The upward trajectory in wholesale beef prices is beginning to slow as we transition into the spring quarter. The choice cutout has declined a little over $3/cwt after topping $259/cwt in late April. At this juncture, it appears that domestic demand has weakened modestly in the near term (although remaining strong by historical standards). For the week ending May 8, 2015, the choice cutout value was priced 13 percent higher than the previous year and 24 percent above the 3-year average.

It is also important to consider the supply-side implications of current market dynamics. On a year-over-year basis, weekly cattle slaughter remains lower than 2014; however, in the short term, weekly kills have expanded from unusually tight levels in late March and early April. Packer margins have improved, providing an incentive to slaughter more animals even though live cattle prices remain relatively high. Increasing weekly kill numbers—in conjunction with historically heavy dressed weights— has led to the decline in wholesale beef prices. On the other hand, in the midst of tumbling prices, AMS marketing data reports that weekly load counts have been increasing since early March.