Spot prices for fresh 50% lean beef trimmings have been tracking firmly below $100 per cwt in recent days, having still been above $150 as recently as early August. LEAP Market Analytics has held a bearish view on this market for a while, but not this bearish. Unless it proves a fluke, it implies 50s demand has slumped to its weakest in two years and dropped below the 2007 to 2024 baseline average.
History says 50s demand swings much harder than whole muscle cuts or the fed beef cutout, so a move back higher into 2027 is not unreasonable, with calmer conditions overall next year than the past eighteen months. That outlook still implies average annual prices for fresh 50s falling in the region of 5% to 10% next year.
Chucks and rounds are anchoring the cutout
The choice cutout has held up better than expected with Labor Day behind it, and looks set to rise slightly this week. It sits around $25 below this time last year, though, with only rib and brisket primals positive year on year. Flanks are down most in nominal terms, but weighted for their impact on cutout value, chucks and rounds are the anchor. Wholesale and seasonally adjusted demand for both has retreated sharply since earlier in the year and is now tracking below year-ago levels, and LEAP expects that to continue through fall at least. Fourth-quarter seasonal forces lean bearish on their own, so defensive chuck and round markets look likely from that alone. The two have tracked closely over time, with rounds underperforming chucks more recently.
Chucks are worth watching for a specific reason: of all the primals, none pinpoints the cutout’s likely position better. LEAP projects a local minimum for the chuck primal in the $260s on a choice basis this fall, consistent with a choice cutout of no more than $340 to $350 per cwt. With demand-side erosion continuing and fed beef production likely to rebound, both the chuck primal and the choice cutout are projected to fall in the region of 5% to 10% across 2027.
The packer side of the ledger looks very different. Having extracted significant concessions from cattle feeders since early summer, helped by plant closures and capacity reductions, packers have been paying just under $220 per cwt for fed steers on the five-area weighted average, live FOB, all grades. LEAP estimates net returns of at least $100 per head for four consecutive weeks, and more than $150 in the last two, with profitability likely to hold through October at least. That margin recovery translated into kills quickly: combined steer and heifer slaughter reached nearly 448 thousand two weeks ago, the highest since January, which looks like the start of the supply chain opening up more fully.
