Retail Beef Prices Declining; Pressure Cattle

Average retail beef prices in May were down, pressuring fed cattle prices, and the outlook for a reversal of this trend looks bleak without a major demand driver.

The average price for all fresh beef in grocery stores during May was $5.838 a pound, according to Bureau of Labor Statistics and the USDA’s Economic Research Service.  This was up 4.6 cents, or 0.79%, from $5.792 in April but was down $2.15, or 3.55%, from $6.053 a year earlier.  May’s price also was up $1.146, or 24.4%, from the 2010-2014 average of $4.692.

The USDA-ERS average retail price for choice beef in May was $6.081 a pound, down 2.4 cents, or 0.39%, from April’s $6.105 and 33.1 cents, or 5.26%, from $6.412 in May of 2015.  However, this was $1.01, or 19.9%, above the 2010-2014 average of $5.071.

 

RECORD CATTLE PRICES PUSH GROUND BEEF DEMAND

 

The record cattle prices in 2014 and 2015 had a lot to do with strong demand for ground beef, wrote Ron Plain and Scott Brown, University of Missouri Agricultural Economists in an outlook report.

Ground beef prices averaged $4.298 a pound in May, down 35.5 cents, or 7.63%, from $4.653 in May 2015 and the lowest since July 2014 when it was $4.224.

Choice sirloin steak prices in grocery stores averaged $8.678 a pound in May and were the highest since November’s $8.724.  Compared with $8.816 a pound in May 2015, choice sirloin was down 13.8 cents a pound, or 1.57%.

The USDA’s five-area price for slaughter steers averaged $130.20 per cwt in May, down $0.60 from the month before and down $30.50 compared with May 2015.  It was the lowest monthly average price since December.

The LMIC estimated cattle feeding losses at $9.15 a head for steers slaughtered in May.  This was $5.76, or 169.9%, worse than April’s losses of $3.39, but $113.09 per head, or 92.51% better than $122.24 losses in May of 2015.

Fed cattle prices were lower last week in moderate volume. The USDA 5-area average price for slaughter steers sold on a live weight basis was $120.62 per cwt, down $6.90, or 5.41%, from $127.52 the previous week and down $29.62, or 19.7%, from $150.24 a year ago.

 

CASH CATTLE MARKET $4 TO $5 LOWER

 

Cash cattle markets Tuesday were $4 to $5 per cwt lower at $116 to $117.  There were no reports of trades in dressed markets.

Trading cattle on a Tuesday is unusual any more.  And trading at lower money this early in the week without a holiday coming shows less resolve on the part of sellers.  Feedlot showlists were estimated to be mixed but larger overall, which made it more difficult for feedlots to obtain higher cattle prices.

Cash cattle markets last week were $7 per cwt lower at $121 live.  Dressed trades were at $197, down $9 to $10.

A growing number of traders continue to worry about the strength of beef markets in coming weeks and months.  The dog days of summer are ahead, and USDA-ERS projections have pork and chicken production up with exports lagging.

The USDA’s choice cutout Tuesday was $1.42 per cwt lower at $218.15, while select was off $1.17 at $198.21.  The choice/select spread narrowed to $19.94 from $20.19 with 134 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Monday was $142.13 per cwt, down $1.18.  This compares with the Aug settlement Tuesday of $139.27, up $2.60.