May 01

CAB Insider: Middle Meats Lower, Ends Hold Up

Federally inspected cattle slaughter last week totaled 613,000 head, down 7,000 on the prior week. Aside from last week’s downtrend, the past four weeks have averaged 611,000 head on an impressive uptick from March’s abysmal 589,000 weekly average.

All of the improvement in recent slaughter capacity utilization has come in the fed steer and heifer segment. Comparing the past four weeks in April to the prior four in March shows a 4.5% (21,000 head) weekly average increase.

The year-over-year contrast for the two months shows quite a difference with March’s slow pace totaling just 95% of a year ago while the April total was 2% larger than a year ago.
The remaining one-fifth of federally inspected cattle harvest is comprised of cull dairy and beef cows, plus a tiny 1.5% bulls. Together, these head counts have drawn dramatically lower by 14% year to date. The trend has been sharply lower since early February when 2024 cow counts peaked at 127,000 head that week, down to the latest 109,000 head confirmed total in early April.

Fed cattle prices showed resiliency last week with a slightly higher average of $183.10/cwt. Early trade in Texas at $181.91/cwt. represented the low end of the range while Iowa/Minnesota topped the market with an average of $185.49/cwt., highlighted by region’s highest reported $187/cwt.

Weakness in boxed beef values are currently the important theme as spring grilling demand has yet to create any signs of surge in prices. The Comprehensive USDA cutout resting at just $299/cwt. is $0.06/cwt. lower than a year ago and well below the mid-March $315/cwt. year to date high.

Price spreads across the carcass quality spectrum are notably narrower at present compared to the three-year average as marbling levels and quality grades are holding at record historical levels in recent data. Combined Choice and Prime carcasses account for 84% of the carcass mix while the CAB carcass certification rate two weeks ago was 40.9%.

Heavy carcass weights recently drove Prime carcass tonnage above a year ago while Choice supplies are nearly par. Latest increases in slaughter should reflect more of the same.
Middle Meats Lower, Ends Hold Up
Beef carcass cutout values have continued a precipitous decline since mid-March, tracking a 5% lower trend in that period. The is firmly against the trend charted in the previous three year average when the comprehensive cutout moved 9.5% higher in the same 6 weeks.

Market observers may pin the cause on the announcement of HPAI in dairy cows for the apparent softer demand. This factor was strongly causative with the precipitous decline in Live Cattle futures contract prices beginning in late March, but is likely less correlated to the dip in boxed beef prices.

Smaller weekly slaughter levels would seemingly spell higher cattle prices, especially in the spring. But larger April head counts resulted in 4.4% larger fed cattle totals than last year in the past four weeks. With fed cattle carcass weights 27 lb. heavier than a year ago as well, the resulting fed beef tonnage suddenly landed well above last year in the past month, just a few thousand head short of that period in 2022. Short term production volume is not nearly as low as it was in March.
Another lesser-known feature of today’s beef market is the price weakness of the highest valued middle meats. Ribeye and tenderloin prices have recently fallen below a year ago. Wholesale Certified Angus Beef® brand ribeyes in last week’s report averaged $9.70/lb., a dollar lower than a year ago and lower than that week in any of the previous three years. Certified Angus Beef® tenderloins last week averaged $13.42/lb., $3.28/lb. lower than the record-high $16.70/lb. set that week last year.

The third coveted middle meat steak item, the 0x1 strip loin, stands in contrast to the former two cuts, lately listed at $8.30/lb., a premium of $1.54/lb. higher than a year ago. Strip loin prices pressed rapidly higher from February through March, hitting the $10/lb. ceiling before pulling slightly lower in April. End users have shown greater demand for strip loins even at this spring’s elevated levels, preferring to substitute them over the higher valued ribeyes.

A degree of waning demand for ribeyes and tenderloins may be a sign of the times, economically, here in the U.S. This is further evidenced by stronger year-over-year prices recently for some chuck and round items, precipitated by sharply lower cull cow slaughter and lean grinding beef availability.
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