Wholesale Beef Prices Are Starting The New Year Off Strong, According to Economist Derrell PeelMon, 21 Jan 2019 11:20:00 CST
Mondays, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Dr. Glenn Selk. Today, Dr. Peel reviews the strong start to the year that wholesale beef prices are currently having.
"Wholesale beef markets are starting 2019 with a continuation of generally strong prices seen last year. For the first three weeks of the year, boxed beef cutout prices are up 2.9 percent for Choice and 3.4 percent for Select compared to the same period last year. In 2018, weekly boxed beef prices averaged 2.2 percent higher year over year compared to 2017. Wholesale beef prices were higher in 2018 despite a projected 2.8 percent increase in beef production and larger pork and poultry supplies. For the week ending January 18, 2019, Choice boxed beef prices were $212.36/cwt. and Select boxed beef price was $207.07/cwt.
"Middle meats have provided the most support to cutout values in recent months. Current Choice rib primal price is $344.79/cwt., up 9.8 percent year over year. Last year, rib primal prices averaged 6.2 percent higher compared to 2017. Choice loin primal price is currently $280.80/cwt., up 4.7 percent compared to the same week last year. In 2018, Choice loin primal prices averaged 1.5 percent higher year over year.
"Currently, chuck primal price is $174.23/cwt., down 2.5 percent from the same week last year. Across all weeks in 2018, chuck primal prices averaged 2.0 percent higher year over year. Choice round primal value is currently $168.40/cwt., down 1.8 percent from the same week last year. In 2018, round primal prices averaged 3.3 percent lower year over year compared to 2017.
"The brisket market has been a juggernaut in recent years with strong barbeque demand combining with traditional brisket markets, such as corned beef and pastrami, to push brisket values higher. Current brisket primal price is $190.74/cwt., up 10.4 percent year over year. In 2018, brisket primal values averaged 15.8 percent higher compared to the previous year. Brisket prices have generally trended up over the last decade. In 2009, brisket primal prices averaged 69.2 percent of boxed beef cutout prices. By 2018 brisket primal prices averaged 83.7 percent of boxed beef cutout values.
"Beef carcass value is a function of the primal composition of the carcass and the primal values. The rib primal has the highest average primal value, averaging 168.2 percent of cutout value in 2018 and represents about 9 percent of carcass weight. The loin primal represents 16 percent of carcass weight and the lion primal value averaged 133.3 percent of average cutout value in 2018. Over the last decade, rib values have increased relative to cutout value while loin values have decreased as a percent of cutout. Together, middle meats represent about 25 percent of carcass weight.
"The chuck primal represents 29 percent of carcass weight and, in 2018, chuck primal values averaged 80.7 percent of the average cutout value. The round primal accounts for 22 percent of carcass weight and round primal prices averaged 78.7 percent of average cutout value in 2018. Chuck values have increased relative to cutout values over the last decade while round values have decreased relative to the cutout value. Together the chuck and round account for roughly 51 percent of total carcass weight. Remaining carcass weight is made up of the brisket, flank, skirt and miscellaneous thin cuts."
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