Wholesale beef prices have moved higher so far this year, reflecting strong beef demand and typical seasonal patterns, said Derrell Peel, Oklahoma State University Livestock Marketing Specialist, in a letter called Cow-Calf Corner.
Choice boxed beef prices averaged $386.41 per cwt the first week of March, up 9.1% from the beginning of the year, and up 23.0% year over year, he said.
A NORMAL INCREASE
Boxed beef prices normally increase through the first half of the year, peaking in June before declining to the end of the year, Peel said. They usually begin to increase more sharply in April as retailers build inventories for the coming summer demand that begins in late May.
The average seasonal price index indicates boxed beef prices typically increase by more than 11% in the first half of the year, he said. This year, boxed beef prices have already increased more than 9%, earlier than usual.
It is not clear if boxed beef prices will increase more than seasonally this year or simply move to seasonal peaks sooner than usual, he said. Either is possible.
A composite seasonal price pattern of boxed beef cuts showed the peak in late spring to early summer, Peel said. The boxed beef seasonal price pattern is the net effect of many beef products included in the composite boxed beef measure.
THERE ARE DIFFERENCES
Across many beef products from the various carcass primals, different beef products have varied and unique seasonal price patterns reflecting different seasonal demands, he said. While many beef product prices increase early in the year, some have lower prices early and higher prices later in the year.
High-value middle meats drive much of the seasonal increase in boxed beef values, Peel said. Strip loins lead the seasonal increase with the most variable seasonal pattern of any wholesale beef product, increasing an average of 30% from January to May. Strips are a popular summer grilling item as well as for restaurant menus.
Ribeye prices also increase modestly in the first half of the year because of seasonal retail and food service demand, he said. Tenderloins are more popular for food service menus and the seasonal bump in the second quarter may be because of Mother’s Day demand. Prices of these steak items drop in the heat of summer with Ribeye and Tenderloin demand rebounding to seasonal peaks in the fourth quarter from restaurant and holiday buying.
Brisket prices typically increase and peak in the second quarter with stronger summer demand, Peel said. Round values have been very strong the last two years as a result of declining non-fed beef production and demand for additional lean beef.
Round prices typically are strong from the second quarter through the third quarter as a result of seasonal ground beef demand, Peel said. Prices for chuck rolls usually decrease into warmer weather. Chuck products have higher demand for roasts and crock pot cooking in cooler weather with prices reaching a seasonal peak in the fall. Chucks also are popular export items.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $235.00 per cwt to $238.55, compared with last week’s range of $234.91 to $248.00 per cwt. FOB dressed steers and heifers went for $369.65 per cwt to $372.04, compared with $369.34 to $377.44.
The USDA choice cutout Wednesday was down $8.22 per cwt at $391.69 while select was up $0.99 at $395.49. The choice/select spread went negative at a minus $3.80 from plus $5.41 with 105 loads of fabricated product and 18 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $440.52 per cwt, and 50% beef was $193.94
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $0.90 to $1.05 a bushel over the May corn contract, which settled at $4.67 1/4, up $0.04 3/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $361.7859 per cwt, up $0.19. This compares with Wednesday’s Mar contract settlement of $361.87, up $1.57.