USDA reported wholesale prices for 50% lean ground beef have been declining as retail sales at fast food restaurants decline, but this should not be called declining demand.
At least some of it could be laid at the feet of a decline in buying interest linked to rising retail prices for fast food, but not all of it, a market analyst said. After all The USDA’s reported prices for other major beef “cuts” remain above last year and the 2017-2021 average.
MORE PRODUCTION
Weekly federally inspected beef production last week was reported at 529.7 million pounds, up from 447.9 million in the Thanksgiving week but down from 535.4 million the week prior. This was less than the 550.9 million pounds produced in the same week a year earlier but more than the previous five-year average of 515.88 million.
Nevil Speer, president of Turkey Track Consulting in Bowling Green, KY, said weekly cattle slaughter remains strong as slaughter-ready cattle keep coming. Also, these cattle are heavy.
The USDA listed the average fed steer dressed weight at 936 pounds, two weeks ago. This was the highest for the year and up from 931 the previous week. It also was up from 930 in the same week a year ago and up from the previous five-year average of 913.2 pounds.
Fed heifer dressed weights two weeks ago averaged 854 pounds, also the highest of the year and up from 854 a week earlier, up from 853 a year ago and up from the 2017-2021 average of 841.6 pounds.
But live weights aren’t as exciting on the surface as carcass weights. The USDA listed live steer weights in Texas, Oklahoma, New Mexico last week at 1,328 pounds, up only a pound from the previous week but down from last year’s 1,342 pounds and up from the five-year average of 1,317.56 pounds.
So, with carcass weights up from comparatively steady live weights, it indicates that cattle are carrying more flesh and more fat, the analyst said. More fat means fattier trimmings and larger supplies of 50% lean ground beef.
OTHER CUTS FARING BETTER
A look at graphs of weekly wholesale prices of other beef cuts from the Livestock Marketing Information Center in Denver, it becomes a little more apparent that the decline in prices for 50% lean boneless beef is not due entirely to lower consumer demand, the analyst said. While prices for “50s” have dropped, prices for other cuts have tended to follow the average trend line and last year’s prices, but at higher levels.
Weekly quotes for some of the more expensive cuts, like boneless loin strips, have gone up, defying the average, which is steady to slightly lower.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $174.60 per cwt to $180.00, compared with last week’s range of $174.33 to $178.97 per cwt. FOB dressed steers, and heifers went for $275.29 per cwt to $279.24, compared with $278.23 to $280.42.
The USDA choice cutout Thursday was down $0.72 per cwt at $289.84 while select was down $1.07 at $258.83. The choice/select spread widened to $31.01 from $30.66 with 164 loads of fabricated product and 54 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.20 to $1.35 a bushel over the Mar corn contract, which settled at $4.87 a bushel, down $0.01.
No delivery intentions were posted for Dec live cattle Thursday.
The CME Feeder Cattle Index for the seven days ended Wednesday was $222.31 per cwt, down $1.92. This compares with Thursday’s Jan contract settlement of $210.27, down $0.12.