Boxed beef prices continue to climb as summer winds down. Andrew Griffith, University of Tennessee ag economist, says there are a few factors at play.
“Boxed beef prices gained several more dollars this week with only one more week before the Labor Day weekend,” he says. “The hope in the beef industry is that consumers stock up on beef products and grill steaks and hamburgers for breakfast, lunch and dinner. However, many of those purchases have already been made, and the support in boxed prices this week come from restocking the meat counter.”
Exports have also played a role in the rising beef prices.
“Domestic demand is not the only driver of beef prices,” Griffith says. “It is reported that China made their largest beef purchase from the United States on record dating back to 1999. China purchased 3,315 tons of beef for the week ending Aug. 20.”
This amount is significantly smaller than the weekly pork exports to China, but he says it is still good news to see beef going to that market.
“This is still a very small amount of beef comparatively speaking, because China purchased 11,216 tons of pork the same week,” Griffith says.
“Regardless of the comparison, it is good to see beef moving to the most highly populated country in the world. There is no guarantee China will continue to purchase beef from the United States. Thus, the industry should be sending as much high-quality product as possible today.”
Feeder cattle markets have also had a good run during recent months.
“The feeder cattle market has been on a tear since the second week of April when the market lows were set during the peak of the coronavirus pandemic,” Griffith says. “Since April, the fall feeder cattle futures contracts have increased about $30 per hundredweight to their recent highs. However, the market has taken a little breather the past couple of weeks as feeder cattle futures prices have lost approximately $6 per hundredweight over that time period.”
This action could signal a return to more normal markets, showing the typical, seasonal price movement.
“This price movement provides some semblance of normalcy as it relates to supply and demand of feeder cattle,” he says. “It would appear the market is attempting to find the longer-term supply and demand of feeder cattle compared to the short run shocks that seem to have become so common the past year.”