February 9, 2009

Boxed beef prices last week extended the downward trend that began nearly three weeks ago while wholesale pork values were off just slightly from last Friday (February 7).

 

The US Department of Agriculture quoted the choice beef carcass value Friday afternoon at US$136.87 per hundredweight, down US$4.96 for the week. From the Jan. 20 close, which was the last day of higher prices in that grade, choice beef has declined US$16.10, or 10.5 percent.

 

Select beef was lower as well but not as much as choice. Select lost US$4.94 for the week and US$11.71 since January 20.

 

The weak economy and loss of additional jobs in recent weeks have caused consumers to tighten their budgets, analysts said. Families are not dining out as much, and many of the food shoppers are buying down to the cheaper cuts of meat.

 

Demand for each of the three main protein categories - beef, pork and chicken - was down in 2008. Glenn Grimes and Ron Plain, agricultural economists at the University of Missouri, estimated demand for beef was off 4.1 percent in 2008, off 3.5 percent for pork and down 1.0 percent for chicken.

 

With demand weaker, especially for the more expensive cuts, the result has been a decline in wholesale prices for the premium steaks produced from the beef middle meats, analysts said. There is normally a softening of prices for these cuts after the December holidays when demand slows and consumers face higher heating bills and credit card payments coming due from holiday gift buying.

 

The primal value for the choice grade beef rib cut Friday was quoted at US$188.39. This was down US$28.03 from the year-ago price of US$216.42. The USDA's choice loin primal quote Friday was US$178.47, compared with US$211.83 a year ago.

 

The lower beef prices have weighed heavily on the cash cattle markets this winter. This week a year ago, beef packers paid mostly US$92 per hundredweight on a live basis and US$147 to US$148 for dressed cattle. They purchased cattle last week from US$80 to US$82 live and US$130 to US$131 dressed. Sales so far this week are mainly dressed from US$131 to US$132.

 

The pork markets were basically flat compared with last week, but against year-ago prices they were down about 6 percent. In January, pork prices averaged about 2 percent above a year ago. Analysts said since wholesale pork prices are considerably below beef, consumers may purchase about the same amount or possibly a little more pork but less beef or other higher-priced protein options, such as seafood. Pork is positioned between the higher priced beef and cheaper chicken, so it may not be affected as much by the uncertainty in the economy.

                          

Last week's cattle slaughter was estimated at 622,000 head, compared with 631,000 a week ago and 616,000 a year ago.

 

The week's hog slaughter estimate was 2.222 million head, compared with 2.267 million a week ago and 2.195 million a year ago.

 

The USDA estimated total beef, pork and lamb production for the week at 945.2 million pounds. Last week's output was 961.8 million pounds, and the year-ago figure was 928.6 million pounds.

 

Broiler/fryer slaughter for the week was estimated at 156.494 million head, compared with 148.079 million a week ago and 165.446 million a year ago.