Beef Prices Near Sustainable Levels

Lizzy SchultzAngus, Beef, Markets, Price

Cattle and beef prices have recovered coming into spring, with beef and competing protein prices underlie it all.

The Choice boxed-beef price recovered nearly 20% from its January low by the end of March, to the neighborhood of $2.20 per pound. Paul Dykstra, beef cattle specialist for the Certified Angus Beef ® (CAB®) brand, says history suggests a little more support for higher beef, at least the higher quality kind.

“The CAB and Choice cutout values are at 90% of their three-year average,” he points out, noting pork prices have been falling since February while chicken returned to its steady climb. At 110% of last year’s price, chicken is a less attractive alternative than pork.

The main engines behind beef’s price recovery have been in the higher grades, despite greater supplies, he says. “Choice volume is up 8.5% and Prime up 14.7% for the year, very much unbalanced in modern history.”

Boxed beef prices retraced a bit in a seasonal pattern and remain well below the three-year average.

“From the standpoint of overall affordability and moving the greater volume this year, prices have to track along this lower trend. Feedyards are doing well today because the market supports selling in a timely manner, providing large throughput to packers,” he explains.

“The market shifts are keeping the game pretty fair this year,” Dykstra says. “Granted, the lower Choice cutout in the first quarter is negative to ranchers in the near term, but we cannot sustain fed cattle at $1.50/pound and higher, nor the boxed beef prices that come with that.”

Dykstra reports on market and industry trends from the premium beef perspective biweekly in the CAB Insider, archived here.