Low wholesale prices for beef and seasonal consumer preferences appear to be showing up in this week’s beef price quotes from the USDA, but such gains are not readily apparent.
Seasonal demand for certain cuts is bloating their prices at the wholesale level while leaving the seasonally less-desirable cuts languishing. This is helping to support the beef cutout at the end of the week, which in turn is helping to support cattle futures traders’ ideas of a market turn.
For the five business days ended Thursday, the choice composite price is down $1.78 per cwt, or only $0.86%, to 204.97 from $206.75. However, in between these dates, the choice value slipped to a low of $203.36 on Wednesday, from which it rallied $1.61 on Thursday.
Select beef remained sluggish as its composite fell $5.38 per cwt, or 2.65%, to $198.00 on Thursday from $203.38 the previous Friday. The select cutout also ticked upward on Thursday but only by $0.26.
The spread between prices for choice and select beef widened during the week to $6.97 from $3.37 on Friday. Since many consumers like a choice or prime rib roast for the Thanksgiving or Christmas holidays, this widening of the choice/select spread is just what would be expected.
CUT COMPARISONS SHOW SEASONAL DEMAND
With that consumer desire for high-eating-quality beef cuts in mind, a look at wholesale beef price quotes from the USDA should reveal a strengthening of specific cuts at the expense of other, more pedestrian cuts.
Wholesale prices for ribs rose $13.59 per cwt, or 4.56%, during the week, hitting $311.34 on Thursday, from $297.75 on Friday, Oct. 2. Ribs hit their low of $296.56 on Monday, rose to $300.36 on Tuesday, dipped to $300.28 on Wednesday then jumped $11.06 on Thursday.
Prices for all other major primal cuts are down for the week, although loins showed some fire Thursday, rising to $276.68 per cwt from $273.57 on Wednesday, a bump of $2.11, or 0.77%. This primal, from which many steaks are cut, almost always has a smaller rally into the holiday season.
Wholesale prices for other cuts that aren’t associated with holiday gatherings are floundering. The chuck, at $172.17 per cwt on Thursday, was down $0.24 for the week and unchanged from Wednesday.
The round was reported Thursday at $182.68 per cwt, down $1.49, or 0.81%, from $184.17 last Friday. And chuck prices were nearly flat for the week, ending Thursday at $172.17.
TRIMMINGS ALSO SHOULD STRENGTHEN
Prices for beef trimmings also strengthen during the fourth quarter, although the seasonal tendency is less pronounced. Consumers who are shopping for the holidays eat at fast-food restaurants more often, and this usually means a hamburger.
But wholesale price gains for trimmings can be thwarted by increasing supplies from slaughter cows, increased imports and from grinding cuts that aren’t selling well.
Imports of grinding beef are up as thanks to a strong US dollar, but demand needs to rise and take prices higher before other cuts are ground up.
CASH FED CATTLE TRADE QUIET
Only widely scattered fed cattle sales were reported in the Plains and western Midwest this week – not enough quality cattle for a market test. Asking prices range from $126 to $130 per cwt on a live basis, but no bids higher than $118 were heard.
In dressed markets, packer buyers were bidding $199 per cwt with offers to call the head buyer on offers down to $200.
Live-basis cash prices last week plunged $10 to $12 to $116 to $124 per cwt. Dressed-basis sales were at $187 to $190, down $12 to $14.
The CME Feeder Cattle Index for the seven days ended Wednesday was $183.43 per cwt, up $1.16 on the day. This compares with the Oct settlement Thursday of $187.87, up $2.92.