Derrell S. Peel, Oklahoma State University
Choice boxed beef price has decreased by 5.4 percent since July 4 to a current level of about $312.50/cwt., 3.4 percent higher year over year. The decline in boxed beef price is seasonal during the hottest part of the summer. Boxed beef prices are a composite based on about 50 wholesale beef cuts and subprimals. There are some interesting things going on within this set of products this year that reflect the unusual environment in today’s cattle and beef markets.
Middle meats are the biggest driver total beef value. Beef tenderloin is the highest value beef cut and the price has been quite flat and lower year over year for much of 2024. This weakness is a bit concerning but the fall may provide an important indicator of tenderloin demand going into cooler weather and the seasonal pick up in restaurant traffic. In contrast, the other steak cuts have values that are generally at or above year ago levels, including ribeye, strip loin, and top sirloin. Overall, rib primals are priced about 3.4 percent higher year over year and loin primals are averaging 1.4 percent lower this year. Middle meats from the rib and loin primals are the heart of boxed beef values.
A look at prices across the various end primals paints an interesting picture. The majority of chuck products are priced either about the same as last year or lower year over year. This includes the top blade, arm roast, petite tender and chuck roll. One notable exception is the mock tender, which is currently priced well above year ago levels. Overall, chuck primal values are up 6.6 percent year over year in July. In contrast, round cut values are mostly higher this year. Higher values are noted for knuckles, inside rounds, bottom round, outside round and eye of round. Overall, round primal values are nearly 21 percent higher year over year.
These values across the carcass contribute to the overall boxed beef value of fed beef production. Fed beef is the result of steer and heifer slaughter. While overall beef production is down 1.6 percent year over year so far, the modest decreases in steer and heifer slaughter combined with dramatically higher steer and heifer carcass weights has led to a 0.9 percent year over year increase in fed beef production through the first half of the year. Increased days on feed contribute to the heavy carcass weights and also to an average of nearly 22 percent yield grade 4/5 cattle this year. An average of 87 percent of fed cattle are quality grading Choice and Prime thus far in 2024. Fed beef is about 84 percent of total beef production.
Nonfed beef typically makes up the remaining 16 percent of total beef production and consists of cow and bull slaughter. Nonfed beef production is down nearly 13 percent year over year thus far in 2024. Cow slaughter is down over 15 percent and bull slaughter is down nearly 8 percent. Nonfed beef production is the source of 90% lean trimmings, a major ingredient for ground beef. The current wholesale price of 90 percent lean trimmings is at a record level and is higher than several of the round cuts mentioned earlier. The market is attempting to make up for the shortage of lean beef in the nonfed market by pulling more lean beef from fed beef supplies. This mostly comes from several round cuts but also likely from the chuck mock tender (one of the few lean cuts in the chuck). Markets always attempt to balance supply and demand and the increased arbitrage between fed and nonfed beef markets today is an indication of a very unusual market situation.
