Choice beef cutout prices jumped last week in what could be the beginning of an annual price spike, but something isn’t normal.
The Livestock Marketing Information Center graphed the weekly USDA-reported boxed beef prices. The 2018-2022 weekly average choice cutout price graph shows a definite price peak last week at $299.07 per cwt. This compares with last week’s average price of $306.74 per cwt.
A SMALLER PEAK?
The two are very close, only separated by $7.67, or 2.56%. And, this year, there was no lead-up to last week’s cutout price, if, indeed, it was the annual peak.
The weekly choice beef cutout price this year has tended to follow the trend of last year into last week with the price in most weeks higher than that of the same week in 2023. The graph line is nearly range-bound with only a slight upward slant.
If this year’s price is to continue following last year’s lead, the annual peak will come within the next month. Last year, it came in the third week of June.
However, if last week’s rally peters out, the spring high price for the choice beef cutout could have been set the third week of March at $312.88 per cwt.
MAYBE NOT ALL BAD
But the beef cutout continuing through the year in a more-or-less sideways pattern would not be all bad for the product. The 2018-2022 average shows the beef cutout falling after the spring peak by $68.95, or 23.1%.
From there, the price slides sideways with an upside breakout the last week of August at $257.31 per cwt.
So, holding the weekly choice cutout price at a point near $300.00 per cwt for the rest of the year could be supportive to fed cattle prices.
LEADING PRODUCTS
Leading the charge to price firmness for the beef cutout are the usual culprits like ribeyes and loins. Like the cutout as a whole, wholesale ribeye prices this year have followed last year’s trend rather than the previous five-year average.
A spring rally may be late and masked by demand for the Independence Day holiday. A spring demand rally also could be obscured by a cut in slaughter and beef production if feedlots’ front-loaded supplies get cleaned up, because when this happens, fed cattle supplies could become very tight, crimping slaughter rates and beef production to boost prices from the supply side.
A surprising outlier in this is the price of 90% lean beef, which doesn’t figure in the choice beef cutout. Prices for this lean product keep setting record highs with no hint that prices will decline seasonally after June.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $184.00 per cwt to $194.17, compared with last week’s range of $184.00 to $189.52 per cwt. FOB dressed steers, and heifers went for $289.67 per cwt to $295.90, compared with $289.94 to $295.35.
The USDA choice cutout Thursday was down $2.33 per cwt at $309.84 while select was up $0.47 at $300.08. The choice/select spread narrowed to $9.76 from $12.56 with 95 loads of fabricated product and 19 loads of trimmings and grinds sold into the spot market.
The weighted average USDA listed wholesale price for fresh 90% lean beef was $352.57 per cwt, and 50% beef was $81.83.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.38 to $1.50 a bushel over the Jul corn contract, which settled at $4.64 a bushel, up $0.02 3/4.
The CME Feeder Cattle Index for the seven days ended Wednesday was $248.81 per cwt, up $0.37. This compares with Thursday’s May contract settlement of $250.32, down $0.05.