Boxed beef cutout values, as defined by the USDA, are caught in a range and holding at higher levels than last year or the 2017-2021 average, according to USDA data processed and published by the Livestock Marketing Information Center in Denver.
Being caught in a range at this time of year is fairly common when looking at the five-year average. What’s new is the much higher price range.
HIGHER PRICES
Last week’s average price for choice 600- to 900-pound carcasses was $301.35 per cwt, up from $299.94 a week earlier and up $55.04, or 22.3%, from $246.31 in the same week last year and up $79.17, or 35.6%, from the previous five-year average of $222.18.
Weekly negotiated choice boxed beef prices tend to flow within, or very near a $20-per-cwt price range from $220 to $240 per cwt through the last six months of the year. This follows a May/June spike that adds another $60 to $80 per cwt to the weekly price.
Last year, there was no May/June price spike, the USDA data showed. The highest price came in the first week of February at $290.97 per cwt followed by a decline to $253.70 by the second week of March. Prices tended to drift sideways to lower for the rest of the year with the exception of a price spike in December.
This year’s price spike came in June when the weekly choice beef cutout reached $339.93 per cwt followed by a decline to $304.07 in early July. Prices have remained in this $20 range ever since.
PROSPECTS
Meat traders may get frustrated if prices hold within the current price range, as they are liable to do without some event popping them up or down out of the range. It will seem as though nothing much is happening when many expect seasonal beef demand to heat up ahead of the holidays.
However, if seasonal demand had a large influence on wholesale beef prices, traders might expect a spike in seasonal boxed beef prices, a market analyst said. However, the seasonal demand tends to come from the middle meats and trimmings, which go into hamburger.
To be sure, hamburger is popular at any time in the year because of its versatility, and middle meat prices trend higher ahead of the year-end holidays as some families feature a rib roast or steak for at least one of their holiday meals. Brisket also is common in some ethnic holiday recipes.
But middle meats get the attention in the last quarter because of the holiday demand. It’s just that the middle-meat demand and buying interest in some of the more pedestrian cuts tend to balance out when it comes to the weekly cutout.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $183.66 per cwt to $184.50, compared with last week’s range of $182.00 to $185.26 per cwt. FOB dressed steers, and heifers went for $289.25 per cwt to $289.34, compared with $285.29 to $291.98.
The USDA choice cutout Monday was up $3.87 per cwt at $304.67 while select was up $1.71 at $277.20. The choice/select spread widened to $27.47 from $25.31 with 79 loads of fabricated product and eight 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 $1.30 to $1.45 a bushel over the Dec corn contract, which settled at $4.90 a bushel, down $0.03 1/4.
No live cattle contracts were posted for delivery Monday.
The CME Feeder Cattle Index for the seven days ended Friday was $248.26 per cwt, down $1.85. This compares with Monday’s Oct contract settlement of $248.32, down $1.55.