Things aren’t looking too bullish for fed cattle and choice beef prices currently.
And, even if the latest downturn in beef prices is a late seasonal move, the dip below last year’s prices is somewhat concerning, said a market analyst.
BOXED BEEF LEADING
The USDA’s listed boxed choice beef cutout values last week was $383.39 per cwt, down $7.34, or 1.88%, from $390.73 a week earlier, down $10.55, or 2.68%, from $393.94 in the same week last year but up $101.66, or 36.1%, from the previous five-year average of $281.73.
Meanwhile, the USDA’s weekly five-market weighted average slaughter steer price last week was $248.01 per cwt, down $7.11, or 2.79%, from $255.12 a week earlier, but up $18.58, or 8.10%, from $229.43 in the same week last year and up $99.90, or 67.4%, from the previous five-year average of $148.11.
All of that was at a time when weekly cattle slaughter is down from last year and the 2020-2024 average. The latest weekly USDA federally inspected cattle slaughter was 458,000 head, down 79,000, or 14.7%, from 537,000 a week earlier, down 103,022, or 18.4%, from 561,022 a year earlier and down 181,144, or 28.3%, from the previous five-year average of 639,144 head.
So, if cattle slaughter is down, beef prices should be steady to higher, but they’re not. The market analyst said the only other response could be less buying interest from domestic consumers, exporters or both.
CONSUMERS SAID TO BE PULLING BACK
Many news sources have run stories about consumers cutting back on many items as inflation cooked prices higher. The Iran conflict and pinched crude oil supplies have pushed gasoline prices higher.
That pushes everything that crude oil makes higher in price from gasoline, diesel fuel, fabrics, plastics and many other items. Wages have gone up, but it hasn’t been enough.
Until recently, it seems, rising beef prices haven’t been a large deterrent to consumers as wages rose because in the broad scheme of things, beef price gains were within the scope of affordable items on a percentage basis, the analyst said.
Many have been afraid of consumer push-back against high beef prices for months, the analyst said, and the current situation of lower beef and cattle prices in the face of lower cattle slaughter may be the first inkling of just such a reaction.
It’ll be hard to tell if the current downturn in beef and cattle prices is the beginning of something bigger, the analyst said, but it bears watching and having a talk with a broker about.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $248.51 per cwt to $256.91, compared with last week’s range of $254.99 to $258.00 per cwt. FOB dressed steers and heifers went for $389.00 per cwt to $400.86, compared with $400.75 to $407.21.
The USDA choice cutout Thursday was down $2.90 per cwt at $368.388 while select was off $3.49 at $355.69. The choice/select spread widened to $12.69, from $12.10 with 123 loads of fabricated product and 15 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $459.82 per cwt, and 50% beef was $181.13.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.20 to $1.40 a bushel over the Sep corn contract, which settled at $4.41 1/2 a bushel, down $0.06.
The CME Feeder Cattle Index for the seven days ended Wednesday was $365.52 per cwt, down $3.55. This compares with Thursday’s Aug contract settlement of $346.60, down $3.35.