Industry At A Glance: Out-Front Beef Sales Increasing

The comprehensive boxed-beef report provides insight into various types of weekly sales – quality, type and destination. Last week’s Industry At A Glance chart focused primarily on the quality aspect and the growing proportion of branded sales over time.

There’s another important trend occurring in the wholesale market: increasing proportion of out-front sales. The graph above details how that’s played out over time in the marketplace. Similar to the live side of the market, packers and wholesale beef buyers are decreasingly utilizing the spot market to manage their inventory needs. Those entities turn to non-spot markets to ensure business continuity, as well as utilizing them as a tool for business stability.

industry at a glance beef sales

Given the outlook for ever-tightening supply in the year(s) to come, will this proportion climb even higher? And if so, will that have further ramifications on the live market and weekly negotiations? Leave your thoughts in the comments section below.

Discuss this Article 2

Burke (not verified)
on Jan 10, 2013

As this trend continues, I don't doubt that price discovery can and will occur; BUT will the reduced transparency result in more volatility as delayed corrections are made in the price discovery process?

Nevil Speer (not verified)
on Jan 10, 2013

Excellent question! What's depicted above parallels the live cattle trend. And the concern turns to reduced price discovery, artificial spot market deflation, and increased volatility. That inherently leads to trying to determine some minimum threshold required for the spot market. There's no perfect answer to finding that level. However, what is more important than some specified threshold is the composition of what is sold on the cash market. In other words, does it represent the broader population. And in this case, where beef carcasses are relatively fungible (more so than cattle) - some small number represents well the remainder of inventory that is sold in some other fashion. Hope that helps.
Nevil Speer

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