith said.
Another reason is a seasonal increase in the number of fed cattle grading select, he said.
“Moving from March into April, the five-year average increase in cattle grading select was 1.8% while the increase from March to May is only 1.3%,” Griffith said.
Select beef production increased nearly 2.2% from March to April, which likely will continue widening the spread, Griffith said. He thought the number of cattle grading select in May will exceed the five-year average, but he said a couple more weeks of data are needed.
Another market analyst said the sudden increase in the demand for choice beef over select could be linked to the US economic recovery. It is very possible that another recession could prevent such an extreme widening of the spread at that time.