Boxed Beef Prices Falling As Slaughter Rises

Boxed beef prices are falling this week as beef packers ramp up production with almost a full staff, but product demand is lacking seasonally, market sources said.

Food service beef demand has been especially limp, according to Urner Barry.  This is in contrast to what seemed to be happening last week as beef demand picked up, opposing a seasonal trend and making some analysts wonder if Valentine’s Day reservations weren’t higher than normal.

But the decline this week implies the party is over, an analyst said.  And, with inflation picking up and eating into home budgets, shoppers may be picking the cheaper cuts or drifting over to chicken to stretch their funds.

 

BRANDED, PRIME BEEF TO BE HIT

 

As consumers drift toward those cheaper cuts, or even other meats, the higher-priced products likely will go begging, the analyst said.  This is, unless export demand for the higher-priced cuts picks up.

Yet, because packer slaughter pace has picked up, more cattle will be needed to fill contractual obligations, which often were booked months ago.  This could mean more pull on available fed cattle as the weather gets colder and wetter and feedlot performance wanes.

In the meantime, the overall weekly boxed-beef cutout value last week held its position above year-ago prices, USDA-Agricultural Marketing Services data showed.  Last week’s average choice cutout value was $290.97 per cwt, up $0.10, or 0.03%, from $290.87 a week earlier, up $60.69, or 26.4%, from $230.28 a year earlier and up $80.63, or 38.3%, from the 2016-2020 average of $210.34.

 

PRIMAL CUT DATA SHOW CHEAPER CUT PREFERENCE

 

A check of weekly prices from the USDA for various primal beef cuts shows a growing preference for the cheaper cuts.  Compiled from AMS data by the USDA, weekly prices for 90% lean ground beef compiled and re-released by the Livestock Marketing Information Center in Denver, show wholesale prices that are more than 25% more than those of last year and the previous five-year average.

Last week’s price for 90% lean, for instance, was $2.77 per pound, compared with $2.77 a week earlier but up $0.57, or 25.9%, from $2.20 a year earlier and up $0.63, or 29.4%, from the 2016-2020 average of $2.14

By contrast, wholesale boneless beef ribeye prices last week from the AMS were $9.02 a pound, down $0.05, or 0.55%, from $9.07 a week earlier but up $0.46, or 5.37%, from $8.56 a year earlier and up $1.83, or 25.5%, from the previous five-year average of $7.19.

Wholesale beef chuck roll prices last week were $4.13 a pound, compared with $4.11 a week earlier, $3.71 a year earlier and the average of $2.88 a pound.

 

CATTLE, BEEF RECAP

 

The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $137.00 to $138.26 per cwt, compared with last week’s range of $136.74 to $139.41.  FOB dressed steers and heifers went for $214.60 to $217.14 per cwt, versus $213.43 to $218.04.

The USDA choice cutout Wednesday was down $2.29 per cwt at $283.15, while select was off $0.65 at $279.57.  The choice/select spread narrowed to $3.58 from $5.22 with 80 loads of fabricated product and 31 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 steady at $1.40 to $1.55 a bushel over the Mar futures and for southwest Kansas were unchanged at $0.20 over Mar, which settled at $6.22 1/2 a bushel, down $0.12 1/4.

The CME Feeder Cattle Index for the seven days ended Friday was $158.93 per cwt up $0.16.  This compares with Wednesday’s Mar contract settlement of $166.87 per cwt, up $3.17.