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Vol. 12, No. 67 / April 10, 2013
The wholesale beef market continues to trade very 000 HEAD US STEER & HEIFER SLAUGHTER, JAN - JUL
PRELIMINARY DATA BASED ON DAILY SLAUGHTER ESTIMATES - 7 DAY RUNNING TOTAL
unsettled at this time and this has so far kept cattle prices 650.0
in check. June live cattle prices jumped about 300 points going JAN 11 - JUL 11 JAN 12 - JUL 12 JAN 13 - JUL 13
into Easter weekend as market participants thought that the end 600.0
of Lent and improving demand going into the grilling season
would support higher cattle prices. Futures have drifted lower 550.0
following that two day rally and June live cattle futures closed
yesterday down 32 points compared to the previous close and near
500.0
the contract lows established in late March. One of the main con-
cerns in the beef complex remains the ability of retailers and food-
service operators to pass on higher prices to the consumer. Also 450.0
important, however, is to recognize the damage that slow demand
in the first quarter has had on pent up demand, accumulated in- 400.0 New Year Memorial
4th of July
ventories and generally the overall planning process for retailers Day
and foodservice establishments going into the spring. From the 350.0
NRA restaurant index to retail food sales to the results of publicly JAN FEB MAR APR MAY JUN JUL
traded food companies, there appears to be no argument that busi-
ness conditions during the first three months of the year were 50CL FRESH BEEF TRIMMINGS, USDA, WT. AVG., US C/LB.
challenging. The lost sales during that period are lost for good. 145
Slow sales often lead to backlog in inventories. They also cause
end users to adjust lower their projections for sales in the coming 125
quarter and thus affect purchasing decisions not just tomorrow 2011
but for the next few months. While there is some pent up demand 105
from consumers in northern states who have experienced a much
colder winter and early spring than a year ago, this has to be bal- 85
anced with the overhang from weak sales in the previous quarter. 5-Yr Avg.
Wholesale beef prices at this point appear to be per- 65
forming better than a year ago, in part because of the cut- 2013
2012
backs in steer and heifer slaughter. Combined steer and heif- 45
er slaughter is currently running at a weekly pace of about 468k/
wk, slightly lower than a year ago but the numbers are skewed a 25
bit by the holiday shortened weeks and the resulting backlogs.
For the period March 4 - April 9, steer and heifer slaughter was Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2.517 million head, 3.7% lower than the comparable period a year
ago (see chart). The choice beef cutout on Tuesday evening was controversy (see chart). More recently, however, the price of fat
pegged by USDA at $191.41/cwt., 7.5% higher than a year ago. beef trimmings (which account for as much as 10% of the carcass)
The select cutout at $187.02/cwt was 5.4% higher than last year. has moved higher and it currently is close to the levels achieved in
The cutout continues to be supported at this time by items that, in 2011. The surge in the price of fat beef trim is not unusual for this
part, rely on good export business. The chuck primal is currently time of year but it is still surprising as it was assumed the loss of
up 13% from a year ago, the brisket was also up 13% and the short LFTB demand would permanently shift the demand curve lower
plate was up 12%. Middle meats are also higher than a year ago for this product. The cutbacks in steer and heifer slaughter cer-
but underperforming the overall gains in the cutout, with the loin tainly are part of the reason for the surge in fat trim values but we
primal up 4.4% and rib up 5.1%. One item that impacts the over- also think that end users came into the spring with lighter than
all carcass but does not show up in the primal values per se is the usual inventories. In all, the improvement in the values of the
value of the fat beef trimmings. If you remember, last year the 50CL has been positive, the question remains how fat prices will
price of fat beef trimming declined sharply following the LFTB be sustained once the Memorial Day demand dissipates (see chart)
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