All-fresh retail beef prices were $5.833/lb. in July, up 1.0 percent year over year.  All-fresh beef prices have increased each month this year since January.  July Choice beef prices were $6.10/lb., down from the June level of $6.207/lb. but fractionally higher than July of 2016. The all-fresh retail beef price increased relative to the broiler composite retail price in July.  The current ratio of retail beef to broiler prices is equal to the record level set in July, 2015.  The retail beef to pork price ratio is also holding steady at levels near the record during the high prices of 2014 into 2016 and, like the beef to broiler retail price ratio, are at levels well above historical ratios prior to 2014.

Wholesale cutout values have dropped sharply in the past two months, with Choice cutout values down to a weekly average of $197.66/cwt. in mid-August after climbing to a stronger than expected seasonal peak of $250.86/cwt. in mid-June.  Choice beef prices have struggled to find a summer bottom with ample supplies and summer heat weighing on beef markets. Weekly Choice cutout values averaged higher year over year from late April until last week. 

Select cutout values also increased from January to a weekly seasonal peak of $224.54/cwt. in mid-May before dropping to last week’s $194.81/cwt.  The Choice-Select spread has displayed an exaggerated seasonal pattern this year increasing from a seasonal low of $1.25/cwt. in mid-February to an impressive $30.38/cwt. in the second week of June.  This was the highest weekly Choice-Select spread since the BSE-induced market turbulence in October, 2003.  The Choice-Select spread has decreased back to a narrow $2.25/cwt. in mid-August.  

The dramatic seasonal Choice-Select spread pattern seems to mostly be a reflection of dynamic Choice beef demand; unexpectedly strong in the spring and struggling recently.  Wholesale beef product values indicate that middle meats have weakened the most recently with rib and loin values dropping relatively more compared to chuck and round values. Choice Ribeye values increased to a pronounced seasonal peak in June, well above year ago levels, but have dropped back to last year’s values recently.  Choice Tenderloin and Strip Loin wholesale values have been plus or minus year ago levels all year but lower year over year recently. Chuck and round values have mostly been higher year over year in recent weeks.

The ground beef market has been quite volatile this year with 50 percent lean fed trimmings exhibiting an unusual and pronounced spike in May before returning to year ago levels recently.  Lean (90 percent) trimmings followed year earlier levels through late April before rising sharply higher year over year for the past several weeks.  

Longer term, wholesale beef product markets continue to adjust following unusual price relationships that emerged during the record high prices from late 2014 through early 2016.  Many lower value products increased relative to middle meats during this period but are returning to more typical price relationships in 2017.  Products from the chuck, round and sirloin increased relative to loin and rib prices during this period. The Choice-Select spread narrowed during the record price period and, as noted above, has widened back out to near record levels at times in 2017.  Looking back, the past five years provides a good case study to help understand the complexities of beef demand and substitution between beef products as well as the interaction between beef and other meats in dynamic meat market conditions.