Cutout value increase may drive beef prices upward at grocery store

Jeff Swenson

Prepared and written by Jeff Swenson, DATCP Livestock and Meat Specialist. The Market Update draws information from several sources, including trade publications, radio broadcasts, agricultural news services, individuals involved in the industry as well as USDA NASS and AMS reports.

Jeff Swenson

The Choice beef carcass cutout value was $7.30 higher on the week, ending last Friday at $290.98. A sustained value of $290 or higher will no doubt cause retailers to raise in-store beef prices, and $300 will be in sight by the end of this week.

Costs are increasing throughout the supply chain as a whole, from increased input costs for cow-calf producers, higher feeder cattle and feed costs for feedlot operators, to higher cattle prices and operating costs for packers. Wholesale distributors will be asked by their customers to explain the higher prices.

Last week’s estimated harvest of 603,000 head was 48,000 head less than the previous week and 62,000 less than the same week a year ago. Fall placed cattle in the South have been marketed for the most part, and Northern fed cattle supply is tight. There are also reports of fewer forward contracted cattle available, so packers will rely on the cash market to cover needs. While fed cattle supply is getting smaller, it has not yet reached the low levels expected. April Live Cattle at the Chicago Mercantile Exchange are trading at contract highs.

Higher pork prices a no-show

Pork producers would normally be seeing seasonal higher hog prices, but that has failed to materialize. In a new report, Brian Earnest, lead economist for animal protein at CoBank, says a decrease in domestic demand and excess supply is weighing on the market. He does point out that the supply is not at a level to stress harvest capacity.

The report does offer some optimism. Given USDA’s estimate of a 2% year-over-year decline in total market hogs, Earnest said it appears the industry is drawing down future hog availability, which should help support prices later this year. CoBank also says the U.S. pork export picture is improving with January 2023 increasing by 9% compared to last year.

The pork carcass cutout value ended last week at $77.90, a drop of $1.90 on the week. The weekly harvest estimate was 2.370 million hogs, 119,000 less than the previous week and 60,000 below a year ago. 

Sheep numbers fall

The USDA called market lambs steady to $10.00/cwt higher last week. The cutout value fell $8.81 to end the week at $519.79. Estimated harvest for last week was 34,000, which was 4,000 head less than the previous week and 6,000 less than a year ago. Overall lamb and mutton production is 2.6% higher year-to-date, with harvest 5.9% higher. 

Pork exports rise

February pork exports totaled 219,729 metric tons (mt), up 11% from a year ago, while export value increased 10% to $596 million. February pork export value equated to $59.76 per head, up 10% from a year ago. Exports accounted for 28.3% of total February pork production. 

Beef exports totaled 105,057 mt in February, down 3% from a year ago, while export value dropped 16% to $757.8 million. Beef export value equated to $391.71 per head of fed slaughter in February, down 12% from a year ago. Exports accounted for 14.6% of total beef production in February.

Exports of U.S. lamb muscle cuts totaled 224 mt in February, up 26% from a year ago, while value increased slightly to $1.23 million. 

State livestock market roundup

All classes of cattle were steady to higher this week. High-yielding, high-grading cattle brought $138 to $172/cwt. Groups of high Choice and Prime steers and heifers sold into the $180s/cwt.  The Holstein steer market was higher, ranging from $114 to $150/cwt with the top end bringing $150 to $155. Silage fed, under finished or heavy dairy breed steers brought $74 to $114/cwt. Dairy x Beef steers were bringing $112 to $162/cwt.

Cows were steady to higher. A bulk of the cows brought $70 to $92/cwt with some selling to $100/cwt and above. Doubtful health and thin cows were bringing $70/cwt and down. Dairy breed bull calves were mostly steady, bringing $100 to $300/cwt with some heavier, well cared for calves selling to $350. Beef and Beef Cross calves were selling to $520/cwt with a few higher.

Unshorn market lambs were bringing $145 to $170/cwt with shorn lambs bringing $140 to $150/cwt. Some packages of lighter lambs sold to $290/cwt.