Big gains in beef prices
By John Maday
| Monday, March 29, 2010
Wholesale beef prices rallied further last week, with the Choice cutout averaging almost $8 higher than the previous week. Cattle prices didn’t follow though, with the market losing a little ground from one week ago.
The Choice cutout averaged $161.73 per hundredweight for the week, after posting substantial gains every day except Friday. Thursday sales averaged $162.78 per hundredweight, with prices dropping $0.09 on Friday to finish at $162.69. That price is a full $27 per hundredweight and 20 percent higher than one year ago.
While last week’s gains in beef prices stand out, the market has been improving steadily for several months, as have cattle prices. The Texas Cattle Feeders Association notes that fed-steer prices improved by $18 per hundredweight between mid-December when they averaged about $80 per hundredweight to a high of $98 during the week ending March 20. Last week prices seemed to level off between $96 and $97 per hundredweight.
TCFA analysts note that the beef prices rising faster than cattle prices have allowed packers to improve their margins significantly. Something is likely to give this week. If cutout prices continue to hold above $160 or post more gains, packers will need to start paying more for cattle. But if beef prices have peaked and begin to back off, any further rally in fed-cattle prices becomes unlikely in the short term.
