Time might be running out on this year’s beef prices as the consumer price index keeps rising, a market analyst said. It’s possible, the product could price itself out of reach for many potential buyers if things keep going as they are.
Consumer prices for all items were up last year from the 2015-2019 average, and this year’s CPI is up from that and rose steadily through May, according to data from the Bureau of Labor Statistics that was compiled, graphed and published by the Livestock Marketing Information Center in Denver.
The CPI for meats in May was close to last year when beef prices still were being pushed higher by shortages caused by plant closures and labor issues stemming from the COVID-19 pandemic. The meats index was rising in May, and while it could fall short of June 2020’s index this year, there is no indication of it falling off just yet, the analyst said.
ALL-ITEMS INDEX UP AND RISING
Using 1982-1984 as the base, the all-items index in May was 269.195. This was the highest reading this year and was up 2.141, or 0.81%, from April’s 267.054, up 12.801, or 4.99%, from last year’s 256.394 and up 23.104, or 9.39%, from the previous five-year average of 246.091.
Using last year and the previous five-year average as a guide, the CPI should level after June, although last year, it was August before the Index returned to a more normal pattern, even if it was at a higher-than-average level.
FOOD AND BEVERAGES INDEX ALSO UP
The CPI for all food and beverages also was up in May to a reading of 273.441. This was up 1.074, or 0.39%, from 272.367 in April, up 5.649, or 2.11%, from 267.792 a year ago and up 22.678, or 9.04%, from the previous five-year average of 250.763.
The CPI for meats in May was 285.991, up 5.046, or 1.80%, from April’s 280.945 but down 0.194, or 0.07%, from last year’s 286.185. However, it was up 31.216, or 12.3%, from the 2915-2019 average of 254.775.
It’s not fair to compare the CPI to last year any time between April and September because of the COVID effect on the economy and the availability of goods, the analyst said. And an argument could be made that comparisons with last year at any time after March are invalid since many restaurants were closed for the pandemic, and consumers had shifted eating habits.
But this year’s Meats CPI picked up where 2020 left off and has continued to rise. It would be reasonable to expect the index to level out over the next couple of reporting months.
CATTLE, BEEF RECAP
Fed cattle traded this week at $120 to $125 per cwt on a live basis, steady to down $1.50 from last week, and at $196 to $198 on a dressed basis, down $2 to $5.
The USDA choice cutout Wednesday was down $1.78 per cwt at $284.90, while select was off $1.23 at $262.08. The choice/select spread narrowed to $22.82 from $23.37 with 131 loads of fabricated product and 27 loads of trimmings and grinds sold into the spot market.
The USDA reported Wednesday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.07 to $1.15 a bushel over the Sep futures and for southwest Kansas were unchanged at $0.70 over Sep, which settled at $5.42 3/4 a bushel, down $0.09 1/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $145.72 per cwt down $0.63. This compares with Wednesday’s Aug contract settlement of $159.00 per cwt, down $1.62.