The Christmas rally in wholesale beef markets continued last week as boxed beef prices headed into the last half of December at the highest levels since early September. Choice boxed beef price has risen 6.7 percent from the late October low and was only 2.3 percent below year ago levels. This is quite impressive given that beef production continues stronger than expected in the fourth quarter. Beef production for the last four weeks is 9.1 percent above the same period last year. For the year to date, Choice boxed beef prices have averaged 12.9 percent down from year earlier levels while beef production is up 5.7 percent so far this year.
Retail Choice beef price in November was $5.76/lb., up slightly from October and down 7.2 percent from one year ago. The All Fresh retail beef price was $5.54/lb., down from $5.63/lb. in October and down 7.5 percent from last year. Despite larger total meat supplies and a particularly strong jump in beef production, retail beef prices have maintained strong ratios to pork and poultry but are slowly adjusting down. In November, The All Fresh beef to pork retail price ratio was 1.53, down from the peak of 1.65 in June, 2015. This ratio averaged 1.33 in the five years from 2009-2013 and has averaged 1.5 since Jan 2014. The All Fresh beef to broiler retail price ratio was 2.93 in November, down from the peak of 3.13 in May of 2015. The 2009-2013 average of this ratio was 2.4 but has averaged 2.98 since January, 2014.
There are indications that retail beef demand has shifted somewhat back to the middle meats after several years of relatively stronger end meats. End meats have carried a relatively higher percent of carcass value since the recession that began in 2008. Mixed strength in steak demand has been countered by weak processing beef markets and lower end meat values generally in 2016. In the last four weeks, rib primal values are nearly 3 percent higher than this time last year mirroring higher Ribeye wholesale values. However, loin primal value is nearly 12 percent lower the past month year over year with Strip Loin and Short loin values down double digit percentages and Tenderloin values just about equal to one year ago. The lower loin cut values is a continuation of an apparent downward trend in relative loin values in the past decade. Chuck primal values are down just over 6 percent year over year in the past four weeks with round primal values down 8 percent compared to last year. Domestic beef demand in 2017 will depend on macroeconomic factors such as income growth and unemployment as well as the impact of larger total meat supplies. Beef export and import flows not only have a quantity impact but also change the mix of beef products that make up domestic consumption and will impact overall beef demand in 2017.