Market Update
Market direction is uncertain, though holiday demand looks steady.
Early November’s federally inspected cattle harvest, at 623,000 head, was a fair reduction on the prior week’s 642,000. The fed-steer/heifer market ended the huge rally of $12 per hundredweight (cwt.) during the previous two weeks with a slightly lower average just above $123 per cwt. on a live basis. As mid-November began, market direction was anyone’s guess, but when live-cattle futures in Chicago faltered early, cattle feeders quickly gave up hope.
Carcass weights could move higher as the mid-November reports become available, but at this point we remain 16 pounds (lb.) under a year ago on steer carcasses at 901 lb. in the latest data. The October Cattle on Feed report is due Nov. 17, but the current picture shows fed-cattle supplies sufficient, but declining through the end of the year.
The unfortunate news for beef buyers was that the big run-up in fed cattle prompted packers to run their boxed-beef prices significantly higher. The CAB cutout two weeks ago was up almost $5 per cwt., with Choice up $5.50 per cwt. and Select up almost $2 per cwt. Some analysts have pointed to the camera-grading changes as a causative factor in packers paying more for cattle, especially of higher quality, but actual impact may be less dramatic than the news.
Without surprise, Certified Angus Beef® (CAB®) brand ribs drove the upward price direction as holiday demand was very much in full swing, and last week’s “lip-on, up” CAB ribeye roll was priced in the wholesale spot market at $9.12 per lb., 81¢ higher than the same week a year ago. That price pattern shows an earlier trip out of the gates for ribs this year than in any of the previous five years. The spike in peeled tenderloin price is virtually straight up since late October, yet the price at $11.92 per lb. last week is 77¢ per lb. higher than a year ago, though much lower than 2014-2015 at this point.
We’re showing a decent increase on strip loins, as well, with 0×1 CAB strips up 42.5¢ last week, but they are pricing well within an expected range for this time of year — between $5.75 and $6.30 per lb. With increases on most items across the carcass, we saw chuck items increase the most on the teres major and arm roast, while flat irons were within reason.
Round items saw a 10¢ to 20¢ increase for the most part with eye of round devalued. Thin meats were steady to just slightly negative last week while flat-cut briskets are a bit pricier than in the last two years for this time period at $4.39 per lb. One would have to call CAB grinds priced at an expected seasonal value today although not as cheap as a year ago.
Editor’s Note: Paul Dykstra is a beef cattle specialist with CAB. Read more of Dykstra’s biweekly comments in the CAB Insider at www.cabpartners.com/news/cabinsider/.