Derrell S. Peel, Oklahoma State University
Here in Oklahoma and a lot of other parts of the country we have reached the dog days of summer. That was once described to me as a hot summer day when “a dog is chasing a cat down the street… and they are both walking”. Cattle and beef markets often struggle in the period after July 4 until mid-August or so. The week after Independence Day, Choice boxed beef prices dropped back from holiday highs of $330/cwt. to about $322/cwt. but seemed to stabilize by the end of the second week of July.
Beef demand usually slows between the July 4 and Labor Day holidays as both summer grilling and high-end restaurant traffic slows in the heat of the summer. The early July drop in boxed beef price is the result of seasonal weakness in the main middle meats: Tenderloin, Ribeye and Strip Loin. Wholesale prices for a number of other cuts continue to move higher, including Tri-tip and Flank steak, along with numerous chuck and round cuts. Several lean round cuts are no doubt supported by the record high price for lean trimmings that is pushing wholesale ground beef value to ever-higher record levels.
Fed cattle prices have stalled in the summer heat in July, holding mostly steady after moving higher through June. Carcass weights finally showed some decrease with the latest reported steer carcass weights the last week of June at 911 pounds, down from 924 pounds five weeks earlier. Summer heat is likely a factor in declining carcass weights as well. The decrease in carcass weights has been much slower than is typical through June and it is not clear what the seasonal pattern will be for the remainder of the year. Carcass weights typically begin increasing seasonally in July but steer carcasses are already 27 pounds higher year over year, even with the recent decrease.
Total fed (steer plus heifer) slaughter was fractionally higher in June year over year and, combined with heavier carcass weights, led to a 3.8 percent year over year in fed beef production for the month. This more than offset a 17.1 percent year over year decrease in nonfed beef production to result in a slight increase in total beef production in the month of June. Retail all-fresh beef prices in June continued to move slightly higher to a record price of $8.00/lb.
Feeder cattle markets also stalled after July 4, with lower prices for all classes reported in Oklahoma auctions for the week ending July 12. Nevertheless, feeder cattle prices remain near record levels. Although June rains have maintained pastures reasonably well thus far, marginal drought conditions have increased in Oklahoma with range and pasture ratings slipping in the latest ratings report.
