Market trends: Beef

The Choice cutout had large value increases in Mar as seasonally higher values for ribs & loins pushed the cutout higher.  However, on Mar 10, the Choice cutout was $2.14/lb., down 4% from 2016 and still at the lowest level since 2013, for this time of yr, reflecting larger production. The Choice/Select spread was $0.07/lb.  Choice short plates ($1.53, +3%) and rounds ($1.81, +1%) were higher yr-over-yr, while values were lower for ribs ($3.18, -13%), flanks ($1.24, -6%), briskets ($1.50, -6%), loins ($3.11, -4%), & chucks ($1.65, -1%).  Loin & rib values have increased a lot since the end of Feb:  the loin increased from $2.63/lb. to $3.11/lb., and ribs from $2.88/lb. to $3.18/lb., although both remain below last yr’s values. For the wk ending Mar 10, prices were lower for ribeyes ($6.91, -17%), top butts ($3.33, -13%), briskets (deckle-off bnls) ($2.13, -14%), flank steaks ($5.23, -12%), top blades (flat iron) ($2.71, -8%), & tenderloins ($10.57, -2%); even for ball tips ($3.14), petite tenders ($4.82) & NY strips ($7.06); and higher for tri-tips ($4.03, +10%). 

Exports continue to exceed yr-ago levels with higher prices for popular cuts: rib short ribs ($4.35, +5%), chuck short ribs ($3.17, +19%), top/inside rounds ($2.48, +10%), & chuck shoulder clods ($1.98, +1%); and lower for chuck rolls ($2.30, -14%). USDA estimates that 2016 beef production was up 6.4% from 2015 at 11.44 mill MT (25.2 bill lbs). 2017 production is expected to increase by another 4.1% to 11.91 mill MT (26.25 bill lbs) which would be the largest since 2010.

Events

After increasing by 7% in 2016, fed beef production was up 4% from last yr thru Feb. Choice beef is up 8.4% in 2017 following an increase of 8.37% in 2016, driven by further increases in the % of fed beef production grading Choice. In 2016, 5.6% of fed beef graded Prime, 70.1% Choice, and 19.4% Select.  2017 to date is 6.3% Prime, 73.1% Choice, and 16.1% Select.

Cash steers were down 8% from last yr at $1.28/lb in mid-Mar due to larger production. The Feb Cattle on Feed report showed that both marketings and placements for the month of Jan were the largest since 2014.  Futures have been trending higher since mid-Feb: (Mar 15 CME Live Cattle Futures closing contract prices with change from Jan 31): Apr: $117.70 (+$3.52), and June: $108.25 (+$4.15).