Choice/Select Spread Remains Wide

The choice/select beef price spread remains historically wide, even if it is below last year and obscured by a total boxed-beef cutout value that is declining seasonally.

The number of reasons for the unusually wide spread in the middle of a pandemic, with buyer interest focused on the more-expensive choice and prime beef, are legion.  Greater buying interest for marbled pork also is being reported.

No single line of reasoning explains the phenomenon of greater buying interest in more-expensive, but better-tasting beef (and pork) exactly, but one market analyst those with money to spend haven’t been affect by the COVID lockdowns as greatly as others.

“People with money want to – and will – spend money on a higher-quality product,” he said in an email.

The beef choice/select spread is defined as the difference between the USDA’s reported choice grade and select grade beef price at the wholesale level with select grade subtracted from the choice grade’s price.  The USDA just reports the numbers and does not give any comment about why prices are moving up or down.

Demand for choice beef, with its higher level of marbling, or intermuscular fat content, over select beef with its near absence of intermuscular fat, has grown the last few years.  This surge in demand has shown some price resilience that has surprised many in and around the beef industry, especially during this year’s pandemic in which many restaurants have been closed or had their operations crimped.

Meat sales through retail grocers have risen to the challenge, and a lower US dollar has aided meat exports, but it seems there is no one explanation for the meat demand, especially for the more-expensive choice and prime grades of beef.




The weekly average choice/select beef spread widened last week, reversing a two-week decline and prompting many traders to re-examine their investment strategies.  However, the real issue to many was the longer-term trends.

The spread, although not a record, has been historically wide since the third week of July, measuring $14.53 per cwt last week, down $8.38, or 36.6%, from $22.91 in the same week a year earlier but up $6.76, or 87.0%, from the 2014-2018 average of $7.77.

Last year, the choice select spread turned in some unusually large numbers rising to more than $27 per cwt in October before sinking fast to the December low.  At the time, strong demand for choice-grade beef was evident in an economy not locked down by COVID0-19.  Seasonal demand for higher-quality products was augmented by a low unemployment rate.

This year, COVID-related sales may have disrupted, but not destroyed. a perfectly good thing, another analyst said.

The seasonal trend for the choice/select spread is to widen into the first week of December before falling off rapidly to bottom in February.




Fed cattle trading last week was reported in the Plains at $101 to mostly $102 per cwt on a live basis, down $1 to $2 from the previous week.  Dressed-basis trading was seen at $160 to $161 per cwt, down $2 to $3.

The USDA choice cutout Tuesday was down $1.12 per cwt at $216.09, while select was off $1.48 at $206.28.  The choice/select spread widened to $9.81 from $9.45 with 119 loads of fabricated product and 41 loads of trimmings and grinds sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Monday was at $140.52 per cwt, down $0.93.  This compares with Tuesday’s Sep contract settlement of $141.67 per cwt, up $0.17.