The weekly wholesale price difference between USDA choice and select grades of beef has narrowed the last two weeks but remains wider than either last year or the 2019-2023 average.
Overall, the difference, or the choice/select spread, remains on an seasonally widening trajectory that won’t level out until late June, according to USDA Agricultural Marketing Service data compiled and published by the Livestock Marketing Information Center in Denver.
CHOICE/SELECT SPREAD EXAGGERATED
If anything, movement of the weekly choice/select spread this year has been seasonally exaggerated. It started the year at its widest point, $29.53 per cwt. This compares with $19.85 in the same week of 2023 and the previous five-year average of $11.27, a gap of $9.68, or 48.8%, and $18.26, or 162.0%, respectively.
In just two weeks in January, the weekly choice/select spread dropped to $14.80 per cwt, a decline of $14.73, or 99.5%. At this point, it was back in line with the 2024 weekly spread of $14.86 per cwt, although it remained wider than the 2019-2023 average of $9.50.
The weekly spread remained in close proximity to last year and the previous five-year average through the second week of March. At that point, the 2024 weekly spread diverged from normal and dropped to near even in the first week of April while the average spread was widening.
This year, the weekly choice/select spread began to widen at a faster pace than normal with the easing of the last two weeks just bring it back to a closer relationship to the average.
WHAT’S AHEAD
The seasonal tendency for the weekly choice/select spread to continue widening into the first weeks of summer is strong. Even last year, when the spread narrowed in the last half of March, it widened again into early July.
After the early summer peak in the weekly choice/select spread, the price difference becomes more erratic with a multi-year average showing more of the true nature of the seasonalities. Generally, the spread holds in a narrow range between $20.00 and $25.00 per cwt until late December when it narrows to less than the $20.00 support barrier. Other variations from year to year appear to be related more to events (economic, political or health-related).
It seems odd that the weekly choice/select spread would narrow in December until realizing that retailer buying interest at the wholesale level declines at this time of year. The only holidays left for retailers is Christmas and New Year’s, and nearly all of their anticipated needs are already met.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $213.21 per cwt to $213.36, compared with last week’s range of $207.38 to $214.72 per cwt. FOB dressed steers, and heifers went for $334.35 per cwt to $335.38, compared with $321.91 to $336.58.
The USDA choice cutout Monday was up $6.29 per cwt at $342.27 while select was up $5.01 at $325.12. The choice/select spread widened to $17.65 from $16.37 with 50 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 was $373.48 per cwt, and 50% beef was $109.44.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.18 to $1.30 a bushel over the May corn contract, which settled at $4.75 1/2, down $0.03 1/4.
No live cattle were tendered for delivery Monday.
The CME Feeder Cattle Index for the seven days ended Friday was $293.71 per cwt, up $3.83. This compares with Monday’s May contract settlement of $291.80, up $1.27.