Wholesale beef prices are in the midst of a sharp rise in value as demand kicks up for the spring grilling season.
The turn higher for the benchmark choice 600- to 900-pound carcass values came right on schedule in mid-February but may be nearing a seasonal peak.
The weekly price listed for that week shows an average of $205.84 per cwt for the product, but the daily price from the USDA’s Market News Service shows a price of $221.32 for Wednesday of this week. Clearly, prices have continued to climb, and demand appears to be the key.
SLAUGHTER RISES TO AVERAGE
Since cattle markets often run on supply moves, it might be tempting to attribute the higher boxed beef prices to reduced slaughter, but the data do not show this to be the case.
Overall cattle slaughter through the first week of March shows a weekly kill of 587,000 head, up 6,000, or 1.03%, from 581,000 a week earlier and 44,058, or 8.11%, higher than 542,942 a year ago. The 2011-2015 average for the week is 588,800, only 1,800, or 0.31%, higher than the latest official figure.
What’s more, the increase in slaughter over last year is coming from fed steers, AMS data show. Steer slaughter for the week was pegged at 296,448 head, up 23,705, or 8.69%, from 272,743 a year ago and up 18,488, or 6.65%, from the five-year average of 277,960.
EXPORTS ALSO STRONG
Beef and beef variety meat exports also are strong despite a generally stronger US dollar. USDA data compiled by the US Meat Export Federation show January exports at 96,488 tonnes, up 14,187, or 17.2%, from 82,301 tonnes in the 2016 month.
The value of those exports was listed at $515,478, up 77,386, or 17.7%, from $438,092 a year earlier.
Japan, Mexico and South Korea remained the largest US export markets.
The US Dollar Index, a comparison of the dollar against a basket of other world currencies, was off Wednesday and Thursday, possibly a “buy the rumor, sell the fact” reaction to the Federal Open Market Committee’s move to raise short-term interest rates by 0.25 point Wednesday. However, starting in October, the Jun Index began to rise, peaking at 103.75 on Jan. 3.
Since then, the Jun Index has declined to a Feb. 2 low of 99.15 only to rebound again to a Mar. 3 peak of 102.19 and decline a bit again this week.
That US dollar strength should have trimmed beef exports along with nearly every US product, but it didn’t.
The USDA Tuesday also predicted higher US consumption of beef this year, a prediction that may have as much to do with supply as demand, but consumers appear to have discovered choice beef and are willing to pay for it.
CASH CATTLE UP $3 TO $5
Cash cattle this week traded in the Plains in a range from $125 to $131.50 per cwt, mostly $127 to $130, up $3 to $5 from last week. Dressed-basis trading was mostly at $210, up $8 to $10.
Average fed cattle exchange auction prices Wednesday were $4.63 per cwt higher at $128.31, versus $123.68 a week earlier.
The USDA’s choice cutout Thursday was up $1.04 per cwt at $222.36, while select was up $0.73 at $213.87. The choice/select spread widened to $8.49 from $8.18 with 72 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Wednesday was $128.22 per cwt, up $0.61. This compares with Thursday’s Mar settlement of $130.55, up $1.32.