Cutout Values Drop Further In December

Even though beef cutout values seemed to rise in December, a look back at values in previous months tells a different story and shows why packer buyers were reluctant cattle buyers.

A Livestock Marketing Information Center graph clearly shows the decline.  All quality grades showed a clear decline from August through December, although branded and choice beef had mild upswings in November, the overall trend was lower.

The same graph also shows the comparative advantages of prime beef pricing over all other types.  Retailers and restaurants will pay more for marbling than for branded products, even though consumer demand for branded products appears to be growing if the brand meets their expectations.




During the last half of 2015, the decline in the overall cutout value was focused on the end cuts, the chuck and rounds as a decline in primal rib values was interrupted by holiday demand, which came most notably in November but remained strong in December.

Choice primal chucks tended to decline all year but fell away more sharply in the last four months, going to $159.70 per cwt in December from $198.50 in August, a decline of $38.80, or 19.5%.  Put another way, this is a drop of $543.20 a head on a 1,400-pound slaughter steer.

Primal round values showed similar declines after a swing higher in June, July and August.  From the August peak, the value of choice primal rounds dropped $51.88 per cwt, or 23.5%, to $169.24 from $221.12.  On that same 1,400-pound steer, this is a drop of $726.32.

Prime grading carcasses aren’t as valuable to producers when it comes to the end cuts.  There is a slight price advantage in the chuck, but the nod goes to branded beef for the rounds, although branded products tend to be made up mostly of choice- and prime-graded beef.

Brisket prices also show a tendency among meat buyers to favor branded product over anything else.  However, these cuts are fattier anyway, and the extra fat of a prime brisket easily could be seen as a detriment.




Steak values showed less seasonal price weakness in the last quarter of 2015 with much of it coming in prime values.  Branded beef and choice primal ribs rose in November and December after a slide from the May highs through October.

The gains in branded, choice and select ribs in the last two months of the year narrowed the value gap with prime product, but prime still held a clear price advantage.

Prices for loins tended to follow the same general pattern as the whole, declining from an August peak, but there are some variations.  As with ribs, the difference between prime and all other differentiated grades narrowed during the period, but the narrowing came because of a decline in prime values.




Cash cattle trading was reported in the Plains Thursday at $133 to mostly $134 per cwt on a live basis, up $1 from last week.  On a dressed basis, cattle traded at $209 to $210, down $1 to $2.

USDA reported mixed wholesale beef prices Thursday, with choice off $0.05 per cwt from Wednesday at $235.16, and select up $0.35 at $229.43.  The choice/select spread narrowed to $5.73 from $6.13, and there were 69 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Wednesday was $162.62 per cwt down $1.42.  This compares with the Jan settlement Thursday of $158.80, down $1.97.