Wholesale beef prices tumbled last week after nearing the $200 threshold the previous week. The daily Choice Boxed Beef Cutout value was $192.74/cwt. Friday, $4.08/cwt.lower week to week. Select was $4.16 lower at $175.54.
“So far this year, the market has seemed to run into considerable resistance at prices north of $195/cwt. To a large degree, this has been a relative price issue,” says John D. Anderson, deputy chief economist with the American Farm Bureau Federation, in last week’s In the Cattle Markets.
“Market participants appear to be split in their views as to the reason for the recent break,” say Steve Meyer and Len Steiner in Thursday’s CME Group Daily Livestock Report. “Some argue that the pullback is largely a by-product of the disruptions caused by Hurricane Sandy, which caused widespread transportation backups and also forced foodservice operators, food retailers and processors to delay deliveries due to the storm.”
For others, Meyer and Steiner say, “the recent sharp break is another indication that wholesale beef prices may have gotten somewhat ahead of themselves.” They explain wholesale beef values moved contra-seasonally higher in September and October.
Moreover, Anderson points out a rally in pork prices in recent week’s reduced price pressure and helped wholesale beef values stage the surge week before last.
Taking a longer view, Anderson says, “Beef prices are almost certainly headed further into record territory over the next several months. Tightening beef and total meat supplies will support higher prices. This will be especially true if these tighter supplies are accompanied by even modestly better economic growth in the new year. Higher beef prices will likely be necessary to support fed cattle prices at a level that will return the feeding sector to profitability. That higher level may be tough to get to in the next few weeks, though.”