Beef Values Could Decline Through September

Weekly boxed beef cutout values for choice 600- to 900-pound carcasses appear to have peaked seasonally and will likely decline into the first week of October.

Bookings for holiday-related cuts may advance prices from early October into mid-December, but there is a limit to how far demand for rib roasts and steaks can take the beef or cattle markets.  Seasonally, prices will set or challenge the late spring or early summer highs, but the need to sell the rest of the animal always caps the average returns for packers and cattle feeders.

This year, sharply declining hide and offal values and weakening economic conditions in China could limit cattle prices, even if beef prices turn higher in October.

A graph from the Livestock Marketing Information Center shows choice boxed beef prices likely topped two weeks ago.  The line for this year’s weekly price is loosely following the 2009-2013 average, although at a higher level.




After dropping for most of the year, weekly prices beef packers receive for cattle hides and offal, called the drop credit, bounced in late July but appear to have peaked two weeks ago.  And since about 60% of US hide production goes to China to be tanned and turned into shoes and car seats, China’s current decline in its manufacturing sector and its currency declines concern US markets.

Total byproducts of the beef slaughter and processing process (edible offal, inedible offal, hides, blood, fats and tallow) constitute about 44% of tot live weight of the animal, according to the USDA.  Inedible products are used in the production of pharmaceuticals, cosmetics, household and industrial products, while many of edible byproducts are exported, along with the hides.

Currently, the weekly drop credit is running along the 2009-2013 average, but if China’s currency woes worsen, potential hide buyers may have trouble lining up credit for extensive purchases.  This could leave these perishable items in cold storage, pressuring live cattle prices.




Cash fed cattle markets remain very quiet.  Bids from packer buyers were posted at $144 per cwt on a live basis but were met with asking prices of $148 to $150.  Dressed bids were posted at $222 in Iowa while asking prices held at $232.

Last week, cattle traded lightly at mostly $143 to $144 live and $226 to $228 dressed.

The USDA reported lower boxed beef prices Tuesday with choice down $1.03 per cwt at $241.21 and select off $1.60 at $230.44.  There were 122 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Monday was $207.02, up $0.65.  This compares with the Sep settlement Tuesday of $200.27, down $1.55.