David Anderson writes in Southern Ag Today: While cattle prices have declined sharply in a break that began in July, there has been little action in the boxed beef cutout. The cutout value represents the value of the seven primal beef cuts in the proper proportion of the carcass. It is often thought of as a good, representative wholesale value of the beef carcass.
The Choice cutout declined from $397 per cwt the week before the July 4th holiday to $363 per cwt by the first week of August. Declining cutout values in the weeks following Independence Day are the normal seasonal price pattern. Cutout values tend to increase leading up to Labor Day, and they did this year, climbing back to a weekly average of $388 by late August. The Choice cutout has since remained in a range between $374 and $379. While the cutout remains at historically high levels, it has been below last year’s Labor Day surge. So, comparing to last year’s price levels is a bit misleading in that last September’s $413 per cwt price peak was a record high, except for two weeks in May 2020 when COVID shut packing plants.
Among the primal cut values that make up the cutout, the primal rib is the only one climbing in value and hitting new highs for the year. The Choice primal rib value hit $667 for the week of October 2nd. The rib normally increases seasonally up to the Thanksgiving and Christmas holidays. Most of the rest of the primal cuts, round, brisket, plate, and flank, have been declining in value as they often do seasonally. The decline in the primal flank value has been especially striking, down 27 percent compared to a year ago and 36 percent lower than its peak in June.
Where to From Here?
The Choice beef cutout tends to decline slightly in the Fall. Beef production normally increases and changing consumer purchases often result in lower prices. This Fall, continued tight beef supplies should keep the overall cutout value historically high even if we do see some seasonal declines. Given the normal seasonal pattern, it is difficult to see sharply higher cutout values boosting cattle prices.
Anderson, David. “Little Movement in the Cutout.” Southern Ag Today
