Wholesale beef prices continue to move lower, pressuring live cattle futures and cash prices as traders argue about how soon a beef bottom may come.
Debate rages among traders about how much – or if – beef demand is being affected by growing supplies of pork and chicken. They also wonder how much – or if – summer weather is affecting beef demand. Others wonder how much – or if – beef prices actually are being affected by demand changes, or whether it is a result of larger summer production.
A graph from the Livestock Marketing Information Center shows the decline in weekly USDA choice 600- to 900-pound beef carcass values since peaking the third week of May at $263.19 per cwt.
Boxed beef prices have fallen $28.35, or 10.8%, to last week’s $234.85. In general, the beef market is following the trend of the five-year period of 2009 through 2013.
The beef market, however, is not following last year’s trend, which was driven upward by strong domestic and export demand and short supplies.
DECLINE SATISFIES SEASONALS
This year’s decline has satisfied the seasonal tendencies to move lower in the summer in terms of percentage and raw numbers. What it hasn’t done is met the time requirement.
Time-wise, the beef market won’t awaken from its summer slumber until the first week of August, and the fact that the market continues to show no signs of a bottom makes traders nervous.
The beef market usually declines $12.98 per cwt, or 7.22%, into the August bottom, going to $166.06 from $178.98 and surpassing this year’s dip of $28.35, or 10.8%.
DO CONSUMERS CARE?
Over the last few years, retail beef prices have continued to rise, fostering ideas that consumers aren’t as concerned about prices as many think. Pork prices over the last two years have fallen, and chicken prices continue to rise slowly.
USDA monthly retail prices for all fresh retail beef in June was $6.11 a pound, compared with $5.51 a year earlier and $4.92 in June 2013. Pork prices last month were $3.70 a pound, compared with $4.12 last year and $3.62 in June 2013. June retail chicken prices were $1.52 a pound, compared with $1.50 last year and $1.51 in 2013.
It appears, then, that consumers don’t really care about how high beef prices are in relation to other meats – yet. At some point, Economics 101 says they will care, but beef continues to rise.
It may be that rising supplies will bring prices down before consumers reach that point.
CASH CATTLE MARKET QUIET
Cash fed cattle markets Monday were quiet with no bids or offers reported. The number of cattle offered for sale this week was thought to be lower overall, which could give sellers a little leverage in this week’s negotiations.
Cattle prices last week fell about $2 per cwt to mostly $148 on a live basis. While cattle in dressed-basis markets sold for $234 to $236, down $2 to $4. Trading was thought to be moderately active.
The USDA’s beef cutout value Monday was a little higher, with the choice product at $233.83 per cwt, up $0.53 on the day. Select was reported at $230.22, up $0.83 on the day.
The CME Feeder Cattle Index for the seven days ended Friday was up sharply at $228.86 per cwt, up $5.83.