The spread between choice and select beef has yet to follow seasonal norms and narrow sharply, meaning grocers and restaurants are still buying holiday fare.
The seasonal trend toward the decline of choice beef prices in relation to select beef prices is well entrenched. Meat buyers stop placing orders for choice and prime beef just before consumers get their holiday plans set.
The shift away from choice beef also comes at a time of year when the percentage of choice grading carcasses versus all other carcasses that come through the packing plants. USDA data show a jump in the percentage of choice carcasses beginning with the first week of December that dips briefly in early January and climbs to an annual high in the first week of March.
Last year, however the December bounce in carcass quality began in the second week of December.
As of Thursday, the choice/select spread was $14.16, compared with $13.03 a year ago when the spread began to narrow sharply the last two weeks of December.
BEEF PRODUCTION LOOKS LOWER
Beef production appears to be declining, however, which could support the choice/select spread. Total slaughter this week through Thursday was estimated at 438,000 head, down 44,000, or 9.13%, from the 482,000 in the same period a year ago.
However, beef production per animal is up sharply from a year ago. Last year each carcass weighed an average of 810 pounds, while this year, they are running about 828 pounds.
But carcass weights still aren’t keeping up with the decline in slaughter. Calculating carcass weights with total slaughter shows beef carcass production of 3.63 million pounds through Thursday, compared with 3.90 million in the same period a year ago, a 6.93% decrease.
Such declines in total beef production could support choice and lower-grading product into the end of the year, minimizing the seasonal tendencies.
CASH CATTLE TRADE LOWER
Cash cattle trade this week has been scattered but lower. Many feedlots are holding out for at least steady prices, but the futures market isn’t buying it.
Dec live cattle futures settled Thursday at $166.45 per cwt, down $0.40, well below last week’s cash price range of $172 to $173. Feb settled $0.15 lower at $166.97.
Cash cattle sales were reported at $166 per cwt on a live basis, $6 to $7 lower than last week. On a dressed basis, sales were reported at $264 to $265, about $3 lower than last week.
Cash trading remained at a standstill in major portions of the Plains states with bids posted at $167 to $168 on a live basis and asking prices holding near $175.
The USDA’s boxed-beef cutout prices were lower Thursday, with choice boxes at $254.42 per cwt, down $1.99, and select boxes at $240.26, down $1.52. The USDA said ribs, chucks and rounds were steady to weak, and loins were lower. Only trimmings were higher amid strong demand for ground beef.
Movement was good, with 250 loads of fabricated product sold into the spot market. Spot sales were lackluster earlier this week, so it looks like buyers are catching up for their first-weekend-of-December newspaper feature ads, which often focus on beef as consumers shift their desires away from poultry.
FEEDERS REMAIN STRONG
Cash feeder cattle markets remain strong amid continued tight supplies. The CME Feeder Cattle Index for the seven days ended Wednesday remains near record highs at $244.19, well above the Jan futures close Thursday of $235.95, which itself was up $1.12.