Market Updates

Weekly slaughter head counts are the key data points gauging feedyard currentness and record boxed beef values this spring. Outcomes in those two metrics, while both dependent on slaughter rate, are working at odds with each other.  

A typical May market is characterized by tight supplies of fed cattle to meet demand for Certified Angus Beef (CAB) brand middle meats for grilling season; however, this May, the cattle are reaching new heights for CAB and Prime percentages, but processing flow can’t satisfy spring demand. 

Last week’s 669,000 slaughter total was a large highlight within a string of less robust weeks. Reports indicate this week’s total will be closer to 640,000, as packers intend to ease the pace on Saturday, providing plant personnel a break for the Memorial Day holiday. Observance of the holiday will idle plants next Monday. 

      Notable international beef news includes last week’s announcement that Argentina is suspending beef exports for 30 days in response to the country’s reported near 50 percent annual inflation. Argentina supplies almost 25 percent of China’s imported beef, leaving a significant short-term gap in China’s needs.  

      This news is unsettling to the global market, as the supply loss portends higher global beef prices. Opportunity for increased U.S. beef sales to China is likely limited as a direct result of this 30-day abnormality.  

While China has shown excellent growth for U.S. exports, current domestic supply and demand fundamentals are overriding further immediate export gains. Beef supply from cattle qualified under China’s import guidelines is currently another growth limiting factor. 

      CAB carcass cutout prices in last week’s average were up another $4.79 per hundredweight (cwt) with Choice up similarly with a $4.17 per cwt increase. Select product was left on the sidelines, averaging a weekly decline of $0.21 per cwt. The Choice/Select spread widened to $16.48 per cwt, leaving attractive opportunity for grid sellers to gain premiums for Choice, CAB and Prime carcasses. 

Ribeyes drove most of the market increase last week as custody of product seems more important to end users than price. Demand has been red hot ahead of Memorial Day and Father’s Day lurks just a few weeks later on the calendar. Calls for cheaper beef prices to round out Beef Month remain unsatisfied in what has been an abnormal upward pricing pattern thus far in May. 

Paul Dykstra is the assistant director of supply management and analysis at CAB. He can be reached at pdykstra@certifiedangusbeef.com.