The wholesale beef market, as measured by the choice boxed beef cutout value, has been on a rollercoaster ride over the course of this year, said David Anderson, livestock and food product marketing specialist at Texas A&M University, in a letter from the Livestock Marketing Information Center called In The Cattle Markets.
That often is the case, but reduced beef production and the calendar rolling closer to grilling-season buying are working together to boost prices, Anderson said.
WEEKLY PRODUCTION DOWN
Weekly beef production has been down anywhere from 5% to more than 10% from the same week last year, he said. Buying kicked in over the last few weeks of March to prepare for grilling season needs.
The result was a weekly average choice beef cutout that started at $354 per cwt and slowly climbed to $365 then skyrocketed to $402 in the span of three weeks, Anderson said. It backed off about $8 per cwt after that.
All of the primal cuts that make up the cutout have increased in value over the course of the year, except the chuck, he said. The chuck primal lost about $4 per cwt since the first of the year. A decline in chuck values over the first quarter of the year is not unusual and likely reflects some movement from winter consumption patterns to spring and summer.
Weekly average primal ribs and loins increased about 20% since the first of the year, Anderson said. The rib increased from $472 to $554 per cwt, while the loin rose from $430 to $530.
The brisket primal exhibited its usual decline from the first of the year through February, when it declined more than $20 per cwt to less than $300 per cwt, but since increased to almost $340 per cwt, he said.
WHOLESALE SHOWED SIMILAR GAINS
Getting from the primal to the wholesale cut prices indicated a similar magnitude of increase, Anderson said. Wholesale ribeyes climbed to $13.28 and strip loins to a little more than $11 a pound. Wholesale boneless beef, whether 50% or 90% lean, continued to increase in price throughout the year.
The market is going to continue to contend with less beef production, he said. Rising imports will continue to augment lean beef supplies for ground beef. While consumer beef demand has been resilient in the face of high and rapidly rising fuel prices, it will pressure consumers’ disposable income.
The shifting landscape of consumers’ purchases in the coming months will generate more ups and downs on the beef price rollercoaster as the year goes on, Anderson said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $245.55 per cwt to $252.00, compared with last week’s range of $235.00 to $248.29 per cwt. FOB dressed steers and heifers went for $386.05 per cwt to $397.06, compared with $373.20 to $388.53.
The USDA choice cutout Thursday was down $0.69 per cwt at $383.50 while select was down $0.75 at $382.58. The choice/select spread widened to $0.92 from $0.86 with 76 loads of fabricated product and 29 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $447.72 per cwt, and 50% beef was $191.07.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.02 to $1.15 a bushel over the May corn contract, which settled at $4.55 1/2 a bushel, up $0.01 1/4.
No live cattle contracts were tendered for delivery Thursday.
The CME Feeder Cattle Index for the seven days ended Wednesday was $370.00 per cwt, down $3.44. This compares with Thursday’s Apr contract settlement of $366.62, down $0.17, and May’s $358.87, up $0.45.