If feedlot managers ever wonder why packer buyers won’t pay more for a pen of cattle that are likely to yield a better-than-average percentage of prime-grading carcasses, it’s because the packer has to sell the whole carcass.
The difference between prime beef and other grades is the amount of intermuscular fat, called marbling. This fat is what gives the beef its “juiciness” and flavor. But cattle generally don’t lay this marbling in until they are in the feedlot. Even then, sometimes it takes a little extra time on high-energy feed to encourage their metabolisms to put in the full extent of their genetic potential for marbling.
And that’s fine if packer buyers are willing to pay a premium for prime-grading cattle. If not, feedlot managers will not go the extra mile to finish cattle with the extra fat.
Data from the USDA’s Agricultural Marketing Service that was compiled by the Livestock Marketing Information Center in Denver showed that the only primal cuts that give them a higher return on prime-graded beef are the rib and the loin. Other primal cuts like the chuck, round, brisket, short plate or flank have little variation in return to the packer from prime down to ungraded.
BREAKING IT DOWN
The loin represents about 16% of the total weight of a beef carcass after the head, hide, internal organs, feet and tail have been removed, according to BeefResearch.org, which is funded by the Beef Checkoff. The rib accounts for just 9% of the carcass.
Those hunks of the carcass, called primal cuts, are further processed into ribeye steaks roasts, short ribs, tenderloin steaks, strip steaks, sirloin steaks and roasts. These cuts at retail command much higher prices from consumers because for these products, eating quality matters.
Packers can get higher wholesale prices for prime-graded ribs and loins, but the rest, about 75% of the carcass, must be sold at prices that are very near to those of lower-grading beef.
The latest monthly data from AMS showed that prime-graded beef ribs had a value of $419.08 per cwt, compared with branded product at $349.45, choice at $339.56, select at $324.95 and ungraded at $273.61. Prime-graded loins had a wholesale value of $318.56 per cwt, branded $285.83, choice $272.00, select $259.22 and ungraded at $229.43.
Compare those differences with the chuck, which had a value of $173.01 per cwt, branded at $176.04, choice at $172.93, select at $172.56 and ungraded at $169.05. The round wasn’t as good with prime at $179.20, branded at $181.20, choice at $179.14, select at $180.49 and ungraded at $179.02.
The problem for packers is compounded by the ground beef market. Tenderness is not an issue, since it is ground, but the product is differentiated by the percent of fat (or lean) in a pound of product. The fat is mixed in or removed to make up the desired ratios, so prime beef doesn’t count.
CATTLE, BEEF RECAP
Cash cattle trading took place in the Plains this week at mostly $119 up to $120 per cwt on a live basis, down $1 to $2 from last week. Dressed-basis trading was at $190 to $191, down $2.
The USDA choice cutout Thursday was up $0.14 per cwt at $206.45, while select was off $1.51 at $203.79. The choice/select spread widened to $2.66 from $1.01 with 99 loads of fabricated product sold into the spot market.
No live cattle futures contracts were tendered for delivery Thursday.
The CME Feeder Cattle index for the seven days ended Wednesday was not available. Thursday’s Mar contract settlement was $136.32, up $1.27.