As the year winds down, the weekly average difference between wholesale prices for USDA choice and select grades of beef is narrowing, reaching its smallest spread for 2025 in the last full week of the year.
And the outlook is for even more narrowing of the choice/select spread in the first couple of months in 2026.
PRICE PATTERN ELUSIVE
The weekly choice/select spread last week was $8.66, down $3.45, or 28.5%, from $12.11 a week earlier, down $22.04, or 71.8%, from $30.70 a year earlier and down $8.91, or 50.7%, from the 2019-2023 average of $17.57.
Fixing a choice/select spread price pattern for the year is difficult without some averaging. The weekly average spread varies considerably from week to week and from year to year.
The Livestock Marketing Information Center in Denver takes data from the USDA’s Agricultural Marketing Service and compiles them into a graph that illustrates the point.
The graph shows that the weekly choice/select spread this year began at its widest margin for the year, narrowed sharply in January, set a temporary bottom in February, hit a couple of peaks in April and May, bottomed again in June, hit a secondary annual high in September and drifted into last week’s annual low.
Last year, the spread declined from its early high the first week of January to bottom about the first week of April, bounce to a seasonal high the first week of July, trough in September, rise to its annual high the last week of November and tail off in December.
The five-year average starts relatively narrow, troughs in late February, peaks in June, peaks again in August, moves roughly sideways into late November where it declines through December.
REASONS ALSO ELUSIVE
The reasons for the year-to-year variations are as elusive as they are striking. This year’s weekly highs and lows, for instance, ran counter to last year’s and only barely followed the previous five-year average.
There are too many variables, a market analyst said. Not only are there differences in beef supply, governed by herd size, climate conditions, position in the multi-year cattle cycle, profitability in calf production, feeding or packing margins, but there are changes in consumer demand as well. These can include things like economic conditions (growing or receding economy), seasonal influences like holidays and school sessions. It’s only been in the last few years that demand for choice product has shown marked growth.
It’s only by averaging the weekly averages over time to develop a multi-year trendline that any kind of pattern can be seen. This shows a narrowing early in the year as weather conditions depress choice beef consumption, followed by a spring rally, correlated to smaller cattle being slaughtered and increased demand for grilling, giving way to unremarkable market changes and a decline after the holidays.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $229.12 per cwt to $230.43, compared with last week’s range of $227.71 to $230.49 per cwt. FOB dressed steers and heifers went for $358.46 per cwt to $360.18, compared with $359.54 to $363.78.
The USDA choice cutout Monday was down $1.13 per cwt at $348.20 while select was off $2.46 at $343.16. The choice/select spread widened to $5.04 from $3.71 with 184 loads of fabricated product and 25 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $396.81 per cwt, and 50% beef was $136.52.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $0.90 to $1.10 a bushel over the Mar corn contract, which settled at $4.40 1/2, down $0.01 3/4.
No live cattle contracts were tendered for delivery Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was $348.04 per cwt, down $7.96. This compares with Tuesday’s Jan contract settlement of $349.55, up $2.55.