CAB Insider: Market update; Texas quality grades dissolve
The disparity in fed cattle values between North and South has favored a premium for Nebraska and Iowa cattle since the spring. The weather-induced imbalance had only revealed itself to the degree of $1 to $2/cwt. until last week’s trade, when it widened. Southern feeders, under the pressure of ample market-ready supplies, traded early last week in a range of $107 to $109/cwt. while Northern feeders held firm until late-week when prices increased to the $111 to $113/cwt. range. The week’s average regional basis difference was $4.50/cwt., favoring Nebraska vs. Texas/Oklahoma fed cattle.
The federally inspected harvest was strong again despite the holiday-shortened week, with an estimated 573,000 head, compared to a year ago at 569,000 head. As had been predicted, June came to a close with a very large total harvest and what could be the largest monthly sum for the year.
Two weeks ago we discussed a price spike for Prime carcasses as supplies dipped to the spring low. That scenario has since become further pronounced, with the latest weekly information pegging the Prime cutout at +7% over a year ago. The commodity Choice cutout value is -1.5% under a year ago, bringing the spread between the two grades to $29.35/cwt.
The boxed beef trade saw a relatively subdued week because of the holiday interruption. The CAB carcass cutout value was fairly resilient in June even as the expected seasonal decline brings us most recently to a three-week lower trend. The total magnitude was just $5.52/cwt. lower, with Choice in the same pattern on a four-week decline of $4.72/cwt. Select product fell precipitously out of favor as demand for the lesser-marbled product waned. That pulled Select cutout down $13.74/cwt. over five weeks as the supply of premium-marbling beef just now starts to come off of the spring low.
While middle meat discounting has been a theme for weeks now, the CAB lip-on ribeye held fairly firm last week as 0x1 strip loins continued to falter. As far as primals are concerned, briskets are losing the most value recently but that’s predictable at this point in the season, as smoking demand tails off into mid-July.
Few robustly higher price quotes are noted. Items that did see positive territory include loin ball-tips, flap meat, flank steaks and CAB whole-muscle grinds across the chuck, round and sirloin.