Source: Lisa M. Keefe, MEATINGPLACE, 4/20/15


Processor margins have been squeezed between the higher cost of cattle, due to tight supplies, and consumers’ reluctance to pay the historically high beef prices they’re seeing at retail. Come summer, though, those margins may loosen a bit, USDA’s Economic Research Service predicted in its monthly Livestock, Dairy & Poultry Outlook report.

After a winter of price volatility, the report says, prices for feeder and fed cattle picked up during the last half of March. “Cow prices have continued steady-to-higher with anticipated seasonal decreases in cow slaughter; the prices have held despite increasing boneless cold storage stocks from increased supplies of imported processing beef and heldover stocks from earlier West Coast shipping issues,” the report explained.

Cattle heading to slaughter are heavier than normal, historically, due in large part to the relatively moderate cost of corn. Moderate corn prices and strength in fed-cattle prices have improved the potential for positive cattle-feeding margins later in 2015, the report said. Still, those heavy carcasses may mean that packers push for discounts, as the resulting exceptionally large cuts of meat are not finding favor in the meat case these days.

All in all, whole beef prices likely will remain historically high. Still, heading into grilling season, demand is up for beef middle meats, which also has pushed the price of other cuts of meat higher. That could give packers a breather on the profit side, at least in the near-term.

Meanwhile, the retail price spread between beef and pork — which has not favored beef lately — is expected to narrow heading in to summer. Although pork supplies will jump on lower incidence of PEDV this year, analysts say, seasonally smaller hog supplies will support pork prices.

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