As much as wholesale beef prices have fallen in the last three weeks, they still aren’t down to last year or the previous five-year average.
The Livestock Marketing Information Center in Denver tracks USDA Agricultural Marketing Service data, plots it on graphs and publishes them on its web site.
The LMIC graph for average weekly USDA choice 600- to 900-poundf beef carcasses showed a steep spike in prices beginning the first week of May and peaking the third week of May at $459.04 per cwt. From there, the average weekly price made a sharp turn-around and was recorded last week at $297.902 per cwt.
That was a $161.138, or 35.1%, drop. However, last week’s average wholesale price for those choice carcasses remained $75.328, or 33.8%, above the $222.574 average price of the same week a year ago and $61.7112, or 26.1%, above the 2014-2018 average of $236.1908.
The way prices are dropping, the average could get back to “normal” by the end of this week, a market analyst said.
And the 2014-1018 average choice cutout bounces along through the year roughly between $200 and $240 per cwt, the data showed.
CHOICE BEEF STILL RULES
Through all the mess of the Great Lockdown, rising and falling prices keeping everyone off balance, it seems through it all, choice beef still was the favorite of buyers.
The difference between average weekly wholesale prices for choice and select beef, called the choice/select spread, deviated sharply wider the last week of May, although it fell back to near the 2014-1018 average last week. But the spread began to widen from the five-year average the first week in May and has remained above average through last week.
As a point of reference, last year’s choice/select spread narrowed in May but rose in a counter-seasonal rally through summer and fall.
This year, the choice/select spread could narrow in a more seasonal flow through the summer as restaurant buying remains slow from COVID-19 fears and unemployment cuts into backyard grilling activities, the analyst said.
COW-BEEF CUTOUT UP SHARPLY
A less-talked-about category of the wholesale beef market, the weekly average price of cutter cow beef also rocketed higher in May and remains well above last year and the 2014-2018 average. AMS data showed that the average peaked at $240.91 per cwt the third week of May, compared with the five-year average for the same week of $190.818 and last year at $172.06.
This meat is ground into hamburger since it doesn’t have the same eating qualities as choice fed beef. Even most select-grade beef may provide a better eating experience when cut into steaks than cow beef.
However, the price deflection does provide some insight into the lower-grade beef markets and shows there is demand for ground beef, the analyst said. This is why the US imports grinding beef.
CATTLE, BEEF RECAP
Fed cattle trading was reported this week at $105 to $108 per cwt on a live basis, down $4 to $10 from last week and at $165 to $172 on a dressed basis, down $11 to $15.
The USDA choice cutout Wednesday was down $10.94 per cwt at $236.06, while select was off $5.11 at $222.84. The choice/select spread narrowed to $13.22 from $19.05 with 192 loads of fabricated product sold into the spot market.
No deliveries were tendered for delivery against the Aug live cattle contract Wednesday.
The CME Feeder Cattle index for the seven days ended Tuesday was $129.70 per cwt, up $0.18. This compares with Wednesday’s Aug contract settlement of $132.67, down $1.57.