CHICAGO, Jan 8 (Reuters) – Prices for select-grade U.S.
wholesale beef hit a record-high on Wednesday for the fourth
straight day, as shipments of the meat slowed after a historic
winter storm in the United States prompted a surge in live
cattle prices, analysts said.
Higher-quality “choice” beef prices also climbed, rising to
the loftiest levels since hitting an all-time high in May, 2013,
U.S. Agriculture Department data showed.
“Supplies are tight and demand is relatively strong,” said
Dan Vaught, economist with Doane Advisory Services in St. Louis.
Heavy snowfall and the coldest temperatures on record in
some parts of the United States this week slowed the
transportation of cattle to slaughter houses and shipments of
beef to retailers.
USDA pegged the select cutout at $207.07 per cwt, up $3.51
from Tuesday. The value was more than $10 above what had been
the previous record set in March of last year, lifted by gains
chuck and round beef cuts.
Select beef typically has less “marbling” or fat and can
come from younger cattle. The leaner select beef is considered
less flavorful and not as tender as choice-grade beef.
The choice cutout was $210.13 per cwt, up $2.82 and just
below the all-time high of $211.37 set on May 23.
The U.S. cattle herd is the smallest in about 60 years,
forcing beef packers such as Tyson Foods Inc and Cargill
Inc last week to pay feedlots in the southern U.S.
Plains as much as $138 per cwt for live cattle, a record price.
“You have to have good wholesale prices to justify paying up
to $138 for cattle,” Vaught added.
USDA estimated that 332,000 head of cattle were slaughtered
so far this week, down about 12 percent from the same period
last year.
“Kills have been lighter. That, in my mind, gives the packer
more room to offer the product higher,” said Elaine Johnson, an
analyst at CattleHedging.com.
Retail beef prices jumped to a record $5.41 per lb in
November after ranchers thinned their herds. Consumer demand for
the beef has declined for several decades as buyers turned to
cheaper chicken. USDA will update retail meat values in a
monthly report due next week.
USDA also adjusted the way it calculates specific cuts
within the cutout, likely contributing to the recent gains, the
analysts said.