Choice beef prices seem to be getting more inelastic than they were 20 or 30 years ago.
Ignoring the four-week price spike in May of 2000 when COVID cut production, USDA choice boxed beef prices continued to rise and have been setting weekly record prices this spring.
TRADING HIGHER THAN $300
In fact, since May last year, the weekly choice cutout has had only one week under $300 per cwt, observed Andrew Griffith, agricultural economist at the University of Tennessee, in his weekly letter Tennessee Market Highlights.
“Additionally, the market has exceeded the $330 price level for 10 consecutive weeks as it approached the 2025 summer grilling season,” Griffith said.
Last week, the USDA weekly choice boxed beef price was listed by the Livestock Marketing Information Center as $359.13 per cwt, up $9.13, or 2.61%, from $350.00 the previous week, up $47.49, or 15.24%, from $311.64 a year earlier and up $54.91, or 18.0%, from the 2019-2023 average of $304.22.
“The market has been amazingly strong to say the least, and it appears poised to stay that way,” Griffith said.
CHOICE/SELECT SPREAD GIVES PAUSE
However, price pressure can be expected in the beef market as summer’s heat arrives, Griffith said. It’s a seasonal tendency that could happen again this year, but there is no reason to think the market will fall apart, nothing has indicated a departure from the market’s overall strength.
USDA data recorded by the LMIC shows the weekly choice cutout price minus the select cutout price, or the choice/select spread, to have fallen below the 2019-2023 average three weeks ago. Last week, the spread was $11.60, choice over select.
A market analyst said the last five to 10 years have shown that consumers are struggling with inflation, and at times, they will substitute select beef for choice beef. But it hasn’t discouraged the overall willingness to pay for the more-expensive choice product when the season or holiday calls for it.
BONELESS BEEF PRICES SHOW CONSUMER STRENGTH
One way to gauge consumer demand for beef is to look at the USDA weekly price for 90% and 50% lean boneless beef prices. These products give a good view of hamburger demand since most of it is ground before sale.
Last week’s 90% lean boneless beef was $383.41 per cwt, up $366, or 0.96%, from $379.75 a week earlier, up $29.41, or 8.31%, from $354.00 a year earlier and up $113.05, or 41.8%, from the previous five-year average of $270.36.
The USDA’s weekly price for 50% lean boneless beef was $126.91, up from $124.42 a week earlier, up from $75.93 a year earlier and up from the five-year average of $116.02,
Strength.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $223.72 per cwt to $227.03, compared with last week’s range of $220.00 to $231.49 per cwt. FOB dressed steers, and heifers went for $351.41 per cwt to $357.98, compared with $348.05 to $365.35.
The USDA choice cutout Tuesday was down $0.56 per cwt at $365.44 while select was off $1.59 at $356.52. The choice/select spread widened to $8.92 from $7.89 with 72 loads of fabricated product and 43 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef was $382.62 per cwt, and 50% beef was $129.74.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.15 to $1.25 a bushel over the Jul corn contract, which settled at $4.38 1/2, up $0.00 1/4.
The CME Feeder Cattle Index for the seven days ended Friday was $301.48 per cwt, up $0.35. This compares with Tuesday’s Aug contract settlement of $301.22, down $0.52.