Beef Market Trend Sep-Oct 2017
The Choice beef cutout has trended lower since mid-June, as seasonal demand (July 4) slowed & held steady at $1.91 - $1.92/lb. with the wk ending Sept 22 @ $1.92/lb., up 3% from 2016. The Choice/Select spread moved seasonally lower from June to Aug as rib & loin cut values trended lower while chucks & rounds received a boost from fall and winter promos. The spread trended higher in Sept, but has been below yr-ago levels since late July, and was $0.04/lb for wk ending Sept 22.
Choice chucks ($1.71, +12%), briskets ($1.47, +12%), short plates ($1.19, +7%), rounds ($1.69, +5%), and flanks ($0.94, +3%) were higher yr-o-yr, while ribs ($2.97, -2%) & loins ($2.38, -4%) were down. Ribeyes continue to come off their record high levels in June, down 8% at $6.20/lb. Most loin & rib cuts have moved lower since mid-June (after July 4th pre-buys). NY strips ($5.07, +7%) & tri-tips ($3.36, +2%) are up from 2016, but tenderloins ($8.93, -3%), ball tips ($2.08, -11%), and top sirloin ($2.50, -19%) are lower. Flank steaks ($4.14, -1%) are steady since Aug—comparable to 2016—while petite/shoulder tenders ($3.40, +3%), brisket ($2.17, +5%), and top blade (flat iron) ($3.00, +6%) are higher.
Major export cuts showed strength in the late summer/early fall, even with increased production, with short ribs ($4.67, +10%), chuck short ribs ($3.33, +13%), top/inside rounds ($2.00, +4%), shoulder clods ($2.02, +7%), & chuck rolls ($3.12, +16%) all higher than 2016. Wholesale values for 50% trim has continued to drop since it peaked at $2.01/lb. in May, falling to $0.44/lb. in late Sept, still up 13% from last yr’s lows. Thru mid-Sept, fed beef production was up 4% & Choice beef production was up 7.4%. 5.6% of fed cattle graded Prime, 72.4% Choice, and 17.9% Select to date, with the % grading Choice & Prime above 2016. The percentage of production grading Choice has been over 73% every week since the first week of July. USDA’s Sept forecast is beef production is up 5.3% in 2017 to 12.05 mill MT and 2018 should be record large, up 2.7% to 12.37 mill MT. Cash steers were up 2% at $110/cwt end of Sept with futures contracts trending lower in July-Aug & slightly higher Sept with expected large supplies (Sept 28 CME Live Futures: Oct: $108.98 (-$5.42), Dec: $115.05 (-$0.13).