Cattle supply is certainly not the issue, rather, it’s a COVID-induced absenteeism issue in many of the country’s packing plants. Packing plants experience increased worker absence, resulting in much smaller slaughter totals so far in January 2022.
Cattle and beef market dynamics in the past year were nothing if not volatile, and in some ways, unprecedented. Supply chain imbalances and processing sector issues have been the focal point of beef price inflation in the past two years.
December has started off on a high note in the fed cattle sector and all of us on the cattle side of the supply chain should be made well aware of what’s ahead in 2022.
Since our September Insider report, the Prime grid premium has amazingly increased by an additional 50%. The latest $30.84/cwt. weighted average packer premium sets the record for the highest reported number in the report.
Our analysis of several million head in 2019 and 2020 shows that increasing average carcass weights across each load lot returned a net benefit in carcasses qualifying for the CAB brand up to 900 lb.
At the Feeding Quality Forum in August, the brand’s Meat Scientist Daniel Clark, Ph.D., and Director of Product Solutions Clint Walenciak pulled back the curtain on factors that limit eligible steers and heifers from qualifying for CAB.
Strong ribeye demand has had heavy influence on cattle values for feeders selling on a grid or carcass value formula. Just as Prime quality grade premiums held much higher than expected late this summer, the Choice/Select price spread has popped back up within reach of record territory once again in recent weeks.
While the entire CAB carcass is charting new territory at record highs for this time of year, the price direction of ribeyes is defying the seasonal trend to an amazing degree.
Lately the Prime grade has slipped down to 8.3% of the total, versus 9.5% a year ago. The reduced slaughter pace, combined with this lower Prime share, has prices heated up for the most premium quality grade.
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