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Holiday beef demand kicking in

Boxed beef prices significantly higher than typical seasonal bump.

Boxed beef prices increased about 10% over the month of October into early November -- a significantly higher increase than the typical seasonal bump, Derrell Peel, Oklahoma State University Extension livestock marketing specialist, reported. A normal bump in prices is less than 2% from October to November, he said.

The Choice boxed beef cutout is currently up nearly 7% year over year, he added.

In total, beef demand is made up of many different beef products that have very distinct seasonal price patterns, he explained.

“As grilling season wanes after Labor Day, some steak items, such as strip loins, tend to decline, and this has continued into November, with wholesale strip loin prices dropping about 6% in the past month.  However, strip loin prices are currently up over 6% from one year ago,” he said.

Another part of the loin, the tenderloin, has a very different seasonal price pattern, Peel explained.

“Colder weather into the end of the year typically supports restaurant steak demand, resulting in higher tenderloin prices through the fourth quarter of the year," he said. "This fall, wholesale tenderloin prices increased faster and more dramatically than usual, jumping by 38% in October.”

Overall, Peel said loin primal prices increased more than 11% in the past month and are currently up 10% from the year before.

He also pointed out that rib-eye prices typically have a sharp and pronounced seasonal peak in November based on holiday demand for prime rib. This year, however, the price increase started early, with October wholesale rib-eye prices up more than 18% in the past month.

Peel reported that wholesale Choice rib-eye prices touched $10/lb. last week for the first time since mid-2017. Rib primal prices, he said, have increased nearly 13% in the past month and are currently 4% higher than the year before.

Both chuck and round products tend to increase seasonally from August into September with the prospect of fall weather boosting demand for roasts and stews, Peel noted. End meat primal prices, on the other hand, are generally flat through September and October and slightly weaker to finish the year.

“October was a mixed bag for chuck products, with shoulder clod prices higher despite lower top blade (source of flat iron steaks) prices,” Peel said.

He also noted that several chuck products have become very popular export items, and seasonal patterns for these cuts have been changing in recent years.

According to Peel, demand for the clod (petite) tender continues to be very strong, with prices up more than 25% in the past month. Wholesale chuck roll prices were higher seasonally, up 12% in the past month. Overall, chuck primal values were up more than 7% in the past month and are currently nearly 6% higher year over year.

Peel relayed that round products displayed similar variability, with top round and outside rounds moving higher in October and bottom round and eye of round prices lower. Wholesale round primal values were nearly 5% higher in October. So far this year, they have been about 4% higher than the year-ago period.

“There is a supply component impacting wholesale beef markets as well, with lower Choice grading percentages since late May,” Peel noted. “The reduction in Choice beef supply relative to Select has resulted in a counter-seasonally high Choice/Select price spread since the summer.” Strong demand and tighter Choice beef supplies both are contributing to sharply higher Choice beef product prices in the fourth quarter.”

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