Subscribe to Our Newsletters
BEEF Magazine is the source for beef production, management and market news.
January 23, 2014
The historic action of the wholesale and live beef markets during the past several weeks has been nothing short of remarkable. It’s difficult to grasp just how far these markets have moved in such a short period of time. While the absolute values of the markets are noteworthy, there’s an underlying dynamic at play that is also particularly important.
That is the relative contribution of the middle meats vs. the end meats to the cutout. I addressed this factor in a previous chart, but the recent sharp action in this area merits it a second look. For the first time in the cutout series, end meats have comprised over 50% of the Choice wholesale market, while middle meats fell to below 40%. Generally, when wholesale values escalate quickly, it’s the result of increased demand for middle meats.
However, in this instance, it appears that we’re bumping up against some price resistance. Therefore, buyers are looking to end meats to supply their customers in both retail and restaurant channels. Explained another way, perhaps prices have gotten so high that the relative value of the chuck and round are becoming far more attractive than the rib and loin cuts. Whatever the cause, it’s clear there are some new undercurrents within the wholesale market.
Granted, the market may settle this out quickly and we’ll look back one day and view this as an anomaly. Meanwhile, though, if prices stabilize well north of $200/cwt., this may become an important influence within the pricing structure. This becomes especially important as we look to the spring market.
As such, looking forward, how do you see this influencing the market? And what might this be signaling with respect to market dynamics and beef customers? Leave your thoughts below.
You might also like:
Nevil Speer serves as an industry consultant and is based in Bowling Green, KY.
Nevil Speer has extensive experience and involvement with the livestock and food industry including various service and consultation projects spanning such issues as market competition, business and economic implications of agroterrorism, animal identification, assessment of price risk and market volatility on the producer segment, and usage of antibiotics in animal agriculture.
Dr. Speer writes about many aspects regarding agriculture and the food industry with regular contribution to BEEF and Feedstuffs. He’s also written several influential industry white papers dealing with issues such as changing business dynamics in the beef complex, producer decision-making, and country-of-origin labeling.
He serves as a member of the Board of Directors for the National Institute for Animal Agriculture.
Dr. Speer holds both a PhD in Animal Science and a Master’s degree in Business Administration.
Contact him at [email protected].
You May Also Like
The dollars and sense of sustainabilityFeb 21, 2023
Current Conditions for
Enter a zip code to see the weather conditions for a different location.
Smokehouse Creek Fire becomes largest in Texas historyFeb 29, 2024
Programs demonstrate U.S. beef’s versatility for China’s foodservice sectorFeb 28, 2024
APHIS strengthens animal health surveillance with UME investigation fundingFeb 28, 2024
NCBA, CattleFax partner on new culling resourceFeb 28, 2024