ManyHorses
Well-known member
Here's a situation that I have to comment on: It is all about the price differential between Choice and Select boxed beef prices. Choice and Select boxed beef prices had nearly assumed parity as the high price of beef on retail grocers shelves is obviously meeting resistance by consumers. As a result the retail meat buyers are cutting back on featuring Choice cuts in favor or enticing consumers to buy lesser priced Select cuts. From the consumer standpoint it has become a choice of either opting to buy the lower priced Select cuts or switching to an alternative meat choice such as poultry or pork - Choice cuts are less of a consideration.
From a producers standpoint maybe this situation should give some thought as to the profitability of grade 4-5 cattle. It would seem counterproductive to suffer the additional cost of production to achieve grade 4-5 when consumers are balking at the paying the price.
Yesterday Choice box prices were only able to hold steady at $145 while the Select cuts lost a dollar to $142, still leaving the spread at only $3. High grade producers should be finding they are beginning to receive negative margins at current price structure, and it may get worse. With Choice cattle failing to deliver a premium and grades 4-5 cattle severely discounted, it appears a near-term market top is in place.
Of course this should only be considered the symptom when considered in the larger scope of things, mainly the scheduled Canadian border reopening on March 7th. Coupled with higher feed grain prices, lower consumer demand, an influx of Canadian cattle may have considerable influence on domestic cattle prices.
Remember: What all this boils down to is what the Mad Cow maketh, the Mad Cow may taketh away - so just be careful on getting locked in on these spring feeder prices.
Richard
From a producers standpoint maybe this situation should give some thought as to the profitability of grade 4-5 cattle. It would seem counterproductive to suffer the additional cost of production to achieve grade 4-5 when consumers are balking at the paying the price.
Yesterday Choice box prices were only able to hold steady at $145 while the Select cuts lost a dollar to $142, still leaving the spread at only $3. High grade producers should be finding they are beginning to receive negative margins at current price structure, and it may get worse. With Choice cattle failing to deliver a premium and grades 4-5 cattle severely discounted, it appears a near-term market top is in place.
Of course this should only be considered the symptom when considered in the larger scope of things, mainly the scheduled Canadian border reopening on March 7th. Coupled with higher feed grain prices, lower consumer demand, an influx of Canadian cattle may have considerable influence on domestic cattle prices.
Remember: What all this boils down to is what the Mad Cow maketh, the Mad Cow may taketh away - so just be careful on getting locked in on these spring feeder prices.
Richard
