The USDA’s weekly wholesale choice boxed beef price may be beginning a seasonal downturn unless supplies get short enough to support a continuation of 2023’s higher price levels.
The weekly USDA choice beef cutout value, as compiled and plotted by the Livestock Marketing Information Center took a hit last week, but the weekly dip came later in the year than is usual and from a much higher peak. From the high point two weeks ago, the choice cutout should decline into a mid-July annual bottom.
That could be followed by a rally into late August, another decline into early October and a final rally into late November. Both of these rallies pale in comparison to the spring rally, however.
2023 SPRING PEAK IS LATE
This year’s rally into a late spring/early summer peak began last year as the US cattle herd size continued its drought-induced decline. The USDA’s weekly choice beef cutout value was higher than the 2017-2021 average all year except for the spring rally’s usual peak.
This year, the weekly value dipped below the 2022 line in late January but continued an uneven climb to this year’s peak ever since, always remaining higher than last year or the previous five-year average.
At one point in May, it looked as if this year’s choice cutout price would dip below the 2017-2021 average at the average’s peak of $296.54 per cwt, but this year’s value bounced at $299.80 that same week and moved up to the latest peak two weeks ago at $339.93 per cwt.
Now, the annual spring peak is late, and seasonal forces may be too much to fight against unless supplies decline.
ON-FEED NUMBERS DOWN
And that just might happen.
The USDA’s monthly Cattle on Feed report has shown a smaller population of cattle being fed to preferred slaughter weight and carcass finish than last year.
However, this year’s monthly cattle-on-feed numbers have held at data points just higher than the 2017-2921 average, and last year’s monthly on-feed numbers peaked in February and dropped sharply to the annual August low, narrowing the gap with the five-year average. It finally crossed below the average in November.
Should this year’s monthly on-feed numbers continue following the 2017-2021 average, they will decline into the August low and climb to a December annual high. They could continue to run just higher than the average, but there is no indication of what they actually will do.
Feedlot placements as a percent of marketings this year have run close to the average and have been on both sides of the line through May. The annual low comes in June.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $181.07 per cwt to $186.11, compared with last week’s range of $182.00 to $191.00 per cwt. FOB dressed steers, and heifers went for $286.79 per cwt to $289.29, compared with $286.23 to $295.18.
The USDA choice cutout Wednesday was down $1.33 per cwt at $327.90 while select was off $1.75 at $296.68. The choice/select spread widened to $31.22 from $30.80 with 80 loads of fabricated product and 25 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 $1.30 to $1.50 a bushel over the Jul corn contract, which settled at $5.90 a bushel, down $0.33.
No deliveries were tendered against Jun live cattle Wednesday.
The CME Feeder Cattle Index for the seven days ended Tuesday was $226.01 per cwt, up $1.04. This compares with Wednesday’s Aug contract settlement of $240.25 per cwt, up $1.25, and Sep’s $243.72, up $1.75.