Author: David Anderson

As cattle prices and the boxed beef cutout have increased, so have briskets.  Higher brisket prices are starting to hit restaurants and home BBQ’ers.  Fewer cattle going to market and tighter beef supplies will pressure beef prices for all cuts, briskets included. 

For the year, through the week ending May 13^th, beef production is down 4.7 percent compared to last year.  Steer slaughter is 4.7 percent below last year and heifer slaughter is 0.3 percent more than last year.  The number of cattle going to market is important for briskets because each animal has two and briskets are a cut that is often sold as the whole primal.  In addition, steer and heifer dressed weights are below a year ago, so total pounds of brisket available is further reduced. 

Prime grade briskets were $2.43 per pound for the week of May 12^th.  Even though price has come down 6 cents over the last 3 weeks it is 16 percent higher than the first of the year and 11 percent higher than a year ago.  Choice, branded, and Select quality grade brisket prices are up similar percentages to Prime since January and compared to a year ago.  

Typically, branded briskets (briskets like certified angus beef or other brands) have the highest price meaning that other quality grades, including Prime, trade at a discount in the wholesale market.  Since February, Prime briskets have commanded the highest price in the market.  That price strength is likely related to slightly fewer cattle grading Prime and more Choice than a year ago.  Many smaller, high end BBQ restaurants source Prime and branded briskets due to their cooked qualities.

What might we expect in our favorite brisket BBQ spots in coming months?  Tight beef supplies and reduced slaughter will keep the pressure on for higher prices.  Restaurants will face higher costs and their ability to pass those on in the form of higher prices might be limited.  Even though less beef is produced leading to higher prices, fears of a recession, reduced consumer incomes, and spending may limit the ability to pass on higher costs. 

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Anderson, David. “Brisket Prices on the Rise.” Southern Ag Today 3(20.2). May 16, 2023. Permalink

Photo by Hayden Walker: https://www.pexels.com/photo/a-person-slicing-barbecue-beef-brisket-9397270/

There’s a lot going on in livestock markets but we can’t keep our eyes off the fed cattle market where prices soared again last week to another record high for the third week in a row.  Surging live fed cattle prices are pulling calf and feeder cattle prices along for the ride. The cutout value is beginning to increase but there are not a lot of effects yet on retail beef prices.  This week we’ll take a brief look at packer and retailer margins stemming from these changes in the live market.

Prices and Margins

Fed cattle prices got well into the $180s per cwt with $182-$183 in Iowa and Nebraska.  Kansas and Texas were about $175 per cwt.  The weekly 5-market weighted average was $180.44.  The Livestock Marketing Information Center estimated cattle feeding average returns were positive from September through March 2023.  The increase in fed cattle prices indicates that cattle feeding returns will continue to be positive in April.  

The Choice cutout value averaged about $297 per cwt last week.  But, it increased throughout the week, and by Friday it was $302 per cwt and $305 on Monday morning.  The live-to-cutout price spread is often used to indicate packer margins.  As such, it should be taken with a big grain of salt because it does not include the packer’s costs.  It is simply the difference between the cost of the cattle and the value of wholesale beef plus the drop credit.  The live-to-cutout spread was $259 in March compared to $385 a year ago.  Recent price moves indicate a spread of about $237 in mid-April.  

Similar to the live-to-cutout spread, we can calculate a cutout-to-retail price spread that reflects a retail (grocery store) beef margin.  It, too, has to be taken with a grain of salt because it does not include their costs which includes the cost of product that does not sell.  Retail beef prices have been relatively flat at about $7.60 per pound for more than a year.  The March retail Choice price was $7.64 per pound.  The cutout-to-retail spread was $1.47 in March compared to $1.65 in March 2022.  The 5-year average spread was $1.17 per pound.  It’s likely that this spread will tighten as the cutout increases. Keep in mind also that beef production is expected to decline by about five percent in 2023.  The market will likely test the consumer’s willingness and ability to pay more for beef in coming months.  

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Anderson, David. “Another Week, Another Record.” Southern Ag Today 3(16.2). April 18, 2023. Permalink

Fed cattle prices surged into record territory last week, with the daily average 5 market live fed steers hitting $175.87 on April 7^th.  Daily average fed steer prices last reached the $170s in late 2014 and early 2015, with a high of $172.08 on November 26^th, 2014.  Steer prices have, generally, been increasing since the beginning of the year, with a couple weeks of dips in mid-January and mid-March.  

The calf market surged along with it.  Georgia, 7-800 pound feeder steers began the year at $156 per cwt and finished last week at $176.  The same weight steers in the Southern Plains have advanced from $184 in January to $193 last week.  Lighter weight, 4-500 pound steers in Georgia and the Southern Plains averaged $240 and $247 last week, respectively.  

Packers have continued to demand cattle as supplies have tightened.  Beef demand appears to continue to be good.  While wholesale prices for steak cuts like ribeyes and loin strips have declined over the last couple of weeks, 90 and 50 percent lean boneless beef and cuts like briskets have increased.  Higher fed cattle prices have pulled calf and feeders higher.  Lower feed prices are also boosting feeder cattle prices.  

The big unknown in the market is beef demand over the course of the year.  The effect of federal reserve action to slow the economy to fight inflation is yet to be fully felt.  Will a broader segment of consumers buy less beef in response to tightening incomes?  Can retail beef prices increase to reflect record live animal prices or will margins absorb the higher live prices?  So far, packer margins have shrunk absorbing higher live prices.  Regardless of those questions and answers, beef supplies will continue to tighten.  High calf and feeder prices may provide some opportunities for cattle ranchers to grab some profits.  

Tomorrow’s SAT will look at futures market prices and some ways to protect these higher prices now for this Fall.

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Anderson, David. “Cattle Prices in Record Territory.” Southern Ag Today 3(15.2). April 11, 2023. Permalink

Many meat items have holiday driven or seasonal peaks in demand.  For example, turkeys at Thanksgiving, chicken wings and the Super Bowl, hamburgers in grilling season, and lamb at Spring religious holidays. Christians, Jews, and Muslims have holidays where lamb may feature and we are now in the midst of those Spring holidays.

Live lamb prices hit record highs in 2021 and early 2022 due to relatively tight supplies and the continued strong demand due to people trying new food items during the pandemic.  As consumers returned to their normal habits following the pandemic and budgets tightened due to inflation, lamb demand contracted and prices collapsed.  More lamb supplies are also pressuring lamb prices lower this year.  Of course, imported lamb plays a large role in lamb supplies.

Average light weight 60-70 pound lambs in San Angelo, TX (the largest lamb auction market in the U.S.) averaged $230-$240 per cwt last week compared to $340-$350 per cwt last year.  These are light weight lambs heading to a meat packer.  Prices typically peak a couple of weeks before Easter and then decline as the holiday demand passes.  Currently, It looks like prices have already hit their seasonal peak.  

Wholesale lamb prices have declined along with live lamb prices.  Lamb leg prices were $4.10 per pound last week compared to $5.87 at this time last year.  Wholesale rack of lamb is about $2.00 pound cheaper than last year at $11.52.  Lower retail prices have begun to show up in special features at grocery stores. 

Over the last two decades, an important shift has occurred in lamb markets.  A “non-traditional” market has emerged driven by growing ethnic markets, direct sales to consumers, and some direct to restaurant trade.  Hair sheep breeds replacing wool breeds have aided some of this change.  Hair sheep breeds are allowing producers in the South to enter this market again.  Statistics on sheep numbers for most Southern states were discontinued back in the 1970s as fewer and fewer sheep were in the South.  It appears that growing non-traditional markets are providing some opportunities for farmers in the South.  

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Anderson, David. “‘Tis the Season for Lamb.” Southern Ag Today 3(14.2). April 2, 2023. Permalink

There are a lot of interesting things going on in livestock markets as we start Spring (at least by the calendar, if not the temperature).  Calf prices are sharply higher, corn prices are down a little, and hog prices and beef exports are struggling.  But, this week we’ll look at beef cow slaughter which is down sharply from earlier this year and compared to a year ago.

From the first week of the year through the first week of March 621,900 beef cows have gone to packers.  That is 53,300 head fewer (down 7.9 percent) than the same period last year.  The 63,000 head sent to slaughter for the week ending March 4^th was the smallest non-holiday week beef cattle slaughter since early April 2021. 

Beef cow slaughter data is reported by USDA with states aggregated into regions.  Most Southern states are in Regions 4 and 6.  Region 4 includes the deep South from Mississippi to North Carolina and up to Kentucky.  Beef cow slaughter this year in region 4 is down 7.4 percent from last year.  Region 6 culling, which includes Texas, Arkansas, and Louisiana, is 10.1 percent smaller than last year.  It looks like culling in both regions has slowed even more over the last couple weeks.  One notable region is showing an increase in beef cow slaughter.  Region 7 includes Iowa, Kansas, Missouri, and Nebraska and slaughter is up 3.4 percent over last year.  Drought remains severe in Kansas and Nebraska according to the drought monitor.

It is worth noting that beef cow slaughter normally declines seasonally a little from January into March and April.  This decline in slaughter this Spring is larger than normal.  

Most everyone who follows the cattle market knows that large numbers of beef cows were sent to market in 2022 due to drought and low calf prices relative to costs.  One of the interesting questions for 2023 is whether cow culling slows down.  The answer, so far, appears to be “yes.”  

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Anderson, David. “Beef Cow Culling Sharply Lower.” Southern Ag Today 3(12.2). March 21, 2023. Permalink