The USDA’s weekly choice boxed-beef cutout value is declining but, at $273.17 per cwt, remains above last year and the 2015-2019 average, according to the Livestock Marketing Information Center.
The LMIC used data from the USDA’s Agricultural Marketing Service to compile the weekly data and post the results on its web site.
Since the cutout is more than last year or the previous five-year average, it implies that more price deterioration is possible without the market being out of line with history, a market analyst said. Traders and producers get used to higher prices pretty quickly and notice when they fall away.
HIGH IN MID-AUGUST
The data showed that this year’s weekly high for the USDA’s weekly choice beef cutout value came in mid-August at $347.02 per cwt. This compares with the secondary high of $338.56 per cwt that came the first week of June.
What’s more, last week’s choice beef cutout value still is higher than the mid-July low of $265.88 per cwt.
The data also showed that the annual high in choice boxed-beef cutout values occurred in the third week of May over the 2015-2019 five-year period. This was at $237.89 per cwt.
Last year’s high in the cutout value is hardly comparable to any other year since it came in the early days of pandemic shutdowns, the analyst said. It was characterized by sharp declines in production and orders that went unfilled.
The production hiccup sent the weekly cutout soaring to $459.04 per cwt the third week of May and was flanked by weekly values of $441.53 and $405.40.
CHOICE/SELECT SPREAD NARROWING
However, while the weekly choice cutout remains above last year and the average, the difference between choice and select beef cutout prices is narrowing and has reached levels that are below last year and the previous five-year average.
The AMS reported the difference between choice and select beef prices, called the choice/select spread, last week at $13.74, down $2.47, or 15.2%, from $16.21 the previous week, down $10.02, or 42.2%, from $23.76 the same week a year ago and down $3.22, or 19.0%, from the five-year average of $16.96.
There is no reprieve in sight for the choice/select spread either until the end of February when spring demand for grilling cuts kicks in. The five-year average shows the annual weekly narrowest point in the spread occurring the last week of February before beginning a strong widening into the first week of June.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $141.72 to $142.66 per cwt, compared with last week’s range of $138.98 to $140.92. FOB dressed steers and heifers went for $222.15 to $222.88 per cwt, versus $209.66 to $218.80.
The USDA choice cutout Monday was down $1.83 per cwt at $272.53, while select was off $0.79 at $257.85. The choice/select spread narrowed to $14.68 from $15.72 with 100 loads of fabricated product and 16 loads of trimmings and grinds sold into the spot market.
The USDA reported Monday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.35 to $1.45 a bushel over the Dec futures and for southwest Kansas were unchanged at $0.40 over Dec, which settled at $5.83 1/2 a bushel, down $0.02 1/2.
No delivery intentions were posted against the Dec live cattle contract Monday.
The CME Feeder Cattle Index for the seven days ended Friday was $160.43 per cwt down $1.15. This compares with Monday’s Jan contract settlement of $165.25 per cwt, up $1.12.