CAB Market Insider 

By: Paul DykstraThe fed cattle market was defensive during the third week of July, pressured by slippage in boxed beef values and an underperforming futures market. 

Fed cattle in the North traded in a wide range from $193 to $198 per hundredweight (cwt), averaging $196 per cwt on the week, which was two dollars per cwt lower. With a $186 to $188 per cwt price range on small spot market volume, the South continues to trade several dollars behind the North.

Carcass weights jump

from summer lows

Carcass weights made a jump up to 916 pounds on the steers, up five pounds in the latest week’s data. Despite the absence of any normalcy in fed cattle weights this year, the chart line has shown the emergence of a summer dip in carcass weights. 

This will potentially replace the summer low point two weeks ago at 911 pounds for steer carcasses and 830 pounds for heifers.

A few more weeks of data is needed to confirm this marks the summer low. If so, the combined steer and heifer summer low carcass weight will be two pounds heavier than that reached in early February. 

This pattern stands in stark contrast to a year ago – and most modern years – when the early February carcass weight average was 25 pounds heavier than that year’s lightest weight reached in June.

Boxed beef

market trades soft

The boxed beef market traded softer last week in the expected late July pattern. 

Middle meat steak items are finding little buying interest as prices are quickly declining. Wholesale buyers are reluctant to “catch the falling knife,” preferring to buy hand-to-mouth, rather than be caught with expensive inventory and the risk of prices continuing lower.

Ground beef remains a summertime demand driver and the fuel continues to be poured onto this fire as 90 percent lean grinding beef will not soon return to abundant supplies. 

As Certified Angus Beef (CAB) recently reported, U.S. Department of Agriculture (USDA) Select subprimal cuts from the round continue to see price support to fulfill grinding demand.

Quality in Texas runs high

Quality grades continue to run high as record-heavy seasonal carcass weights meter out marbling-rich product in fed steer and heifer plants. 

The USDA Prime grade has been the beneficiary of longer feeding periods with the national average Prime share at 10.5 percent. Prime percentages of 12.5 percent, marked in the spring of 2020 and 2021, remain the all-time records. However, the national average Prime grade is always lower in the summer, so the most recent spike to 10.5 percent in June captures the new record for this time period. 

A deeper look into the state-by-state grading data shows a strong upward trend in carcass quality in Texas packing plants. 

Of the three states with the largest packing plant capacity, Texas is rarely noted for strong production of Prime or CAB carcasses. In 2023, the Texas plants averaged 4.5 percent Prime, well behind the national average of 9.2 percent. However this March, the state’s Prime share has steadily increased from 4.5 percent to 6.6 percent of fed cattle carcasses.

This would be less remarkable if Nebraska and Kansas packers were locked in a similarly increasing Prime pattern this summer. However, these two states are producing a more seasonally declining grade into the summer, despite posting impressively high Prime carcass shares when compared to prior years. 

Texas steer carcass weights were last reported at close to 50 pounds higher than a year ago for the same week. Weight increases are widely noted across all regions this year, but the magnitude of the increase is less pronounced while looking to more northern packers. 

The Iowa carcass weight is 30 pounds higher than a year ago, in comparison. 

The wide fed cattle price spread is indicative of these regional differences in weights. As well, heavier weights in Texas are promoting the positive carcass quality grade trend. 

Also, the beef on dairy cattle supply increase in recent years has been most prevalent in Texas. This can’t be ignored as an impactful development in the carcass quality discussion in Texas. 

These two factors together combine to tell the story of marbling upticks in the South this summer.  

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