The percentage of steer and heifer carcasses grading prime so far during 2020 has outpaced normal levels, said Josh Maples, Extension economist at Mississippi State University, in a Livestock Marketing Information Center letter to Extension agents called In The Cattle Markets.
The average percent prime for the first seven months of 2020 was 10.6%, the highest on record and about 2% more than during the first seven months of 2019, Maples said.
PRIME UP AS DEMAND STAGGERS
The larger totals of prime beef production occurred as a sharp decline in travel and dining at high-end restaurants affected demand, and the premiums received for prime carcasses declined, he said. These shifts limited the reward for achieving the prime carcass grade.
But the USDA-AMS national weekly comprehensive boxed beef cutout report showed the value of prime relative to choice increasing since the low point earlier this year, Maples said. From April through July 2020, the prime boxed beef cutout value averaged only $10.59 more than choice. Since the start of August, the weekly difference has averaged $23.71, including consecutive weekly increases over the past five weeks.
That suggests the difference between choice and prime cutout values may be returning to more normal levels, Maples said.
DRESSED WEIGHTS UP
Dressed weights also have been higher during 2020, Maples said. Average steer and heifer dressed weights were 899 and 829 pounds, respectively, during the first eight months. For steers, this was a 32-pound increase while it was a 25.5-pound increase for heifers.
Dressed weights usually are seasonally lowest during late spring and then peak in late fall, Maples said. In 2020, the spring decline did not materialize because of processing disruptions forcing cattle to stay on feed longer.
The percentage of cattle grading prime was increasing steadily before the disruptions, he said. Prime averaged 4.1% from 2010 through 2015 and 7.4% from 2016 to 2019.
On the opposite end of the grading scale, the percentage of cattle grading select has been declining, Maples said, averaging 28.3% during 2010 to 2015 and 18.5% from 2016 to 2019. The average select percent for the first seven months of 2020 was 14%, the lowest seven-month average on record and 3.5% lower than the first seven months of 2019.
CHOICE PERCENT ALSO RISING
Meanwhile, the percent of cattle grading choice has increased to 74% from 2016 to 2019 from 67.3% in 2010-2015, averaging 75.2% through July 2020, Maples said. Together, 85.8% of cattle graded prime or choice during 2020 through July.
However, while prime percentages increased, the weighted average carcass premiums decreased, Maples said. The USDA-AMS five-area weekly premiums and discounts reported showed the average carcass premium for prime from April through July 2020 was $8.37 per cwt, $3.52 lower than the same period of 2019.
For comparison, the average prime premium during April through July for 2015 to 2019 was $14.03, he said.
CATTLE, BEEF RECAP
Fed cattle trading this week was reported at $104 to $105 per cwt on a live basis, up $1 from last week. Dressed-basis trading was seen at $164 per cwt, up $1 to $2.
The USDA choice cutout Wednesday was up $0.43 per cwt at $215.87, while select was up $1.30 at $207.60. The choice/select spread narrowed to $8.27 from $9.14 with 123 loads of fabricated product and 47 loads of trimmings and grinds sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Tuesday was at $142.28 per cwt, down $0.17. This compares with Wednesday’s Sep contract settlement of $142.00 per cwt, up $0.30 and Oct’s settlement of $141.52, up $0.90.