The choice boxed beef cutout value continues to hold within a narrow range at a level significantly higher than the 2016-2020 average as consumers remain attached to the choice product.
Some market analysts give credit to Federal economic stimulus money for sending consumers to the choice beef section of the food case rather than the select and no-label section because, suddenly, they could afford it, and the government money was too little to do much else with. But it created a desire for more choice beef, that carries through to the present.
2022 PRICE UP
The average weekly wholesale price for 600- to 900-pound choice beef carcasses last week was $269.71 per cwt, according to USDA data. This was $1.44. or 0.54%, more than the same week last year, which came in at $268.27 per cwt.
However, last year’s boxed beef prices were out of synch with weekly trends as COVID ravaged the world. There was a typical late spring/early summer price peak at $338.56 per cwt, followed by a drop to last week’s low. This was followed by another surge to the 2021 high of $347.02 about the first week of August.
After that, the choice cutout price dropped rapidly to early October and then subsided more slowly to the annual low of $262.04 the third week of December.
NORMAL MOVES MORE SEDATE
Using the 2016-2020 average of weekly choice boxed beef prices as “normal,” there should only be one major peak in wholesale choice boxed beef prices each year. This should be about the third week of May with the latest average peak at $277.06 per cwt.
Leading up to that annual peak is a minor peak in late March, and following it is another minor peak in late August around $213.77 per cwt. The last peak occurs the last week of November near $217.17 per cwt.
This year, the weekly choice boxed beef price peaked the last week of January at $290.97 per cwt, which was out of character for a season of the year when holiday bills come due, and winter weather keeps people at home.
Since falling off that peak to the 2022 low so far of $253.70 per cwt the first week of March, the weekly choice boxed beef wholesale price has held within a range from $255 to $274 per cwt, and there is no indication it will change anytime soon.
But it could, a market analyst said. This is the nature of commodity markets. Sudden changes can come quickly and decisively.
So far, the percentage of choice beef production to select has fallen off slightly, kept there by an influx of lower-grading cattle because of high feed costs. But who knows?
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $137.75 to $144.71 per cwt, compared with last week’s range of $137.00 to $145.17. FOB dressed steers, and heifers went for $216.39 to $219.67 per cwt, versus $216.89 to $220.37.
The USDA choice cutout Wednesday was down $1.12 per cwt at $267.99, while select was down $2.07 at $241.81. The choice/select spread widened to $26.18 from $25.23 with 117 loads of fabricated product and 28 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were steady at $2.60 to $2.80 a bushel over the Sep futures and for southwest Kansas were unchanged at $0.10 over Sep, which settled at $6.05 1/2, up $0.05 1/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $170.64 per cwt up $0.73. This compares with Wednesday’s Aug contract settlement of $179.10, up $1.67.