Last week’s 641K head weekly slaughter reflects a few days of downtime on the part of one major packer’s fall cooler cleaning. It’s said that more of this is expected in
the upcoming weeks as packers prepare for the slaughter pace required to get through fourth quarter demand. The September 1 Cattle on Feed report, released last Friday, surprised analysts with August placements up 2.7% over last year and 7.2% compared to the five-year average. Additionally, the cattle on feed number as of September 1 was estimated at 3.7% larger than a year ago. These metrics translate into bearish market news in the short term, in a market that has more positive long term feel than the report’s reactions will generate. The boxed beef market is showing significant signs of cooling off as September draws to a close. Of course, the degree to which prices are cooling is only in relation to record high territory, so the discussion must be placed in that context. Even so, the CAB brand cutout price has come down $12/cwt. from the summer high of $354/cwt. three weeks ago. It’s rare that the production side of the market would cheer lower boxed beef prices, but given the current price points, that is exactly what some would suggest will protect current red hot beef demand. Looking across the average of CAB carcass subprimal pricing, last week’s report shows softening values for everything except for the rib primal. Ribeye prices remained untamed in the CAB weekly data from Urner Barry. Yet, commodity Choice ribeyes finally showed a slightly lower trend to round out last week with further pressure early this week. Protein buyers now turn the page to fourth quarter buying, which typically means higher prices through early December. The October-November price run-up is normally very stout, but it’s anyone’s guess if that pattern emerges again in a pricing environment that’s
already sending retail buyers away from the trade desk.
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