Consumer concerns with inflation are quite real and retail beef values closed out the first quarter 15% higher than last year. Even so, the end user beef market has gained a widening appreciation for Prime beef.
Carcass weights in the latest USDA report for the week of May 9th show a large seven pound drop for steers and 10 pounds lighter on the heifers. This suggests currentness has picked up in the fed-cattle sector.
The cattle placement pattern beginning in the fourth quarter of 2021 shows the finished cattle supply will start to swell in June and could become a 20,000 head surplus over a year ago.
The coming weeks should fuel interest in high-quality beef cuts for grilling. As the share of harvest-ready calf-feds grows in the fed cattle supply, we anticipate seasonally lower quality grade trends.
Cattle feeders have been more willing to sell finished cattle in recent weeks since corn prices have elevated the ration cost and feed conversion efficiency decreases at the end of the feeding period.
In 2019 Certified Angus Beef reported an aggregate packer CAB premium total of $92 million. By 2021 that total was nearly double, resulting in $182 million in CAB premiums.
Quality grades set record highs for combined Choice and Prime carcasses during the first five weeks of 2022, slightly higher than last year. Prime grades are down marginally from year-ago at 10% vs. 10.8% last year.
The slaughter pace last week was the best we’ve seen in 2022, with an estimated Federally Inspected total of 659K. Given the previous week’s disappointing pace due to weather, these are very promising totals.
Considering the production factors of the past two years, it’s logical to consider that advances in carcass quality, or higher marbling scores, will be less likely to develop in 2022 than in the previous two years.
Regardless of the market examined, “uncertainty” is an accurate descriptive term. U.S. equities are unsettled despite a promised interest rate hike and that spills over to cattle and beef.
