Choice/Select Beef Spread Widening Seasonally

The weekly average difference between wholesale prices for choice and select beef is widening and has a habit of widening even more until mid-December.

That difference, called the choice/select spread, had a 2011-2015 average weekly bottom date in the first week of August at $4.93 per cwt.  Last year, the bottom came later, in the second week of September, at $5.72 per cwt.

This year’s bottom came the last week of August at $1.15 per cwt.

Normally, the annual weekly low point for the choice/select spread comes about the first week of March.  For the 2011-2015 period, the weekly low was $1.89 per cwt.  Last year, the annual low came the second week of February at $3.51 per cwt.

This year’s annual low came last week.  Before that, the spring low came in the third week of February at $1.25.

 

FALL CHOICE DEMAND STRONG

 

The wholesale demand for choice beef in the fall for holiday dinners often takes the spread to its widest point in the year.  For the 2011-2015 average, the spread is widest the first week of December at $15.46 per cwt.

However, last year, the wide-point in the spread occurred the first week of June at $23.81 per cwt.  The fall peak, at $17.60 fell well short of eclipsing the late spring peak.

This year, looks to be a mirror of last year, only with greater extremes.  This year’s peak also came the first week of June at $30.38 per cwt.

With the annual low coming just five weeks ago and the tendency for it to peak around $15.00 to $18.00 makes it seem unlikely that fall holiday demand will take the spread back up to the late spring high around $30.00.

But if the fall price spread is going to widen as far as the June high, it likely will be ribeye demand that takes it there.  This cut normally makes its annual high in late fall.

Last year, there was a surge in wholesale prices for this item that make the annual weekly average high of 933.76 cents a pound.  The next highest price came the second week of March at 881.05 a pound.

This year, there was a late-spring peak to 1,022.43 cents a pound.  It was far and away the largest spring peak price for this cut, and it may be too high for the fall demand to eclipse.

But if fall demand for boneless beef ribeyes does take out the late-spring high, it could mean prices well above 1,100 cents a pound.  And it may just be enough to set a new high for the choice/select spread.

 

CATTLE, BEEF RECAP

 

No cattle sold last Wednesday on the Livestock Exchange video auction.

Cash trade was reported late last week at $107 to $108 per cwt on a live basis, steady to $1 lower than the bulk of last week’s action.  Sales in dressed markets were reported at $172, steady to up $2.

The USDA’s choice cutout Tuesday was up $0.65 per cwt at $197.87, while select was up $0.74 at $189.02.  The choice/select spread narrowed to $8.85 from $8.94 with 82 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Monday was $155.76 per cwt, up $1.39.  This compares with Tuesday’s Oct settlement of $152.42, up $2.07.