As weekly wholesale 90% lean beef prices keep rising to record highs, the difference between them and their 50% lean counterparts is narrowing.
Both products are ground into hamburger and blended to create the variety of lean-to-fat ratios seen in grocery store meat cases.
Looking at graphed prices for the two from the Livestock Marketing Information Center in Dember, it becomes clear that weekly prices for 50% lean beef are rising faster than the 90% lean.
What’s somewhat surprising, one analyst said, is that 90% lean beef prices continue to set new highs against the seasonal trend. The higher-fat-content 50% lean beef also is rising against the seasonalities, but it’s harder to see.
90% LEAN SETS RECORD AFTER RECORD
Last week’s USDA average wholesale price for 90% lean beef was $375.75 per cwt, up $1.85, or 0.49%, from $373.90 a week earlier, up $81.53, or 27.7%, from $294.22 a month earlier and up $128.20, or 51.8%, from the 2018-2022 average of $247.55.
The 90% lean beef usually peaks in price about the last week of May before declining into October where it takes a small bounce into December.
The annual peak in late spring or early summer coincides with seasonal demand for product suitable for grilling through the Independence Day holiday. It’s versatility also is a draw for many consumers who wish to use ground beef in other dishes besides grilled as hamburger patties.
But the price fluctuations are more complex than that. Supplies have a lot to do with it. In the US extra lean beef comes mostly from cull cows and bulls. More is imported from countries where feedlot finishing is less common.
As the US cattle herd has diminished over the last few years. Lean beef production has gone up as cows and bulls were sent to slaughter to trim herd sizes. But as the US runs up against an end to the available supply of cull cattle, prices will go up as production declines – if demand remains stable.
Well, demand has remained very good for 90% and 50% lean beef. There were articles in the news last week about how US beef imports were up, which shouldn’t be surprising if the US is reaching the end of its cull cattle supply and demand for the beef is strong.
50% LEAN BEEF RISING
Prices for 50% lean beef are rising as well, reversing the decline and widening spread between them and prices for 90% lean beef. The near-term bottom came the third week of May at $68.88 per cwt.
More gains are needed to match the 2023 price, but they appear to be headed that direction.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $188.00 per cwt to $198.00, compared with last week’s range of $188.00 to $200.95 per cwt. FOB dressed steers, and heifers went for $296.46 per cwt to $302.88, compared with $297.15 to $309.23.
The USDA choice cutout Tuesday was down $0.23 per cwt at $313.21 while select was down $1.67 at $296.66. The choice/select spread widened to $16.55 from $15.12 with 138 loads of fabricated product and 27 loads of trimmings and grinds sold into the spot market.
The weighted average USDA listed wholesale price for fresh 90% lean beef was $375.26 per cwt, and 50% beef was $140.92.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.56 to $1.78 a bushel over the Sep corn contract, which settled at $4.02 1/2 a bushel, up $0.02 1/4.
The CME Feeder Cattle Index for the seven days ended Monday was $257.74 per cwt, up $1.07. This compares with Tuesday’s Aug contract settlement of $258.75, up $2.35.