Market Closeout
Carcass weights find bottom late.
In a continuation of tracking seasonal transitions we turn attention to carcass weights. Confirmed USDA weight reports lag two weeks behind, but formula-priced steer and heifer carcass weights are current through last week. That represents a large portion of the total head count.
Fed-cattle carcass weights traditionally find their annual lightest point in the spring of the year. In the past decade, the annual low was realized in May or early June. Yet the latest data indicate that this year’s low was potentially realized the last week in June at 848 lb. for combined steers and heifers. This isn’t finalized, but formula cattle weights the first week of July were 7 pounds (lb.) higher — the beginning of a seasonal turnaround when weights will build to their annual heaviest in the fall.
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The “so what” in this data is the fact that even though the fed-cattle slaughter counts are small, we saw lighter cattle harvested well past the early June expectation. Supplies of market-ready cattle are very current, and both the market average price and quality price premiums show potential to outperform typical July expectations.
Looking ahead, there may be implications for further light carcass weights depending on the basis relationship between cash and futures. However, cattle supplies read as quite tight in the fourth quarter, resulting in the likelihood that weights and finish on harvested cattle could be lower than recent years’ trend lines.
Now is the time for cattlemen to evaluate the potential for exceptionally strong premiums in high-quality Certified Angus Beef® (CAB®) traditional and Prime carcasses down the road. Feedlot management protocols favoring protection of bred-in marbling potential make financial sense a majority of the time, but that may become more glaringly true in the fourth quarter this year. When high-quality carcasses are in short supply, the price spreads tend to explode. Be ready.
Editor’s note: Paul Dykstra is director of supply management and analysis for Certified Angus Beef. This article is reprinted from the July 12, 2023, CAB Insider newsletter. Subscribe at https://cabcattle.com/newsroom/cab-insider/. [Lead photo by Lindsey Sawin.]
