CAB Insider: Greater Eligibility Assists CAB Supply
Paul Dykstra, Certified Angus Beef
via Drovers - July 29, 2020
Fed cattle prices have stabilized and improved over the past three weeks with a $2.47/cwt. total increase for fed steers in the 5-area weighted average. The cattle feeding sector is moving along in small strides at this time, so this news fits the bill. The counterpoint is that last week’s $97.24/cwt. steer price average is 14.5% lower than the same week a year ago.
The slightly higher trend is a bit more heartening given that boxed beef cutout values continued to work lower again last week. The historical trend for cutout prices is to put in the summer low in mid- to late July.
This week will provide some answers as to whether or not we’re seeing a short-term low for cutout prices. Most cuts from the Choice and CAB reports showed fractionally lower prices last week, with a couple of cuts from the round slightly higher.
The only notable downward price on any single item remained solely with the 0x1 strip loins, which declined another $0.30/lb. with the CAB strips averaging $6.60/lb. at wholesale. A case could be made for lower values yet on strips, but ribeyes have ceased their rapid free-fall in the latest data, removing one important middle meat from the downward pull.
Analysts have pointed to current packer margins well over $200/head so there is limited fundamental pressure on fed cattle prices due to marginally lower cutout values.
Still, the backlog remains a factor, particularly so in the south. Feeders in the north appear to be more emboldened with a more current showlist last week allowing them to top the trading range at $100/cwt.
Greater Eligibility Assists CAB Supply
Fed cattle and beef supply rank right at the top of the watch list this year and will remain there for quite some time. While the beef business has proven sensitive to supply chain disruptions, the Certified Angus Beef ® (CAB) brand is similarly driven.
A unique aspect of the brand is that only black-hided cattle are eligible for consideration for further USDA grading service review under the brand’s 10 carcass specifications. Consequently, the proportion of the fed cattle population that is black-hided is a key driver in long term sales growth. More eligible animals equates to potentially more qualifiers...
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