The reasons for wholesale USDA choice and select beef prices to invert last week are elusive, but the move could indicate a shift in consumer choices at the retail meat case, a market analyst said.
A CBS News story Monday said beef is getting harder for Americans to afford. Retail prices have skyrocketed in the last 10 years with accelerated increases just in the last year.
CHOICE/SELECT SPREAD INVERTS
The difference, or spread, between wholesale values for choice and select beef inverted last week, and the have remained inverted through Monday. Wholesale prices for choice beef usually are higher than select because of its generally greater flavor and tenderness qualities.
And, until last week, USDA choice beef was higher in wholesale markets than select, which has less marbling and generally is lower in flavor and tenderness.
Over the last 15 years, beef demand among US consumers has flourished, despite the fact that the 70% to 75% of US cattle turn out to be choice grade beef. So, in spite of the production percentage differences, consumers have eaten it up.
2026 CHOICE/SELECT SPREAD DOWN
Yet, consumers seemed to begin losing the love in the last quarter of 2025 and have continued aloof this year. A graph of the USDA choice/select spread from the Livestock Marketing Information Center in Denver showed the divergence from the 2020-2024 average.
Last week, the spread was a minus $1.50, meaning select beef was $1.50 per cwt higher in price at the wholesale level than select. Last year in the same week, choice was $19.65 per cwt higher than select and over the previous five-year average, it was $9.21 higher.
And, with the US cattle herd at a 70-year low and no relief in sight for an end to the US drought, there doesn’t seem to be any relief for consumers who really want US choice beef but can only afford US select or even ungraded beef, the analyst said.
Wheat prices are rising as large portions of hard red winter wheat production areas suffer from a lack of water. If rain isn’t there for the wheat, it isn’t there for pastures either.
The weekly Drought Monitor showed large tracts of moderate to exceptional drought over almost all of the contiguous 48 states except the Midwest and far Northern Plains. With so much grazing land burning up with drought, there is little room for the US herd to expand, the analyst said.
That means, beef prices at the wholesale and retail levels will remain elevated, and there could be more instances when the choice/select spread inverts, he said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $248.13 per cwt to $250.44, compared with last week’s range of $235.00 to $248.29 per cwt. FOB dressed steers and heifers went for $386.05 per cwt to $391.66, compared with $373.20 to $388.53.
The USDA choice cutout Tuesday was up $1.28 per cwt at $383.20 while select was down $3.84 at $379.80. The choice/select spread reinverted to $3.40 from minus 1.72 with 77 loads of fabricated product and 17 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $458.24 per cwt, and 50% beef was $181.32.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.02 to $1.15 a bushel over the May corn contract, which settled at $4.43, up $0.02 3/4.
No new live cattle contracts were tendered for delivery Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was $375.02 per cwt, up $1.08. This compares with Tuesday’s Apr contract settlement of $375.87, up $1.40.