CME: Choice Beef Prices Move Higher

Holiday trading hours: CME Commodities (Dairy, Livestock, Lumber) floor trading will close at 12:00 PM on Thursday. Globex trading will observe regular hours. Floor and Globex Trading of CBOT Commodities (Grains, Oilseed, etc) will have regular trading hours on Thursday. For a more complete listing of the holiday trading hours, please visit the CME Group website by clicking here.

Choice beef prices have moved sharply higher in recent weeks and on Wednesday night they closed at $171.2 /cwt, 22% higher than a year ago. Beef prices have improved steadily since April, thus supporting live cattle values, which are quickly approaching the $100 mark in the cash market. Nearby August futures have also found strong support as they closed on Wednesday at $104 /cwt. So what’s going on with beef values to warrant such a jump in prices? Did US consumers decide that if they’re not going to spend more time going out to restaurants or taking weekend vacations, at least they would reward themselves with a nice juicy steak in the backyard? Maybe but it’s a difficult proposition to prove without some decent survey analysis. Looking at the recent surge in prices, the picture looked awfully familiar. Back in 2006, a similar situation appeared to unfold. Beef and cattle prices declined sharply in March and April. The decline affected not just cash prices but also the summer futures contracts. The decline presented retailers with an excellent opportunity to book significant beef volumes for summer grilling features. As Memorial Day business approached, packers had a larger percentage of their production already booked. Fed beef supplies also moderated. As a result, those looking to purchase product in the spot market had to bid up prices in an effort to secure product. A similar situation may be taking place today. Retailer features, based on those low spring beef prices, have encouraged strong sales at the beef retail counter. With more beef moving through and a larger than normal percentage of current production already booked, prices for available beef in the cash market have increased significantly higher. It also helped in the last couple of weeks that steer and heifer slaughter was down as much as 6% from a year ago.

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