Cattle and beef markets often struggle in the period after July 4 until mid-August or so, known as the “dog days of summer.”
The week after the Independence Day holiday, weekly choice boxed beef prices dropped from holiday highs of $329.96 per cwt to about $322.00 and continued to decline.
TYPICAL DEMAND DROP
Beef demand usually slows between the July 4 and Labor Day holidays as summer grilling and high-end restaurant traffic slows in the heat of the summer, said Derrell Peel, Oklahoma State University Extension livestock marketing specialist, in a letter called Cow-Calf Corner.
The early July drop in boxed beef price was the result of seasonal weakness in the main middle meats: tenderloin, ribeye and strip loin, Peel said. Wholesale prices for many other cuts continued to move higher, including tri-tip and flank steak, along with numerous chuck and round cuts.
By now, most cuts are declining as 50% lean trimmings “are on fire,” said a market advisor.
Several lean round cuts were supported by the record high price for lean trimmings that continued pushing wholesale ground beef value to ever-higher record levels.
CATTLE PRICES STALLING
Fed cattle prices appeared to stall in the summer heat of July, holding mostly steady after moving higher through June, Peel said. Carcass weights showed some decrease in June with the reported steer carcass weights the last week of June at 911 pounds, down from 924 pounds five weeks earlier.
However, weights rebounded in July, going to 916 pounds the first week of July and 915 the second.
The decrease in carcass weights was much slower than is typical through June, and it is not clear what the seasonal pattern will be for the rest of the year, Peel said. Carcass weights typically begin increasing seasonally in July but steer carcasses are already 27 pounds higher year over year, even with June’s decrease.
SLAUGHTER UP
June’s fed slaughter was fractionally higher than last year and, combined with heavier carcass weights, led to a 3.8% year over year boost in fed beef production for the month, Peel said. This more than offset a 17.1% year-over-year decrease in non-fed beef production to result in a slight increase in total beef production for the month.
Feeder cattle markets also stalled after July 4. Nevertheless, feeder cattle prices remained near record levels, Peel said. Although June rains maintained pastures reasonably well, marginal drought conditions increased in Oklahoma with range and pasture ratings slipping.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $190.00 per cwt to $200.62, compared with last week’s range of $188.00 to $198.00 per cwt. FOB dressed steers, and heifers went for $297.40 per cwt to $302.57, compared with $296.12 to $308.96.
The USDA choice cutout Tuesday was down $0.33 per cwt at $314.48 while select was down $0.14 at $301.38. The choice/select spread narrowed to $13.10 from $13.28 with 97 loads of fabricated product and 22 loads of trimmings and grinds sold into the spot market.
The weighted average USDA listed wholesale price for fresh 90% lean beef was $378.14 per cwt, and 50% beef was $156.25.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.46 to $1.70 a bushel over the Sep corn contract, which settled at $3.88 3/4 a bushel, down $0.07 1/2.
The CME Feeder Cattle Index for the seven days ended Monday was $250.73 per cwt, down $0.02. This compares with Tuesday’s Aug contract settlement of $256.97, up $0.55.