The boxed beef market has had its fair share of trials and tribulations over the last couple of years, and this year looks to be no different, said Urner Barry’s Market Briefing.
One area of highlight thus far is some of the premium spreads—or lack thereof, in some cases, the report said. This is showcased within the cutout values for choice, select and no-roll boxed beef.
The choice cutout, for example, had only just begun its new rally at the beginning of February, whereas select and no-roll products carried their uptrends over from the close of 2022, Urner Barry said.
CHOICE CUTOUT RISING
Choice cutout values are up about 3% since entering the new year, Urner Barry said, while select cutout sits roughly 11% higher and no-roll has shown a rally of more than 13% for the same period.
That largely could be attributed to the short supply of select and no-roll products, as is typical for this time period, the report said. The opposite could be said for choice product, where excess supplies weighed on prices once slaughters normalized.
Overall, boxed beef prices have surged to seasonal all-time highs, an impressive feat for this time of year, Urner Barry said. The seasonal tendency for weaker beef demand in February has been bucked by renewed interest for middle meats, coupled with consecutive weeks of reduced cattle slaughter.
Ribeye and tenderloin, two higher priced items, had prices start the first quarter well above seasonal norms and at record highs for this part of the year, contributing to the stout cutout performance, the report said. The resiliency has been astounding, as both items have been supported and in rally mode earlier than expected.
CATTLE SUPPLIES TIGHTENING
Also, cattle supplies continue to tighten following four straight years of herd liquidation, Urner Barry said. The nation’s beef cow herd is at the lowest level since 1962 and will lead to tighter beef supplies in the months and years ahead.
Compounding this reduced output is a sharp drop in cattle carcass weights, the report said. Overall feedlot performance has been affected by wintry weather and muddy feedlot conditions in several regions.
As of the first week in March, dressed steer weights were 15 pounds less than 2022, Urner Barry said. Through February, year-to-date beef production was about 4.5% lower.
The reduction in the US cattle herd inventory has set the stage for higher cattle prices this year, the report said. For now, though, beef packers have managed to maintain positive margins because of a higher cutout and a pullback in harvest levels.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $165.03 to $165.84 per cwt, compared with last week’s range of $161.55 to $167.74. FOB dressed steers, and heifers went for $259.40 to $259.73 per cwt, versus $258.70 to $266.29.
The USDA choice cutout Monday was down $2.33 per cwt at $281.02 while select was up $1.50 at $273.94. The choice/select spread narrowed to $7.08 from $10.91 with 93 loads of fabricated product and 14 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 $1.60 to $1.70 a bushel over the May corn contract. Bids in Kansas were steady at $0.75 over May, which settled at $6.33 a bushel, down $0.01 1/4.
The CME Feeder Cattle Index for the seven days ended Friday was $188.01 per cwt, down $0.84. This compares with Monday’s Mar contract settlement of $188.20 per cwt, down $0.65.