CAB Insider: Will Quality Premiums Continue Higher?

 

By Paul Dykstra, Drovers  

September 21, 2022

 

Federally inspected steer and heifer slaughter has picked up a brisk pace since the conclusion of Labor Day. In the past two weeks, the weekday head counts have averaged 5,300 head (5.3%) more per day than the same period a year ago. As well, a week ago Saturday featured a 77,000 head total in an effort by packers to replenish the supply chain during a holiday-shortened week.

 

Carcass weights have mirrored 2021 trends since May with last week’s steer weights unchanged on the week prior at 904 lb. The latest heifer weights are 84 lb. lighter than steers at 820 lb. each.

 

The fed cattle market has been steady for three weeks in a tight range around $143/cwt. Price variation from north to south in the cattle feeding belt has narrowed since July/August. The range in both regions can be boiled down to roughly a $5/cwt. range with most of the market consolidated once again. This occurred despite the failure of northern packers to see premium beef grading trends return to the lofty levels of the past two years.

 

Prices have fallen quickly over the past two weeks on the boxed beef side of the business. The Choice cutout is down $8/cwt. in that period with this week’s early quotes down to $252/cwt. The CAB cutout value, reported last Thursday, was down more than $4/cwt. in a two-week trend. The seasonal expectation is for continued lower prices into the early part of October in the spot market before fourth quarter demand begins to stare retailers in the face. Prudent protein buyers are making out-front purchases now given the opportunity to procure product at lower prices today for 21- up to 90-day delivery periods.

 

Breaking down the CAB carcass cutout in last week’s pricing report, the 0x1 strip loin jumps out...

 

Will Quality Premiums Continue Higher? ...

 

more, including table, graphs  

https://www.drovers.com/news/beef-production/cab-insider-will-quality-premiums-continue-higher