Beef carcass cutout values ended 2023 with a whimper, remaining fairly flat through December although holding at a higher level than 2022 or the 2017-2021 average, according to USDA data compiled and published by the Livestock Marketing Information Center.
And since the cutout almost always begins at a lower level in the first weeks of January than it showed in the waning days of December, it can be assumed that this season will show no change to the pattern this time around, a market analyst said.
CONSUMER BUYING IN QUESTION
The USDA choice beef cutout price for the last week of January was $291.45 per cwt, up from $290.19 a week earlier but down from $291.76 the week before that. This action was firmer than the 2017-2021 average, which shows a drop through December with a kick higher in the last week of the year. 2022 action was uncharacteristic in that it rose sharply through December.
For months, consumer beef buying actions have confounded many in the cattle and beef industries, remaining strong as inflation ate into their spending power. Predictions of a major pullback from the more expensive of the three popular proteins in the grocery meat case have come to naught.
Shoppers regularly picked up choice or branded beef over select or no-roll products, and grocers were able to keep even prime beef in the meat case, presumably at a profit.
But with the holiday season and its attendant loin and rib demand in the rearview mirror, analysts again are stretching their necks out to say that maybe, just maybe, consumers will pay credit card bills rather than focus on high-quality beef products, at least until grilling season resumes.
Some analysts are even referring to the lackluster performance of the USDA’s choice beef cutout as an indicator that such a consumer pullback was beginning in December. Although some ascribed the limp year-end performance of the cutout as grocery and restaurant meat buyers expecting a dip in consumer buying interest in December and limiting their January inventory.
THE WEATHER EFFECT
Weather forecasters are calling for a major winter storm this week in the Northeastern US. If snow blocks roads and highways there to slow or stop traffic for a time, meat consumption will be affected, the analyst said.
Most obvious will be the restaurant trade where customers will not, or cannot, venture out to eat. These folks will stay home and either scavenge out of the fridge or grab a quick something on the way home.
Grocery shopping also will be affected but not in the same way. The problem for many will be deliveries of replacement stocks for that which is sold.
Some of the missed grocery buying will be made up, but for restaurants, a meal missed is a sale missed.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $173.57 per cwt to $173.98, compared with last week’s range of $172.00 to $175.59 per cwt. FOB dressed steers, and heifers went for $273.16 per cwt to $273.94, compared with $269.19 to $274.88.
The USDA choice cutout Monday was up $1.67 per cwt at $278.83 while select was down $0.17 at $259.36. The choice/select spread widened to $19.47 from $17.63 with 103 loads of fabricated product and 28 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 $1.25 to $1.35 a bushel over the Mar corn contract, which settled at $4.55 a bushel, down $0.05 3/4.
The CME Feeder Cattle Index for the seven days ended Friday was $229.02 per cwt, up $0.93. This compares with Monday’s Jan contract settlement of $223.87, up $0.75.