Weekly US beef prices continue to show a bearish bias, contrary to the 2010-2014 average, as more product enters the wholesale and retail pipeline.
Some market analysts like Oklahoma State University Extension Livestock Marketing Specialist Darrell Peel in the Oklahoma Farm Report also think summer heat may be making consumers and traders alike a little lethargic.
Certainly, “the dog days of summer” are here, keeping many consumers indoors and away from their back yard grills where much of the beef consumed in this country is prepared.
Appetites also diminish during summer’s heat, and grocers with in-store delicatessens report a rise in demand for sliced ham and turkey when the weather is hottest. Shoppers will stop on their way home and pick up these cold cuts as an alternative to heating up the kitchen to prepare a meal.
Bacon demand also rises during the last half of summer as consumption of bacon, lettuce and tomato sandwiches increases with the seasonal addition of ripe tomatoes to the menu.
CHOICE BEEF PRICES SAGGING
Wholesale choice beef prices currently are declining, doing a better job of mimicking last year than the previous five-year average.
As of last week, the USDA’s choice cutout value was $206.00 per cwt, $3.33, or 1.59%, lower than the previous week’s $209.33 and down $19.60, or 8.69%, from the latest high of $225.60 set the first week of June.
Last week’s choice cutout value also was $28.85 per cwt, or 12.28%, lower than the $234.85 per cwt recorded in the same week a year earlier.
However, last week’s choice cutout price was $12.79 per cwt, or 6.62%, more than the 2010-2014 average of $193.21 for the same week.
On a weekly basis, the five-year average and last year’s prices show a short-term bottom in the third or fourth week of July.
Starting with that low, prices take a seasonal bounce that lasts for about a month. This coincides with an uptick in demand as school lunch programs and retailer buying for the Labor Day holiday pick up speed.
If all goes according to previous years, the weekly choice wholesale price of beef should decline again this week and next week before rising in August. Using the seasonal uptick a guide, this price should rise $8.77 per cwt, or 4.62%, in August.
Using last year, where prices bottomed the third week of July, as a guide, prices should rise $11.30, or 4.86% from their July low.
It seems logical, then, to figure that the August rise in choice beef prices should be around 4.5% to 5.0% from the late-July low.