As steaks, roasts and other meats become more expensive, ground beef seems to be carrying the day, said Elliott Dennis, Extension livestock economist at the University of Nebraska, Lincoln, in a letter from the Livestock Marketing Information Center called In The Cattle Markets.
Lots of simple and easy-to-cook recipes while families attempt to stay within a budget, and demand for lean beef is strong.
Combine that with low imports of lean beef, and cutter cow boxed beef prices are likely to remain high, Dennis said. This consumer demand should continue to support higher prices for the slaughter cows.
Ultimately, the tradeoff will be between chasing after those $310-per-cwt values on 500- to 600-pound feeder cattle in 2024 and taking the cash up front this year, he said. Producers need to be extremely diligent about calculating the tradeoff.
Understanding what all needs to go right, and what can go wrong, for heifers and bred cows to pay themselves back will be extremely important this fall, Dennis said.
The annual fall feeder run is about to begin, and given cattle prices, forage conditions and the economy the question of whether heifers will be retained, he said. Considering these factors, the herd expansion might not occur with as much momentum many might think.
GROUND BEEF
Americans love ground beef, which comes primarily from trimmings, Dennis said. Meat processors use trimmings from fed cattle, cows, bulls and imported product to create the different lean/fat combinations offered at retail. Beef trimmings from the domestic market consist of about 70% of all beef trimmings used. The remaining 30% comes from imports.
Trimming supplies from fed cattle are much more stable than cows and bulls, since the latter tends to move up or down with the cattle cycle, he said. Imports take up the slack.
But while imports have dropped off by about 500 million pounds this year, leading to higher retail prices, consumers continue to pay more for the product, Dennis said. And trying to guess how much consumers are willing to pay is difficult.
BOXED BEEF AND CUTTER COW CUTOUT
There is a seasonal inversion in cutter cow prices, Dennis said. Seasonally, prices normally climb until May or June and then decline as more cows come to market.
But last year and this year, prices rose later in the year, driven mainly by strong demand for ground beef, he said.
Heifers as a percent of total cattle on feed remain at the highest levels they have been in the last 20 years, he said. With the choice/select spread favoring quality meat, lean meat remains in demand, thus, higher cow prices.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $181.64 per cwt to $185.02, compared with last week’s range of $178.95 to $187.74 per cwt. FOB dressed steers, and heifers went for $283.68 per cwt to $290.47, compared with $279.95 to $289.61.
The USDA choice cutout Tuesday was down $3.20 per cwt at $302.12 while select was down $1.63 at $281.78. The choice/select spread narrowed to $20.34 from $21.91 with 127 loads of fabricated product and 38 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.60 to $1.75 a bushel over the Dec corn contract, which settled at $4.76 1/4 a bushel, up $0.04 3/4.
The CME Feeder Cattle Index for the seven days ended Monday was $252.87 per cwt, up $0.12. This compares with Tuesday’s Sep contract settlement of $253.50 per cwt, down $0.75.