Now that the Independence Day holiday is past, the USDA’s weekly choice boxed beef cutout should be dropping – but it’s not.
In fact, it continues to rise, setting a 2024 high in each of the last five weeks.
CUTOUT KEEPS CLIMBING
The USDA’s weekly choice boxed beef cutout value, as compiled and reported by the Livestock Marketing Information Center in Denver last week was $323.71 per cwt, up $2.32, or 0.72%, from the previous week’s $321.39. Last week’s value was $5.48 per cwt, or 1.66%, less than the $329.19 per cwt recorded in the same week last year but up $83.45, or 34.7%, from the 2018-2022 average of $240.26.
The fact that last week’s choice cutout value was less than the same week last year may be a bit misleading, a market analyst said. Last year’s weekly values were declining at the time, and this year’s weekly value appears poised to cross over last year’s line on a graph as soon as this week.
The average weekly high for the choice cutout comes the third week of May, stumbling around until the Independence Day beef orders fade and a higher percentage of older fed cattle show up in the slaughter mix, producing more beef.
The late-spring/early summer high is the annual weekly high of the year. A smaller peak usually comes in August as cattle languish in the summer heat and beef orders for the Labor Day holiday roll in.
Much is made each year of the fall rise in beef demand as orders for steaks and rib roasts come in, but it pales in comparison to the spring/summer high.
CHOICE/SELECT SPREAD WIDENING
The difference between weekly USDA cutout values for choice and select grade beef continued it uneven climb last week, rising above the 2018-2022 average last wee for the first time since the third week in March.
Many analysts and traders have been in awe of the resilience of consumer demand for choice beef in light of continued strong US economic inflation. Without comparing the values, they assumed a graph of the weekly choice/select spread would show a wide gap between the two.
But while the spread has shown strength since bottoming the second week of April at $2.89, it has merely followed the seasonal trend, and it has done so at lower values than last year or the previous five-year average until last week when it crossed above a descending average last week at $19.63.
Just for reference, last week marked the 2023 seasonal high for the spread at $32.07.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $193.50 per cwt to $193.66, compared with last week’s range of $189.71 to $200.07 per cwt. FOB dressed steers, and heifers went for $304.90 per cwt to $307.62, compared with $298.67 to $309.14.
The USDA choice cutout Monday was up $0.04 per cwt at $330.47 while select was down $0.34 at $304.72. The choice/select spread widened to $25.75 from $25.37 with 73 loads of fabricated product and 16 loads of trimmings and grinds sold into the spot market.
The weighted average USDA listed wholesale price for fresh 90% lean beef was $370.89 per cwt, and 50% beef was $92.73.
The USDA said basis bids for corn from feeders in the Southern Plains were up $0.07 to $0.13 at $1.62 to $1.78 a bushel over the Sep corn contract, which settled at $3.93 1/4 a bushel, down $0.17 1/4.
The CME Feeder Cattle Index for the seven days ended Friday was $258.29 per cwt, up $3.21. This compares with Monday’s Aug contract settlement of $259.17, down $2.30.