CAB Insider: Lower Cutouts Spur Beef Buying

May is Beef Month and the push for sales in volume is underway, driven on the promise of spring grilling demand. Packers have increased production to the limit their labor resources will support, which means harvest levels larger than 665,000 head across all federally inspected plants. Total year-to-date beef harvest has run close to 2% larger, with fed cattle up 1.5% over this time last year. Yet beef sales have felt like pushing a rope uphill since early March as buyers stepped away from the market to see if the typical March price decline would arrive on schedule. The dip was barely noticeable and a corresponding lack of buyer interest kept a lid on comprehensive weekly sales. Total load counts remained below a year ago from mid-March until last week. Most recently the fed-cattle market meltdown and large packing-sector profits have fueled packer appetites for cattle. That led to boxed beef inventories that had to be pushed out the door at substantially lower prices, such as last week’s $7/cwt. decline in the comprehensive cutout. We may yet see much higher load counts from the sales side as supplies at the packer level promise to be large. Last week’s estimated harvest adjusted upward to 671,000 head after accounting for the Saturday shift. Memorial Day buying from the retail perspective is already taken care of, but hopefully a bright side remains with warmer weather and lower cutout values spurring sales and throughput from feedlots all the way to end users. Even so,…

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