Continued increases in beef tonnage realtive to harvest supplies are adding to the challenge beef packers face to grow margins.
“The average steer carcass weight for the week was 874 lbs. That is 4 lbs. heavier than the previous record set in October 2009. Heifer carcasses averaged 805 lbs., just 1 lb. shy of the previous record,” says Andrew P. Griffith, an agricultural economist at the University of Tennessee in his weekly market comments.
For the year, carcass weights are on par to average about 20 lbs. more than in 2011. That mirrors the trend seen in recent years. Even with the added tonnage from average weights, beef production will decline, meaning those selling beef are going to have to figure out how to ratchet prices up or get squeezed further.
“…Packers will have to work hard to push selling prices higher against likely consumer resistance, especially given the availability of relatively low-priced pork…” Len Steiner and Steve Meyer explained in Friday's CME Group Daily Livestock Report. Speaking to the lower than average packer margins that continue to prevail, they add, “…There is no single driver of the most recent decline from $175/head the last week of August to $75/head the week of September 14, but the roughly $5/cwt. rally in live cattle prices was the largest contributor...”