Wholesale Beef Defies Seasonal, Turns Higher

Wholesale US beef prices headed higher this week turning against a seasonal trend but with much more volatility.

USDA data on the choice boxed beef cutout value show that prices rose every day since Friday’s low of $245.72 per cwt.  The value Thursday had risen $5.11, or 11.2% to $250.83.

The spread between choice and select beef widened this week as the price for select beef went to $244.73 per cwt, up $4.53, or 18.6%, from $240.42 on Friday.  The choice/select spread as of Thursday was $6.10, down from $5.30 May 13.

The bump in the choice/select spread, however, may be only temporary, as the market is fighting a strong seasonal trend lower.  Data from previous years does allow for an uptick in the spread, but the strong indicator is for a narrowing into the first week of August.

Normally, the choice/select spread peaks seasonally in mid-June and narrows into the August low.  Last year, and this year, the seasonal peak has come in mid- to late May.

But last year, the seasonal summer low came right on time, stretching out the late-spring/early summer decline.

 

CHICKEN PRICES LOWERED BY BIRD FLU

 

Avian influenza, or more specifically the bans on imports of US poultry meat because of the US’s worst-ever outbreak of bird flu, is lowering chicken prices, which could affect beef demand and consumption.

The heaviest incidence of bird flu outbreaks have been concentrated in the table egg flocks and on turkey flocks in Midwestern states.  This creates the conditions for the pressure on broiler prices.

Since the bans on imports of US poultry center mostly on US chicken meat, while the disease itself has concentrated on the egg-laying flocks, it creates a surplus of meat, which falls on the US market.

The USEA estimates lower egg production as a result of the outbreaks and the depopulating of the flocks that comes with it.  Table egg production totaled 593 million dozen in April, 0.6% lower than a year earlier.  The forecast for 2015 was lowered to 6.9 billion dozen, a decline of 5.3% from 2014 and a decrease of 334 million dozen from last month’s forecast.

The number of layer chickens affected by bird flu through early June was more than 34 million.  As a consequence, the wholesale price for a dozen large eggs in the New York region averaged $1.69 in May, about 30% more than a year earlier.

 

CASH FED CATTLE MARKETS QUIET

 

The USDA Thursday reported only a handful of cash cattle transactions.  300 steers weighing an average of 1,460 pounds sold at an average $151.36 per cwt on a live basis with 73 heifers weighing 1,325 pounds sold at $153.  Market sources said these sales were in Iowa.

On a dressed basis, the USDA reported 75 head moving with an 866-pound carcass weight at $239.

Most cash cattle markets Thursday remained quiet with bids of $150 per cwt on a live basis meeting asking prices of $155 to $158.  On a dressed basis, bids were posted at around $240 per cwt, compared with asking prices nearer $250.  Last week, cattle sold at $152 to $155 live and $242 to $244 dressed.

The CME Feeder Cattle Index for the seven days ended Wednesday was $225.73 per cwt, down $0.74, compared with Thursday’s Aug settlement of $221.92.