The choice wholesale beef cutout value started the year at about $200 per cwt., advancing to $264 in July, before slumping to about $250.
That roughly 5% retreat from the peak could provide some relief for consumers on retail beef prices, but not much. Grocers likely did not factor the entire price surge into retail prices on the way up. Retail prices will likely lag the retreat.
Consumers have better news on pork. The pork cutout started the year at $84 per cwt. It surged to $138 in July. Recent cutout values are in the $106 range about 23% off the peak. Wholesale pork is not only lower-priced than beef, but it's also slipping faster off its peak.
Both should enhance pork's competitive position with beef at retail. That's good news for pork lovers, not such good news for beef producers.
No cheap hamburgers coming
Lean beef from cutter cows, 90% lean beef trimmings and 50% lean beef trimmings are key components of ground beef. Cutter cows are predominantly aging cows culled from dairy and beef herds. Rabobank estimates as much as 60% of the beef consumed in the United States is some form of ground product.
While wholesale beef cutouts have eased since July, hamburger components have shown little slippage.
Ninety percent lean trimmings started 2014 around $214 per cwt. They advanced to $291 in July and are currently holding around $297. Cutter cows started the year around $170, advanced to $228 in July and are holding around $232. Fifty percent lean beef trimmings started the year around $91, rocketed to $162 in mid-March and have since retreated to the $140 area.
The fat component of ground beef is getting cheaper. But amount of fat Americans should be consuming has, or at least should have, a rigid upper limit—according to my personal physician.
Check out John Otte's daily update on the livestock markets, Livestock Call.