Consumer beef buying interest is holding strong in the face of inflation, held up by rising prices for competing proteins, said Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, said in a letter to Extension agents called Cow-Calf Corner.
In the first quarter of 2022, retail and wholesale beef prices were sharply higher compared with last year, Peel said. May’s retail all-fresh beef prices were 9.5% higher than last year.
However, beef prices actually rose sharply in the second quarter of 2021 and remained high, he said. Retail prices reached a record high in October with an all-fresh price of $7.548 a pound, decreasing slightly to a May 2022 level of $7.374 a pound.
BEEF DEMAND HOLDING STRONG
Most beef wholesale prices are less than last year’s sharply higher prices, he said. The typical May pre-grilling season boost was more muted or absent this year, but prices generally increased in June leading to higher choice boxed beef prices the past several weeks.
Prices for major steak products are lower than last year but do not indicate appreciable demand weakness at this point, Peel said. Brisket prices are significantly lower than 2021 and steady in the second quarter, but still high compared with recent years.
The increasingly popular sirloin tri-tip has increased sharply the past several weeks and is more than 25% more than the 2021 average price, he said. The ground beef market remained consistently strong for the last year with prices for 90% lean trimmings holding close to the record highs achieved one year ago.
CHICKEN, PORK PRICES RISING
Chicken prices continue to rise and may be helping to support beef prices, Peel said. Wholesale chicken breast meat prices rose more than 69% from the beginning of the year to a peak in late May before pulling back slightly.
More recently, chicken leg and leg quarter prices jumped sharply, he said. In contrast, chicken wings decreased to the lowest levels in two years. From 2017-2021, wings averaged 1.65 times breast meat prices but in 2022 have averaged about one half of breast meat.
Retail broilers continued to increase in 2022 in absolute levels and relative to retail beef prices, Peel said. In May, the ratio of retail all-fresh beef price to the retail broiler composite price dropped to its lowest level since early 2019, meaning broilers are relatively more expensive than beef.
Retail pork prices also rose relative to beef with the ratio of retail pork to retail beef prices at its lowest level in a year, he said. Prices generally are higher for all major wholesale pork products.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $140.00 to $146.03 per cwt, compared with last week’s range of $135.00 to $144.00. FOB dressed steers, and heifers went for $216.47 to $220.44 per cwt, versus $213.01 to $219.19.
The USDA choice cutout Tuesday was up $1.06 per cwt at $267.56, while select was up $0.31 at $246.70. The choice/select spread widened to $20.86 from $19.73 with 122 loads of fabricated product and 21 loads of trimmings and grinds sold into the spot market.
The USDA reported that basis bids for corn from feeders in the Southern Plains were unchanged at $1.90 to $2.00 a bushel over the Jul futures and for southwest Kansas were steady at even the Jul, which settled at $7.60 3/4 a bushel, down $0.23 3/4.
Twenty-five heifer delivery intentions were posted Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was $165.03 per cwt up $0.85. This compares with Tuesday’s Aug contract settlement of $175.30, up $2.35.