It looks like wholesale beef prices are being supported by lower production, although lower pork production doesn’t seem to have had as much of an effect.
Red meat production this year could continue to decline, and may not recover noticeably until 2024, a market analyst said. As a result, prices could be supported for another two years, at least.
BEEF PRODUCION DOWN
The USDA put beef production last week at 509.8 million pounds, down 7.7 million, or 1.49%, from 517.5 million the previous week and down 35.5 million, or 6.51%, from this year’s peak weekly output of 545.3 million the second week of January.
Last week’s production also was 37.1 million, or 6.78%, less than the 546.9 million pounds produced in the same week a year ago but up 13.92 million, or 2.81%, from the 2017-2021 average of 495.88 million.
Looking at a graph from the Livestock Marketing Information Center on the production data, it looks like weekly beef production will dip below the 2017-2021 average within a week or two, the analyst said.
And, while beef prices may be gleaning some strength from the declining production, the fact that it still is more than the five-year average may be one reason that more support hasn’t come into the picture, the analyst said.
Wholesale beef prices traditionally have been linked more to supply than to demand. Consumer demand was considered to be near steady for a given week in a year, giving rise to some seasonalities to the meat-price structure, but leaving the primary driving force to supply.
Actual demand also is hard to measure, since it can be defined differently than consumption.
But with the decline in production this year have come some price gains. All primal cuts have shown price increases over the last month as production of all beef has declined.
PORK SUPPORT MORE TENUOUS
However, as well supported as wholesale beef prices seem to be, pork support is more spread out. This may be because weekly wholesale pork prices are less out of synch with last year or the previous five-year average, the analyst said.
The USDA listed pork production last week at 514.5 million pounds, down 29.4 million, or 5.41%, from 543.9 million a week earlier, down 73.2 million, or 12.5%, from the 2023 high of 587.7 million the second week of January, down 28.7 million, or 5.28%, from 543.2 million the same week a year ago and down 18.26 million, or 3.43%, from the 2017-2021 average of 532.76 million.
Perhaps the markets will see more price support for pork in coming weeks, but there may have to be more of a production divergence from normal first, the analyst said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $160.20 to $165.08 per cwt, compared with last week’s range of $160.59 to $162.08. FOB dressed steers, and heifers went for $254.08 to $258.82 per cwt, versus $251.10 to $258.71.
The USDA choice cutout Wednesday was down $1.12 per cwt at $287.83 while select was down $2.82 at $276.43. The choice/select spread widened to $11.40 from $9.70 with 84 loads of fabricated product and 15 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 $1.50 to $1.60 a bushel over the Mar corn contract, which settled at $6.40 1/2, up $0.11. Bids in Kansas were steady at $0.75 over May, which settled at $6.35 3/4 a bushel, up $0.05 1/2.
The CME Feeder Cattle Index for the seven days ended Tuesday was $183.04 per cwt, up $0.42. This compares with Wednesday’s Mar contract settlement of $188.30 per cwt, down $1.50.