Market Trends: Beef in USA

The Choice cutout trended higher through the end of the year before dipping to $1.92/lb. in the second week of January.  The cutout was still $1.92/lb. for the week ending January 27, down 13% from 2016 and down 11% from the previous 5-year average.  The Choice/Select spread was $3.52/cwt.  For the month of January, the cutout was at similar levels to 2012 and 2013 prices.  All Choice primals were down year-over-year for the week ending January 27: short plates ($1.21/lb., -5%), ribs ($2.92, -8%), flanks ($1.02, -9%), loins ($2.51, -11%), rounds ($1.74, -16%), briskets ($1.42, -16%),, and chucks ($1.61, -18%).

The chuck primal decreased through the month of January, and so far in 2017, the chuck primal has had the worst primal performance compared to year-ago prices. The ribs and loin primals trended seasonally higher for the end of the year holidays, but items like ribeyes and tenderloins have come down from their December highs and are now below prices for the last few years.
For the week ending January 27, prices were lower year-over-year for top butts ($2.38, -21%), ribeyes ($6.16, -12%), tenderloins ($9.04, -9%), and ball tips ($2.27, -8%), while values were higher for tri-tips ($3.91, +9%) and NY strips ($5.54, +1%).  Briskets (deckle-off bnls) were lower year-over-year at $2.07, -21% along with petite tender ($3.60, -20%), flank steaks at ($4.30, -17%), and top blade (flat iron) ($2.71, -13%).
Prices were down for other top export items including rib short ribs ($4.00, -10%), chuck short ribs ($3.07, -1%), chuck rolls ($2.56, -10%), chuck shoulder clods ($1.90, -19%), and top inside rounds ($1.97, -14%).
USDA estimates that 2016 beef production was up 6.4% from 2015 at 11.44 million metric tons (25.2 billion pounds).  2017 production is expected to increase by another 2.9% to 11.77 million metric tons (26.0 billion pounds) which would be the largest since 2011.
Source: USMEF


In 2016, fed beef production increased by 7%, and Choice beef production increased by 8.4% as higher percentages of production graded Choice. In 2016, 5.6% of cattle graded Prime, 70.1% graded Choice, and 19.36% graded Select. For the first three weeks of 2017, 6.2% graded Prime, 73.4% graded Choice, and 16.5% graded Select. 

Cash steer prices were down 9% from last year at $121/cwt at the end of January as larger production pressured prices. The January Cattle on Feed report indicated large placements at the end of 2016 that will result in increased production levels this spring/summer. Since the report, futures have moved lower: (January 31 CME Live Cattle Futures closing contract prices with change from December 14): February: $115.60 (+$1.90), April: $114.18 (+$1.43), and June: $104.20.