Choice Ribeye Setting Weekly Price Highs

As the USDA’s weekly boxed beef cutout value continues at a more-or-less steady pace, and imaging the 2016-2020 average, the weekly wholesale boneless ribeye price is reaching 2022 highs and continuing to climb.

That suggests the ribeye is supporting other, weaker cuts and going counter to its normal movement, which is sharply lower in mid- to late December.

 

RIBEYE KEEPS SETTING HIGHS

 

While not attaining the 2021 weekly high of $1,478.21 per cwt, which came in mid-September, this year’s high of $1,250.42, which came last week, seemed to have more real demand behind it than last year’ COVID-induced spikes.

Last year, government handouts to combat the effects of lockdowns to control COVID were linked to more buying interest for things many couldn’t have afforded without the handout.  This meant many spent their windfall on RVs, camping gear, new furniture, a new paint job for the house and food items.

For many, it meant they could afford some more expensive beef cuts than they normally would have purchased.

What may have happened, an analyst said, was that many consumers discovered how tasty choice, or even prime, beef was and how well it worked on the grill in place of select or no-roll cuts.

Now, in spite of inflation, many of those consumers may be bellying up to the meat case and continuing to buy choice ribeyes in spite of higher costs in the rest of their budgets, the analyst said.

 

THE BULL MAY STOP DANCING SOON

 

What may happen, though, the analyst said, is that the bull may stop dancing soon.  Current demand for choice ribeyes may be linked to last-minute buying by retail grocery meat buyers to fill in unexpected gaps in consumer buying for holiday meals.

In some sense, this may be considered pent-up demand from last Christmas when holiday travel plans for many were curtailed or cut off completely, the analyst said.  It’s very possible that January consumer buying of choice ribeyes could fall off sharply as holiday bills start coming in.

Surveys have shown that consumers are spending more for the holidays this year, including travel expenses, in spite of inflation taking a bite out of their wallets.  Unlike the government, consumers will have to pay back the loans they have on their credit cards.

Such cutbacks in general spending are common for the first quarter, when winter has many socked in anyway, the analyst said.  School grinds on, and families fall into a routine that doesn’t include any real beef-eating holidays until Memorial Day.

A sudden cut in consumer demand for ribeyes could be seen first in a drop in the choice cutout and a narrowing of the choice/select spread, the analyst said.

 

CATTLE, BEEF RECAP

 

The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $156.04 to $157.32 per cwt, compared with last week’s range of $155.00 to $158.55.  FOB dressed steers, and heifers went for $245.93 to $246.10 per cwt, versus $243.78 to $250.21.

The USDA choice cutout Monday was up $1.00 per cwt at $263.83 while select was up $3.12 at $238.57.  The choice/select spread narrowed to $25.26 from $27.38 with 62 loads of fabricated product and 11 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 $1.90 to $2.10 a bushel over the Mar futures and for southwest Kansas were unchanged at $1.00 over Mar, which settled at $6.47 1/4, down $0.05 3/4.

No cattle contracts were tendered for delivery Monday.

The CME Feeder Cattle Index for the seven days ended Friday was $178.74 per cwt down $0.77.  This compares with Monday’s Jan contract settlement of $182.10, down $1.67.