Expana reported Wednesday that USDA choice and Certified Angus Beef markets were dull with many buyers seemingly on the sidelines.
The question was, though, what are the buyers waiting for? Were they wanting some clear direction from consumers, lower wholesale prices from beef packers, or are they cutting back on feature plans for the upcoming Labor Day holiday? Or is it something else?
HIGH PRICES OFFPUTING TO CONSUMERS
Despite the data that shows strong support for retail and wholesale beef prices, there is no real national employment adjustment factor to compare apples to apples for actual demand. The solid price foundation could be just more employed people with money to spend on a good meal or two, i.e. more money in the economy, butting up against fewer cattle and less beef production.
Anecdotal observation points to certain segments of society being more careful about their beef purchases by watching for sales or switching to less expensive cuts. It’s quite a price shock to look in the meat case and see steaks with price tags that are three or four times what they were just a couple of years ago.
US beef exports are off, too, which may be a good thing for domestic consumers as it leaves beef that might have been shipped to a foreign country on the table for US consumers.
Expana may have alluded to restricted consumer interest when it said Wednesday that some retail grocers may be cutting back on their Labor Day holiday beef features, although historically this would be unusual. The meats associated with the Labor Day holiday are very similar to those for the Independence Day holiday == ground beef, hot dogs and chicken, with a few pork chops thrown in.
YEAR-END HOLIDAY SUPPORT
With fed cattle supplies tightening, it would not be out of the question for retail meat buyers to be looking ahead to the year-end holidays. While turkey dominates for the Thanksgiving Day holiday, there is a segment of the population that prefers a ham a rib roast or a quality steak, either by itself or with the turkey.
And while the major grocery chains have their features planned months in advance and much of their expected meat needs booked, there remains a certain portion of their buying that comes near the holiday itself. It’s this portion of their needs that may be coming to the wholesale market now rather than in October or November. If it is, wholesale beef prices could be supported
Whatever happens, it’s an interesting market to follow.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $235.00 per cwt to $242.27, compared with last week’s range of $233.00 to $241.92 per cwt. FOB dressed steers and heifers went for $366.72 per cwt to $383.28, compared with $365.34 to $382.74.
The USDA choice cutout Wednesday was up $4.92 per cwt at $374.86 while select was up $5.42 at $351.36. The choice/select spread narrowed to $23.50 from $24.00 with 64 loads of fabricated product and 19 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef was $421.12 per cwt, and 50% beef was $177.15.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.45 to $1.60 a bushel over the Sep corn contract, which settled at $3.79 3/4, down $0.01 3/4.
No live cattle delivery intentions were posted.
The CME Feeder Cattle Index for the seven days ended Tuesday was $336.21 per cwt, up $0.18. This compares with Wednesday’s Aug contract settlement of $345.02, up $3.97.