Cutout values, which determine the wholesale price of beef, have seen a significant increase. These values, although not reaching their highest levels ever, have surged due to the soaring prices of fed cattle. On June 12th, the Choice cutout reached $337.43 per hundredweight (cwt), climbing by $23 in just one week and $30.99 since the start of June. Although slightly below last year's peak of $337.56 on June 11th, 2021, it stands as the highest value since August 2021.
This rise in cutout value affects all parts of the cow, including the rib, loin, and brisket, which have seen price jumps of more than $45 per cwt in the past week. The brisket witnessed the largest increase, with a growth rate of 20 percent. The Select cutout also experienced growth, albeit not as much as the Choice cutout, resulting in a widening Choice-Select spread from $20.12 to $27.19 since the beginning of June.
The cow boxed beef cutout, representing beef from cows, has been steadily increasing from around $194 per cwt in January to $227 per cwt in early June. While beef cow slaughter remains lower than last year, dairy cow slaughter is surpassing last year's figures and is likely to increase further as milk prices face challenges.
The rapid rise in wholesale cutout values over the past two weeks, following the Memorial Day long weekend, indicates strong beef demand as the summer grilling season kicks off. According to the USDA's AMS national weekly retail beef report, around 64.1 percent of surveyed stores featured at least one beef item in their advertisements this week, slightly down from 71.7 percent the previous week.
Although beef production is expected to remain lower than last year, which supports higher wholesale beef prices, it usually increases during the summer months. However, even with this anticipated rise, production will still fall short of last year's levels. Reduced beef production, along with robust beef demand, has led to a substantial decline in beef stored in cold storage since the beginning of the year. Since January, cold storage beef stocks have decreased by 86 million pounds, which is a 16 percent reduction.
Reaching the all-time record set during the peak of the COVID-19 pandemic is unlikely to happen anytime soon. Nonetheless, the combination of limited beef supplies and higher fed cattle prices will continue to provide support for wholesale beef prices, reflecting the current market conditions.
Photo Credit: steveoehlenschlager
Categories: Ohio, Livestock, Beef Cattle