Beef Consumers Get The Memo: Choice Is Better

Beef consumers appear to be getting the message that choice beef eats better than select or non-graded, and many are becoming more willing to pay for it.

Cattle producers have said for years that they would produce the kind of beef they are getting paid for, and the fact that a higher percentage of beef carcasses are grading choice or prime, compared with just a few years ago, is testament to the change in compensation for the higher eating quality carcasses.

For years, many produced one quality of cattle for sale to packers and then the public and one or two singles for their families.  At the time, packers often discounted cattle feeders for what was considered overly fat cattle, even though many of those carcasses graded choice or even prime.

The public just didn’t want the intermuscular fat, called marbling, that carries the flavor to the tongue and tenderizes the meat.  Either they were convinced the fat was bad for them, or they didn’t want to pay up for the higher eating quality, especially with that nagging thought in their heads that what they were eating might be bad for them.

In addition, many consumers for years didn’t know what the USDA quality grades meant.  The terms “choice” and “select” seemed to be two terms that had the same meaning, so there was no incentive to pay for fattier beef, just because it was labeled “choice.”

What’s more, many stores didn’t even label select beef, letting it fall into a category the industry calls “no roll,” or ungraded, so consumers had even less information about how their beef purchase would eat.

 

RECORD PERCENTAGE NOW HIGH GRADE

 

But over the last few years, an increasing percentage of consumers now “get it,” market sources said.  They see the eating quality difference of choice beef, either because of restaurant advertising, word-of-mouth or something else, and they are willing to pay more to get it.

Packers were the first respond by dropping the discounts charged to cattle feeders for extra fat that has to be trimmed.

Ten years ago, the beef industry was generating about $140 million a week for the top grades.  The current six-month average is around $250 million, said Nevil Speer, vice president of US operations for AgriClear Inc., in a Beef Magazine article.

As testament to how well producers have responded to market incentives, the cattle slaughter mix achieved a new record in mid-March of nearly 8% of carcasses grading prime and 74% grading choice for a combined 82%, Speer said.

That’s a long-term trend, too, he said.  The industry set a record for weekly prime, branded and choice tonnage in November at 152 million pounds.  The six-month moving average is running around 130 million, versus 10 years ago when it was about 95 million pounds.

 

CASH CATTLE QUIET

 

No cash cattle trade was reported Monday.

Cattle traded on the livestock exchange Wednesday at an average of $128.60 per cwt, up $2.60 from the previous week, but fewer than 1,000 passed under the gavel.

Subsequently, cash cattle traded in a range from $129 to $133 per cwt on a live basis, mostly $130 to $133, up $4 to $5, and at $210 on a dressed basis, steady to up $2.

The USDA’s choice cutout Monday was up $1.51 per cwt at $218.67, while select was up $0.40 at $204.29.  The choice/select spread widened to $14.38 from $13.27 with 81 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Friday was $139.41 per cwt, up $1.36.  This compares with Monday’s Apr settlement of $138.25, down $0.30, and May’s at $137.45, down $1.80.