CAB Market Insider

Abbreviated slaughter schedules have been prevalent because of poor weather conditions burdening packers with power outages and transportation issues.

Following two reduced weekly head counts due to the holidays, during the second week of January, the estimated 549,000 head total was 17 percent smaller than the same week a year ago. 

CAB records second largest pounds of product sold 

The week starting Jan. 15 also started below recent normal weekday head counts, with just 112,000 head harvested, compared to the more typical 125,000 head range. 

Although the second week of January’s $173.80 per hundredweight (cwt) fed steer price was down 70 cents per cwt, the market found decent support as packer needs to fill the supply chain were offset by cattle being pushed back in the harvest schedule. 

Live cattle futures prices have been mounting a comeback in seesaw fashion since the first of the year. The February contract has gained $3.50 per cwt since Jan. 2, but the setbacks have been as frequent as progress. 

Boxed beef are reflecting the recent smaller production volume with the Choice cutout up two percent or $5.83 per cwt on Jan. 15 versus Jan. 8. 

The Certified Angus Beef (CAB) cutout shows a decline of $2.75 per cwt in the week-to-week average. Yet, the decrease follows a week when the CAB price advanced while the Choice cutout trended lower, generating an abnormally wide CAB to Choice price spread of $26.31 per cwt. 

The second week of January’s opposite relationship between the two was a trailing realignment.

On average, across several years, January through the first week of February is typically a lower beef demand period when prices move sideways. It’s a time when high-flying middle meat values deflate from December, and end meats strengthen a bit as the cheaper roasting items come into focus. 

Logically, spot market cutout prices may remain more elevated in light of recent supply struggles. 

In December, the brand recorded the second largest pounds of CAB product sold by packers to licensed partners.

Carcass weights to plunge, quality to remain

The onset of severe cold temperatures and snow accumulation in a broad spectrum of cattle feeding regions will pull fed cattle production down. 

Beyond the reduced weekly slaughter head counts, carcass weights are set to plunge. Since the all-time record high carcass weights were recently recorded in late December, there is certainly some flex in the production system as far as boxed pounds of product per head. 

From a cattle feeder’s perspective this conversation is void since feed efficiency and daily gains have been slashed dramatically during the past 10 days. Pen conditions will erode in the future as temperatures warm up, adding to cattle performance declines. 

The adjacent chart details fed cattle carcass weights for the past two years. 

The 2023 weight trend started with the first four months trailing 2022 by an average of 16 pounds per carcass. The winter storms and brutal temperatures are still fresh in our minds with the duration of poor conditions measured in months, not weeks. 

Although this season’s weather impact is not yet two weeks underway, a similar pattern in decreased cattle performance will come through in the carcass weight data very soon. 

Formula steer weights were down five pounds as of Jan. 15, as the weather shift was initially developing. This was the tip of the iceberg. 

Shifting focus from carcass weight to carcass quality, the outlook remains positive through the first quarter. 

CAB has previously detailed extreme cold temperatures haven’t historically had a negative impact on marbling scores. In fact, the trend is just the opposite, as improved national average carcass quality, in terms of percent U.S. Department of Agriculture Choice and Prime and percent CAB acceptance, is often noted during these weather conditions. 

Increased potential carcass quality is one of the only benefits of a polar vortex event for cattle feeders. Feedyards may see more of their Angus-type cattle qualifying for the CAB brand than would have been achieved under conditions favoring heavier carcass weights. 

Since marbling scores below Modest 00 – the minimum requirement for Premium Choice – are the primary reason carcasses are not certified for the brand, marbling improvement is key to capturing more CAB carcasses and premiums. 

But, lighter average carcass weights – primarily in big steers – pull the percentage of carcasses exceeding the brand’s 1,100-pound maximum lower than otherwise might have been realized in ideal feeding performance conditions, increasing the pen’s percent CAB acceptance. 

Lighter weights also mean fewer ribeyes exceeding the brand’s traditional 16-square-inch maximum and those measuring more than the one-square-inch upper limit.

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