With ever-tightening cattle and beef supplies pushing prices higher, all eyes are on beef demand going forward, said Derrell Peel, Oklahoma State University Extension livestock marketing specialist, in a letter called Cow-Calf Corner.
Beef demand has been remarkably robust through many shocks in recent years and continues to surprise and impress despite the nervousness of the industry to the challenges facing consumers, Peel said.
EXCEPTIONAL BEEF DEMAND
Post-pandemic beef demand has been exceptional since 2021. Per capita beef consumption in 2022 was 58.9 pounds, equal to 2021, he said. All while real (inflation-adjusted) retail all-fresh beef prices were record high in 2021 and just slightly lower in 2022.
That compares to 2015, when real retail all-fresh prices reached the same level but with per-capita consumption at 54.0 pounds, 8.3% less than 2021-2022.
So far in 2023, retail all-fresh beef prices have continued to increase, especially since July, with September at $7.82 a pound, a record-high monthly retail price, Peel said. Retail all-fresh prices have averaged 6.6% higher year over year (4.0% higher in real dollars) in the July-September period.
Since July 4, weekly choice boxed beef prices have averaged $307.16 per cwt, ranging from a low of $299.94 to a high of $321.97, he said. Choice boxed beef prices have averaged 18.4% higher year over year through the third quarter.
With beef production projected to be down more than 5.5% year over year, per capita beef consumption is expected to decease to 57.0 pounds this year, Peel said.
TENDERLOINS, RIBEYES STEADY
Tenderloin and Ribeye, the two highest value cuts have held steady through the year and are beginning to increase seasonally into the fall, he said. Tenderloin prices have been especially firm in comparison to other top-shelf cuts. Top butts have been the lowest priced items.
Other steak items that are seasonally highest for summer grilling, including strip loins, sirloin and tri-tip have decreased from summer highs, but generally are following normal seasonal patterns.
Weekly choice wholesale chuck and round products generally held steady through the first half of the year and are increasing in the second half, Peel said. This likely reflects seasonal tendencies and tightening supplies.
It is common for roast items to increase when cooler weather brings out the crock pots, he said.
There certainly are plenty of macroeconomic and geopolitical uncertainties to keep the industry nervous about beef demand, Peel said.
However, the increasingly high quality and consumer preferences for beef continue to be reflected in strong beef demand, he said. These factors, combined with tightening beef supplies, likely will keep wholesale and retail beef prices strongly supported in the coming months.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $179.05 per cwt to $186.00, compared with last week’s range of $180.60 to $187.95 per cwt. FOB dressed steers, and heifers went for $284.10 per cwt to $292.15, compared with $290.71 to $293.89.
The USDA choice cutout Thursday was down $1.61 per cwt at $294.72 while select was off $0.20 at $267.65. The choice/select spread narrowed to $27.07 from $28.48 with 107 loads of fabricated product and 30 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 $1.35 to $1.40 a bushel over the Dec corn contract, which settled at $4.74 3/4 a bushel, down $0.04.
The CME Feeder Cattle Index for the seven days ended Wednesday was $228.70 per cwt, up $0.41. This compares with Thursday’s Nov contract settlement of $229.37, down $0.05.