Pressured by the declining buying power of consumers struggling to make ends meet amid higher inflation rates, the wholesale price of boxed beef has sunk below last year and the 2016-2020 average, even as total herd numbers decline.
What’s more, price prospects for beef from here on out fall well below levels at this time of year, according to data from the USDA’s Agricultural Marketing Service compiled by the Livestock Marketing Information Center in Denver. The annual peak in wholesale boxed beef prices should come this week and be followed by a significant decline into late July or early August.
PRICES ONLY HOLDING ON
Weekly average prices for choice 600- 900-pound beef carcasses are only holding on rather than following seasonal trends higher, the data showed. By doing so, last week’s boxed beef price dipped below the five-year average for the first time this year.
Last week’s choice boxed beef price was $256.95 per cwt, compared with $258.29 a week earlier, last year’s $314.06 and the previous five-year average of $270.64.
That’s not a lot of difference, but seasonally, there isn’t much strength left. The weekly average price tops out next week.
Last year’s strong consumer buying interest amid active government COVID stimulus checks sent seasonal prices higher and later than normal. Last year’s seasonal high came the first week of June at $338.56 per cwt.
If choice boxed beef prices only follow the 2016-2020 average from here on out, they will come nowhere near last year’s stimulus-related, elevated levels, a market analyst said. And, since memories are short, beef prices will seem to be under severe pressure, which could pressure fed cattle prices.
RIBS, LOINS FEELING THE HEAT
All major primal cuts of beef were showing price pressure as of last week, but the lead seemed to be taken by ribs and loins. Data showed weekly prices of both to be much lower than last year and crossing below the previous five-year average.
The average price for the primal rib from the same choice 600- to 900-pound carcass last week was $395.28 per cwt, compared with $393.90 a week earlier, $526.17 a year earlier and the 2016-2020 average of $399.87.
Rib prices may be recoiling from an uncharacteristic rally last month, the market analyst said. Rib prices last year began a strong spring rally in April, and meat buyers may have been hoping for something similar this year. But it didn’t happen.
As a result, the spring rally for ribs may be over, the analyst said. Time will tell, but the five-year average points to modest support into June followed by the summer doldrums.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $140.47 to $143.60 per cwt, compared with last week’s range of $140.00 to $158.23. FOB dressed steers, and heifers went for $219.21 to $222.62 per cwt, versus $220.11 to $225.73.
The USDA choice cutout Wednesday was down $0.01 per cwt at $260.47, while select was down $2.17 at $246.02. The choice/select spread widened to $14.45 from $12.29 with 108 loads of fabricated product and 28 loads of trimmings and grinds sold into the spot market.
The USDA reported that basis bids for corn from feeders in the Southern Plains were unchanged at $1.55 to $1.65 a bushel over the Jul futures and for southwest Kansas were steady at even the Jul, which settled at $7.81 1/2 a bushel, down $0.19 1/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $155.05 per cwt down $0.22. This compares with Wednesday’s May contract settlement of $155.85, down $1.32.