Packer buyers may not be paying the premiums for choice- or prime-grading cattle they were paying a year ago, but USDA-Agricultural Marketing Service data show they are getting more.
That likely is because of an increase in the number of cattle being slaughtered, a market analyst said. Data from the AMS and USDA’s National Agricultural Statistics Service estimated weekly slaughter for most of the year being above the same week of 2017.
However, the wholesale cutout value for the various grades of beef show a definite difference between grades. Prime gets the most money, followed by branded beef and then choice. In fourth place is select-graded beef, and ungraded product brings up a distant fifth.
PREMIUMS CONCENTRATED IN BETTER CUTS
But a problem for the packers is that they can’t get premium prices for all cuts of beef, even if they are graded prime, choice or fall into a branded-beef category. A look across LMIC graphs of monthly prices for various primal cuts shows that premiums for prime, branded and choice beef are concentrated in the primal ribs and primal loins.
The data for primal ribs show a monthly average price in November of $443.32 per cwt for prime, $408.99 for branded beef, $395.41 for choice, $328.52 for select and $293.12 for ungraded beef.
Similar results are shown for primal loin values. The USDA data for November showed prime product fetching $304.62 per cwt in the wholesale market, while branded loins brought $281.34, choice brought $269.73, select $247.49 and ungraded $213.76.
However, the more mundane primals don’t get as much respect.
Primal chucks in November were valued at $167.45 per cwt, compared with $169.80 for branded product, $167.37 for choice, $165.61 for select and $162.22 for ungraded.
Rumps didn’t get the respect either. USDA data showed that prime-grading rumps were valued at $166.88 per cwt, versus $168.32 for branded product, $166.86 for choice, $167.51 for select and $165.12 for ungraded.
To make matters harder for the packer is that the chuck and the rump constitute the largest share of the beef carcass, constituting about 49.2% of the carcass, according to the University of Tennessee.
Over the long haul, prime-graded beef is best for the packer. Customers of this product usually want the best and are willing to pay for it.
What would Ruth’s Chris Steakhouse be without prime beef.
CATTLE, BEEF RECAP
A total of 97 head of fed cattle sold Wednesday at the Fed Cattle Exchange video auction at an average price of $119 per cwt, up $1.17 from a week earlier.
Cash cattle traded Tuesday at $187 per cwt on a dressed basis to a regional packer in eastern Nebraska and western Iowa, steady with last week.
Cash cattle traded last week late at $118 to mostly $119 per cwt on a live basis, steady to up $0.50 from the previous week. On a dressed basis, cattle traded at $187, up $3.50 to $4.
The USDA choice cutout Thursday was up $0.22 per cwt at $212.47, while select was down $0.57 at $201.00. The choice/select spread widened to $11.47 from $10.68 with 100 loads of fabricated product sold into the spot market.
No delivery notices were served for Dec live cattle.
The CME Feeder Cattle index for the seven days ended Wednesday, was $146.40 per cwt, down $1.43. This compares with Thursday’s Jan settlement of $147.97, up $0.40.