As the Christmas and New Year’s holidays approach, it is clear that wholesale demand for certain cuts of beef and pork is dropping.
On average, the wholesale price of boneless ribeyes peaks two to three weeks ahead of the Christmas holiday as retail grocers and restaurants stop ordering holiday fare and concentrate on selling previous purchases.
USDA data show wholesale beef ribeye prices falling to $810.35 per cwt last week from the record high of $894.35 the week before, a drop of $84.00, or 9.39%. These large cuts make up the rib roasts that grace many holiday tables.
That decline is by no means extraordinary, however. In the same week last year, the wholesale price of ribeyes fell $44.00 per cwt, or 5.45%, to $762.97 from $806.97. The previous five-year average price peaked a week earlier at $705.72 per cwt and then fell to $684.94 the following week, a drop of $20.78, or 2.94%.
A graph of ribeye prices shows that the average and last year’s price lines dropped even more steeply in the second week after the peak.
That may not happen this year, though. The line from the peak to last week’s price was almost straight down. If it does, correct more steeply the price could drop below last year’s for the first time since the first week of March.
HAM PRICES DIP BELOW LAST YEAR
The wholesale price of trimmed “green,” or uncured, hams dropped below last year a week ago as orders tailed off seasonally, USDA data showed. Last week, the price of hams fell $5.01, or 5.66%, to $83.45 a pound from $88.46 in the prior week.
The peak in holiday green ham purchases is less well defined than it is for rib roasts, possibly because there are many more of them. There is a small spike in the five-year average about the first or second week of December, but this year’s prices declined right through both.
Last year, there was a rise in ham prices to the annual peak the second week of November and another, shorter peak a month later.
This year, because of the uncertainty of the effect the Porcine Epidemic Diarrhea virus was having on pork supplies, there tended to be much more volatility to pricing.
The annual high for green hams usually occurs in the summer as demand for sandwiches goes up. The 2014 annual high was reached in the first week of August at $143.49 per cwt, $61.93, or 75.93%, higher than the five-year average of $81.56.
Another 2014 price peak, which could be more closely associated with the end-of-year holidays, occurred the second week of October at $139.04 per cwt. By contrast, last week’s USDA price was $83.45.
CASH CATTLE $7 TO $8 LOWER
Cash cattle markets this week are $7 to $8 per cwt lower at $156 to $157 on a live basis. A smaller dressed-basis trade was reported at $252, down $2 to $4.
Pressure from sharply lower live cattle futures was said to be the root cause of the decline, although lower beef prices also played a part.
The USDA reported its choice beef cutout value Wednesday at $242.41 per cwt, down $0.47 from Tuesday. The select cutout was $231.13, down $3.12.
The choice/select spread widened to $11.28, and there were 132 loads of fabricated product sold into the spot market.
Live cattle and feeder cattle futures are expected to trade lower again today amid further long liquidation.
The CME Feeder Cattle Index through Tuesday was $234.69, down $0.58, while the nearby Jan contract settled Wednesday at $216.60.