It looks like beef demand is holding steady, said Derrell Peel, Oklahoma State University Extension livestock marketing specialist, in a newsletter to Extension agents called Cow-Calf Corner.
“Demand” considers retail prices as well as the quantity of consumption, Peel said.
“The all-fresh retail beef price in October was $7.25 a pound, down slightly from $7.32 a pound in September and down 4.0% from the record high of $7.55 a pound one year ago,” he said.
In 2022, the all-fresh retail beef price has held in a narrow range from $7.37 a pound to $7.25 and has averaged $7.33 through October, up from the 2021 annual average of $6.95, he said.
2022 PRODUCTION RECORD HIGH
Total 2022 commercial beef production was projected at a record 28.3 billion pounds, Peel said. After adjusting for exports, per capita retail beef consumption was projected at 59.3 pounds, up year over year from 58.9 pounds in 2021.
The fact that retail beef prices this year are averaging higher while consumption also is increasing is an indication of strong demand, he said.
Wholesale boxed beef prices, similar to retail prices, have traded in a narrow range for most of 2022, Peel said. Since March, choice boxed beef averaged $261.77 per cwt with a weekly maximum of $272.48 and a minimum of $246.31, leading to a range of $26.17/cwt. This follows very strong wholesale demand in 2021, which led to an average choice boxed beef price of $279.81 per cwt with a weekly maximum of $347.02, a minimum of $206.73 and a range of $140.29 for the year.
So far in 2022, choice boxed beef prices reached a low in October of $246.31 per cwt and increased to more than $263 since then, Peel said. Prices for numerous wholesale cuts increased, including the tenderloin at $15.06 a pound, up nearly 38% from the August low and now 12% higher than year-ago levels. This was the highest wholesale tenderloin price since September 2021.
Wholesale ribeye prices normally increase in the fall ahead of holiday demand for prime rib, and recently reached $10.23 a pound, the first time over $10 since last year, Peel said. Current ribeye prices are up nearly 23% from the summer low.
BEEF PRODUCTION
Beef production WAs expected to decrease sharply in 2023, which will lead to higher prices and more product-market dynamics, Peel said. Consumers, thus far, have absorbed large supplies at record prices, but as supplies tighten, some may “trade down” as market prices ration a smaller supply.
Per capita beef consumption was expected to decrease next year, not because demand is weak but because available supplies of beef will decrease, Peel said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $150.85 to $156.00 per cwt, compared with last week’s range of $151.44 to $155.35. FOB dressed steers, and heifers went for $236.10 to $242.19 per cwt, versus $235.92 to $240.89.
The USDA choice cutout Wednesday day was down $4.07 per cwt at $252.56 while select was off $0.85 at $233.33. The choice/select spread narrowed to $19.23 from $22.45 with 109 loads of fabricated product and 46 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 $2.05 to $2.25 a bushel over the Dec futures and for southwest Kansas were steady at $1.00 over Dec, which settled at $6.63 1/4, up 6 1/2.
The CME Feeder Cattle Index for the seven days ended Tuesday was $174.83 per cwt up $0.19. This compares with Wednesday’s Jan contract settlement of $179.25, down $2.42.