Even with record-high wholesale beef prices, meat buyers in April continued to favor USDA prime-graded beef over branded, USDA choice, USDA select or ungraded product.
Whether that means it pays to feed cattle to their full genetic grading potential or not is something individual cattle feeders will have to determine for themselves, a market analyst said. The costs of feeding each set of cattle to maturity will vary with the costs of the feeder cattle, feed and overhead and be the deciding factors.
Physiology and genetics scientists also will explain that some cattle have a genetic predisposition to produce carcasses with well-marbled meat. Many of these cattle will produce a prime carcass without special help, but some will need extra time on feed to deposit the intermuscular fat known as marbling.
PRIME BEEF BRINGS MORE MONEY
At any rate, prime beef has brought more money to the packer than other grades or categories of beef for more than a year.
Data from the USDA’s Agricultural Marketing Service that was compiled by the Livestock Marketing Information Center in Denver showed that prime beef in April brought an average of $257.382 per cwt. This compares with the price for branded beef (Certified Angus Beef, for instance) of $250.258 per cwt, a difference of $7.124, or 2.85%.
The average price for choice beef in April was $248.766 per cwt, $8.616, or 3.46%, less than prime’s value, while select was valued at $236.750, a difference of $20.632, or 8.71%, and ungraded beef brought $215.948, $41.434, or 19.2%, less than prime.
The price of prime beef in April, however, was less than the returns seen at its most recent height in September. That month, the average price of prime beef was $284.6575 per cwt, the LMIC said. The difference between prime and choice at that time was $58.9625, or 26.1%.
At that point, there was no quibbling about whether it was better to sell prime-grading cattle to packers, the analyst said.
PRIZE GOES TO END CUTS
However, despite the fact that prime beef commanded a higher average price than other grades and categories, the prizes for most distinguished gains for April went to the end cuts, chucks and rounds, the LMIC said.
Normally, there is less buying interest for the end cuts at this time of year as consumers seek out middle meats (steaks) and decrease their consumption of roasts, which come mostly from the end cuts.
But these aren’t normal times as packing plants close or curtail processing as they deal with sick employees from the COVID-19 pandemic. Grocery shelves have been nearly emptied of all meats while restaurant buying has dwindled to a shadow of its former self.
People also had to stay at home rather than eat out, changing what they ate. Millions also are now unemployed, which changes their dietary preferences and abilities.
That has changed the whole dynamic of wholesale beef markets, aiming buying interest at cheaper beef cuts – the ends.
CATTLE, BEEF RECAP
Light fed cattle trading was reported Monday in the Plains at $120 per cwt on a live basis. Steady with the upper end of last week’s $110 to $120 trading range. Dressed-basis trading last week was seen at $170 to $190 per cwt, up $5 to $25.
The USDA choice cutout Monday was down $19.37 per cwt at $414.95, while select was off $24.19 at $394.87. The choice/select spread widened to $20.08 from $15.26 with 130 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Friday was $125.73 per cwt, up $0.93. This compares with Monday’s May contract settlement of $126.60, up $1.87.