Wholesale beef prices keep leaning lower, and the rib category is doing almost all the work holding the complex up. Every primal cut except the rib is on track to decline from last week, while the rib has climbed into record territory. Ribs and chucks are the only two primals trading above year-ago levels.
LEAP Market Analytics reads that split as a microcosm of the wider US economy. With fuel prices persistently high, lower and middle income consumers are in hunker-down mode, which is weighing on pork and chicken demand and on the cheaper end of the beef complex. Higher income consumers do not appear to have changed their habits, so upscale dining has not taken much of a hit and demand for middle meats remains solid.
Rib demand turned defensive in the second quarter on a seasonally adjusted basis, then recovered through the summer and looks to be strengthening again this autumn. Add the usual tailwind into Thanksgiving and Christmas, and LEAP sees a good chance the choice rib primal tests $700 per cwt between now and year-end, most likely late November to mid-December. The cutout itself is expected to keep drifting lower regardless.
After the holidays the seasonals turn sharply negative, and LEAP would not be surprised to see the current demand prove overheated. A Cattle on Feed report lands on Friday; LEAP expects September placements near 1.84 million head, down 9.2% on last year.
Read the full US beef market analysis here.
