Retail beef price drop reflects lower wholesale prices

Beef consumers should be seeing lower prices on beef, whether steaks or ground chuck, at grocery stores as production increased and wholesale prices continue to decline, said a Texas A&M AgriLife Extension Service expert.

David Anderson, Ph.D., AgriLife Extension economist, College Station, said the U.S. Department of Agriculture retail market report showed prices on beef and other meats are moving downward.

Retail choice beef of all cuts – steaks to ground chuck – averaged $6.84 per pound in July compared to $7.56 per pound in June, he said. However, prices are still higher than this time last year when choice beef averaged $6.07 per pound.

“Even though they’re coming down, we’re way above prices at this time a year ago,” he said.

Anderson said the price decline for beef at grocers reflects a lower wholesale price trend. Retail prices for pork and chicken also slipped since June.

Wholesale choice beef cutout value was $2.05 per pound last week, basically where it was before COVID-19, he said. Wholesale prices were falling, and retail prices are just now catching up.

Despite wholesale prices dipping, COVID-19 restrictions continue to contribute to retail prices being higher than a year ago, Anderson said.

“Restaurants are still not open or open at full capacity, so there is stronger demand at the grocery store for beef,” he said. “There is more costs to put products on shelves, packaging and demand for different cuts compared to restaurants, adjustments to how the stores operate, and stores don’t have an incentive to lower prices if the product is in high demand.”

Anderson said research shows lower prices can be delayed between wholesalers and the consumers. Retail prices go up quicker than they come down.

“There’s research on what’s called asymmetric prices – they don’t go up and down at the same pace,” he said. “There’s a term ‘sticky prices,’ regarding grocery store prices that may be higher than expected considering wholesale prices, but that are nevertheless going down as data suggests. As buyer we’d like to see them come down quicker.”

Calf prices improving

Calf prices are trending higher for 500-600-pound steers yet still a little lower than pre-COVID-19 prices, but Anderson said that could be seasonal. March prices are typically higher compared to mid-summer. And calf prices have been steadily climbing since before the pandemic.

Anderson said there is a demand for cattle, and lower corn and feed prices than a year ago adds more value to maintaining herds.

“Calf prices are better, and we aren’t seeing emerging drought in parts of the state leading to large runs of cattle that might affect prices negatively,” he said. “That could change in the coming weeks without rain.”

Drought monitors show extreme drought continues in parts of West Texas and the southern Panhandle, but much of North and Central Texas has been trending toward drought conditions due to lack of rain and triple-digit temperatures.

If that trend continues, Anderson said culling could flood local markets and lead to price declines for producers.

If calf and cattle prices continue their steady climb or begin dropping due to cattle sell-offs in drought-stricken parts of the state, the ripple effect likely won’t reach consumers anytime soon. 

“We shouldn’t see any sharp price adjustments,” he said. “Prices are moving the direction they should for consumers and producers, but with restaurants dealing with the pandemic, a large number of unemployed Americans, a huge reduction in GDP, those recessionary impacts plus increasing meat supplies should reflect lower prices at the register.”

AgriLife Extension district reporters compiled the following summaries:

CENTRAL: Intense heat and dry conditions persisted. Daytime temperature highs were 100-107 over the last 10 days. All dryland meadows and pastures looked burned up. Most cattle producers started supplementing with cubes or hay with little to no grazing left. Calf weaning started early in an attempt to reduce feeding requirements. Irrigated crops still looked good. Corn and sorghum harvests were rolling along.

ROLLING PLAINS: Conditions remained hot and dry, except for a small number of areas that received light rain. Cotton was in fair to good condition but needed moisture. Pasture and rangeland conditions were fair to good but could also use moisture.

COASTAL BEND: Persistent hot and dry conditions allowed field activities to continue. Corn harvest continued in the upper end of the reporting area with exceptional yields reported. In southern parts of the district, cotton harvest was in full swing with many operations reported hitting the halfway point. Yields were consistently 2-3-plus bales per acre. In other areas, cotton was being defoliated and will soon be ready for harvest. Rice harvest continued with excellent harvesting conditions and yields reported. Continued dry conditions quickly diminished rangeland and pastures. Some hay was being cut. Livestock water was getting short and becoming a concern. Livestock were in good condition, and the calf crop looked to be a little heavier than normal. Non-irrigated pecans were shedding nuts due to dry conditions.

EAST: No measurable rain fell across most of the district. Harrison and Jasper counties received some rain. Pasture and rangeland conditions were good. Subsoil and topsoil conditions were adequate. Hay production continued despite the excessive heat and dry conditions. Livestock were doing fair to good. Fall calving began. Armyworm infestation reports increased, and Bermuda grass stem maggots were reported. Wild pig activity continued.

SOUTH PLAINS: Subsoil and topsoil moisture levels increased due to the recent rainfall received in some counties, but more rain was needed. Peanuts continued to progress and were generally disease free. About two-thirds of cotton fields had less than 2.5 nodes above white flower. Producers continued to scout fields for pests. Cattle were in good condition.

PANHANDLE: Most crops were suffering from hot, dry conditions, and moisture was much needed. Most northern parts of the district reported adequate topsoil moisture and adequate subsoil moisture. Central and southern parts of the district reported short to very short subsoil and topsoil moisture. Pasture and rangeland conditions were good to very poor. Corn and sorghum were in poor to excellent condition. Cotton was in good to fair condition with fields setting bolls. The northeastern section of the district reported damaging hail and straight-line winds. Peanuts were doing well.

NORTH: Most counties reported adequate to short topsoil moisture. Weather conditions were hot with some counties reporting 104-105-degree temperatures. There was sporadic rain reported across the district, but pastures were still dry. Heavy fall armyworm activity was reported. Feral hogs were still active.   

FAR WEST: Temperatures averaged above 100-degrees by midday with lows in the high 70s and low 80s at night. Scattered thunderstorms delivered only trace amounts of recorded rainfall. Soil moisture levels were very low, making the ground very hard. Crop conditions were worsening. Cotton crops were maturing under irrigation. Dryland producers planted some hay grazer in places that received rain. Pecan orchards were starting to mature and will be preparing for harvest soon. Producers continued to feed livestock and wildlife. Producers shipped some late lambs and goats. A few wildfires were reported.

WEST CENTRAL: Dry and hot conditions continued, with some rain reported in parts of the district. However, most areas remained in drought conditions. Sorghum and corn harvests were in full swing. Dryland cotton harvest was all but done. Irrigation was not keeping up with crop water demand. Pastures were dry, and wildfire dangers were a concern throughout the district. The local goat market was down some, but prices were still very high overall. Other livestock markets were steady.

SOUTHEAST: Conditions remained hot and dry. Hay fields were browning out. Spring gardens were just about gone. All corn and sunflower acres were harvested. Rangeland and pasture ratings were excellent to very poor with good ratings being the most common. Soil moisture levels ranged from adequate to very short with adequate levels being the most common.

SOUTHWEST: Hot, dry conditions continued with only trace amounts of precipitation reported. Triple-digit temperatures were stressing crops, pastures and rangeland. Kendall County reported that trees were going dormant early. Caldwell County reported all corn and sorghum were harvested. Livestock were in fair to good condition. Cattle and sheep prices looked decent. Fall shearing of Angora goats began. Supplemental feeding continued for livestock and wildlife.

SOUTH: Northern, eastern and western parts of the district reported hot weather conditions with very short to adequate soil moisture levels. Soil moisture levels in southern parts of the district were adequate to surplus. Corn and grain sorghum harvests were complete. Yield reports were erratic with some exceptionally good yields in the mix. Cotton bolls were opening, and the crop was nearing harvest. Peanuts were progressing. Both crops were under irrigation. Pasture and rangeland conditions continued to decline in drier areas due to excessive heat and lack of moisture. Pasture and rangeland conditions remained fair in areas that received recent rains. Zapata County reported grasses were green and growing. Grazing increased for ranchers who were able to reduce supplemental feeding. Duval County reported cattle prices dropped. Some producers sold some livestock to reduce grazing pressure on native rangelands and pastures. La Salle County reported a daytime high temperature of 105 degrees. Ponds were starting to dry up, and livestock were spending more time in the shade. Wildlife were starting to suffer and were moving to find water. There were more quail coveys, and deer were in better condition. Irrigated crops like watermelons and cantaloupes were producing normally, and the Coastal Bermuda grass pastures were producing good bales. Seed bed preparation for spinach, cabbage and mixed greens continued. Hay producers were cutting and baling their second cutting as hay prices reached $65 per round bale on average. Cameron County reported the majority of cotton acres had been destroyed by Hurricane Hanna. Many cotton fields in Hidalgo County will not be harvested because of the deteriorating quality following the hurricane. Even some late-planted cotton fields that farmers thought might be salvaged were now being reported as total losses. Many sesame fields will not be harvested as well. Citrus growers were reporting significant damage to their grapefruit crop. Orange producers reported less damage to trees and fruit. Pastures with good drainage were in good condition following the heavy rains, but pasture with poor drainage still had standing water and were not fairing so well. There were minimal reports of livestock losses due to the hurricane.