Market update

The cash fed cattle market trend this summer has been quite positive in relation to history. Prior to the COVID-19 pandemic, cattle feeders could count on cattle supply and beef demand factors aligning to set annual price highs in the spring of the year. April was typically the target month for the high, but realistically any time from April through mid-June would capture the annual high.

So far, the 2022 market has followed a relatively flat pricing pattern. Unlike the stereotypical pattern described above, the year-to-date high was posted just two weeks ago with $146 per hundredweight (cwt) edging out the spring high of $143 per cwt. The relatively late arrival of higher prices continues to be spurred by fewer market-ready, premium grading cattle in the most active cash trading area in the North. 

Beef demand is proving to be more resilient than expected. While it is lower than recent years, it appears to be leveling off. Inflationary impacts are certainly a factor as retailers and distributors have held beef prices on a higher plane to accommodate increased input costs. 

Carcass cutout values have traded in a very stable pricing environment since late April. The Choice cutout has moved little with a range of $257 per cwt to $267 per cwt during this time. 

Similarly, the Certified Angus Beef (CAB) cutout has traded from $272 per cwt to $284 per cwt for the period. The latest Choice cutout value is eight percent lower than a year ago and the CAB cutout is 11 percent lower.

Entering mid-July, lower beef prices are predicted through the dog days of summer. The traditional lower price trend for this period tends to translate into summer lows sought in the market through the first week of August.

Last week’s CAB cutout was slightly lower than the prior week with a $4.25 per cwt decline. Given May and June wholesale beef prices did not undergo the tremendous spikes seen in the past two years, the transition to July has not generated significant price declines so far. However, ribeye and strip loins have finally given up some of their June value, as both items were the notably cheaper cuts in last week’s boxed beef trade.

Carcass weights find annual low

Since the COVID-19 onset, carcass weights have been on a short list of market-influencing talking points in the cattle sector. In May 2020, national average weights rocketed to as much as 48 pounds heavier than the year before. Since this devastating period, weights have struggled to find significantly lower levels.  

A final push of backed-up supplies of fed cattle in the first quarter of 2021 saw carcasses continue to mark new highs. Cattle numbers in the following quarter brought more current and weights dropped 18 pounds in two weeks to match the weekly average of the year prior.

Jumping ahead to 2022, a slow packing sector pace kicked off January with a quick recovery to more impressive daily harvest levels in February. Carcasses still tracked a heavier path than the prior year from February through early May, finally pulling lower.

The annual average carcass weight low appears to have been made during the week of June 13, with steers averaging 879 pounds and heifers averaging 810 pounds. Heifers declined yet another pound in the following week’s data, but steers increased four pounds that week to move the average upward again.

Weights now begin their steady climb to their expected November annual heaviest. Reviewing cattle placement in feedlots this year suggests fewer fed cattle supplies expected in the fourth quarter along with much higher costs of gain will hold carcass weights below a year ago. This will be dependent on the basis trend (cash minus futures price) which guides cattle feeders’ decisions regarding marketing timing.

End-user demand for premium quality grade carcasses remains sharp today, given the premium spreads between grades including CAB carcasses. While impossible to perfectly project carcass values months in advance, the supply and demand evidence we see today suggests fourth quarter premiums for quality could shape up to be quite strong.

Angus youth achieve
carcass excellence

The National Junior Angus Show, conducted annually in July, is best known as a place where junior Angus members display breeding heifers in the show ring. However, it’s the carcass steer competition, possibly less famous as far as junior cattle shows are concerned, bringing the level of competition to new heights this year.    

Forty-two registered Angus steers were harvested in this year’s contest. This exemplary set of cattle graded 30 percent Prime, 60 percent CAB brand (calculating both Prime and Premium Choice) and just seven percent Select. The Prime carcass percentage more than tripled the recent industry average and the CAB share was almost double the brand’s recent average.

The real highlight in this set of steers is the fact nine head, or 21 percent of the carcasses, were Prime, beef carcass yield grade two’s. It appears in the data they would also have qualified for CAB Prime. It’s a fairly special set of cattle that can hit such a lofty marbling achievement while remaining this lean in terms of their finish, with the Prime yield grades averaging a mere 0.36 inches of backfat thickness. 

Readers may quickly recognize backfat measures in commercial fed cattle today are more commonly or well above 0.5 inches. While these steers could have been fed longer in a commercial setting, we might argue they were fed to their most feed-efficient endpoint in the hands of these junior Angus exhibitors. Our congratulations to this group of exhibitors for setting their sights on excellence and achieving it.

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