Quick Look:
- After Independence Day, Choice boxed beef prices dropped from $330/cwt to $322/cwt, typical of summer slowdowns.
- While demand for premium cuts wanes, prices for Tri-tip, Flank steak, and lean trimmings rise, boosting ground beef value.
- Prices plateaued in July, with steer carcass weights decreasing slower than usual, remaining 27 pounds heavier year-over-year.
- June’s beef production increased by 3.8% year-over-year for fed beef, despite a 17.1% drop in nonfed beef production.
- Prices held near record levels but declined in mid-July, with pasture conditions slightly deteriorating due to drought.
Here in Oklahoma and across much of the country, we’ve entered the dog days of summer. This term, once humorously described to me as a hot summer day when “a dog is chasing a cat down the street…and they are both walking,” perfectly encapsulates the sluggishness brought on by the oppressive heat. This period, stretching from the Fourth of July to mid-August, often brings unique challenges to the cattle and beef markets.
Post-Independence Day Blues
The week following Independence Day saw a drop in Choice boxed beef prices from their holiday high of $330/cwt to about $322/cwt. While initially concerning, this decline stabilized by the second week of July. This drop is a typical seasonal adjustment, reflecting the slowdown in beef demand between the July 4 and Labour Day holidays. The summer heat reduces summer grilling activities and high-end restaurant traffic, decreasing demand for prime cuts like Tenderloin, Ribeye, and Strip Loin.
Shifting Beef Demand
Despite the overall slowdown, not all beef cuts are experiencing a decline. Wholesale prices for reductions such as Tri-tip and Flank steak and various chuck and round cuts continue to rise. This increase is primarily driven by the record-high price for lean trimmings, pushing up the wholesale value of ground beef. It’s an interesting paradox: while the demand for premium cuts wanes in the heat, more economical cuts surge, reflecting changing consumer preferences and market dynamics.
Summer Heat and Stalled Prices
Fed cattle prices have also hit a plateau in the July heat, holding steady after a rise in June. Interestingly, carcass weights have begun to decrease, with the latest reported steer carcass weights at the end of June dropping to 911 pounds from 924 pounds five weeks earlier. The summer heat likely contributes to this decline. However, the reduction in carcass weights has been slower than usual for this time of year, leaving the seasonal pattern somewhat uncertain for the remainder of the year. Despite the recent decrease, steer carcasses remain 27 pounds heavier year-over-year.
Beef Production Trends
Despite varied factors affecting different market segments, June saw a slight increase in total beef production. Total fed beef production, including steers and heifers, was up 3.8 per cent year-over-year due to higher slaughter numbers and heavier carcass weights. This increase offset a 17.1 per cent year-over-year decrease in nonfed beef production. Consequently, June’s overall beef production saw a modest uptick. Retail prices reflected these trends, with all-fresh beef prices increasing to $8.00 per pound in June.
Feeder Cattle Market Dynamics
The feeder cattle market mirrored the stasis seen in other areas, with prices remaining near record levels but showing a decline across all classes in Oklahoma auctions for the week ending July 12. While June rains have generally maintained pasture conditions, there is a growing concern about marginal drought conditions. The latest ratings report indicates a slight deterioration in range and pasture ratings, which could impact feeder cattle prices.
Navigating the Dog Days
As we navigate through these dog days of summer, the cattle and beef markets continue to reflect the complexities of seasonality, consumer behaviour, and environmental conditions. The decline in prime cuts and the rise in demand for lean trimmings underscore the market’s adaptability. Meanwhile, the plateau in fed cattle prices and fluctuating carcass weights highlight producers’ ongoing challenges. Understanding these trends is crucial for stakeholders at all market levels as they strategize for the remainder of the summer and beyond.
In essence, while the dog days of summer bring a certain lethargy to both people and markets, the intricate dance of supply, demand, and environmental factors keeps the cattle and beef industry on its toes.
