Beef To Continue Struggling

Tuesday’s USDA Cold Storage report reconfirmed that beef likely will continue to struggle for market share for some time.

The report showed total stocks of beef in US freezers on Nov. 30 amounted to 510.5 million pounds, up 4.6 million, or 0.91%, from 505.9 million on Oct. 31, and up 109.7 million, or 27.4%, from a year ago.

Fed steer dressed weights are declining seasonally, and futures traders used this as leverage to take the market sharply higher Tuesday for a third straight session.  However, it’s likely a seasonal decline in carcass weights will take a long time to make much of a difference in all but the fresh meat market.

Fed steer dressed weights tend to peak in late September or early October and decline gradually until February when they fall more rapidly into the annual bottom in late April.

Last year and this year, the weight trends have followed the pattern, although at an increasingly high level.  And, because this year’s markets were so unprofitable and volatile, dressed weights have tended to be more variable.

That is why many market analysts missed the significance of the annual turn lower in early October.  That, and the fact that last year’s weights did not turn lower for the winter until early December.




Since carcass weights peaked in early October, it might have been assumed that beef stocks would see a decline by Nov. 30.  Clearly, the USDA numbers show otherwise.  Beef demand has sagged along with the lower dressed weights, allowing cold storage stocks to mount.

Meanwhile, the amount of pork in cold storage extended October’s steep decline as average pork prices remained below last year in all but one week in January and in all but two weeks of the 2009-2013 average.

The steep decline in cold-storage pork supplies can be laid at the feet of lower ham supplies.  With lower prices for hams, consumers did what they do best by opting for what they perceived as a better value for their holiday meats, cutting in-store ham supplies by 56% from October.  Besides the turkey, consumers took home hams to serve their families.

But even at that, total frozen pork supplies remain above a year ago and the previous five-year average by 14% and 10%, respectively.

It could be argued that pork inventory declines similar to October and November could take Dec. 31 stocks below last year and the five-year average, offering further pressure to beef prices.  But this argument ignores the strong seasonal trend toward a leveling in total pork stocks during December.

Beef demand may increase in December as retail grocers prepare for the post-holiday winter doldrums when roasts and ground beef are the targets of many shoppers, but the amount of red meat in cold storage may hang over the market like a black cloud.




Cash cattle markets Tuesday traded lightly at $122 to $124 per cwt on a live basis, up $4 to $6 from last week.  No dressed-basis bids or offers were reported.

Feedlot showlists were sharply lower in Texas and Kansas, possibly giving sellers a little price leverage this week.  Plus, at least one packer was searching for cattle ahead of a winter storm that is forecast for the Plains over the next few days.  The approaching Christmas holiday when traders disappear also may be involved in the decision to bid higher on Tuesday.

Cattle markets last week were active with trade spread out over four days.  Prices were mostly $117 to $118 per cwt on a live basis and $184 to $188 on a dressed basis.

The USDA reported mixed wholesale beef prices Tuesday with choice up $0.25 per cwt from Monday to $191.53, and the select cutout off $0.28 at $183.65.  The choice/select spread widened to $7.88 from $7.35 on Monday, and there were 178 loads of fabricated product sold into the spot market.

The USDA said chucks and rounds were steady to firm while choice ribs were lower with select ribs steady.  Choice loins were steady with select product lower.  Trimmings were steady.

The CME Feeder Cattle Index for the seven days ended Monday was $151.03 per cwt, up $0.97.  This compares with the Jan settlement Tuesday of $158.65, up $3.15.