The percentage of beef grading choice out of all graded beef is running very close to last year and the 2018-2022 average as federally inspected production follows last year more closely than the previous five-year average.
CHOICE GRADING NOW MORE NORMAL
The USDA’s listing of the percentage of beef production that graded choice at slaughter was 72.28% for the last week of June, according to USDA data graphed and republished by the Livestock Marketing Information Center in Denver. This compares with the previous week’s 72.26%, the previous year’s 72.54% and the average of 72.12%.
But being “normal” hasn’t been the case for most of this year. The data showed that the percentage of federally inspected beef production started the year near the five-year average but crossed above the descending average line on the line graph where it remained until the first week of June.
It should be noted that the weekly percentage of choice-versus-other grades has been lower than last year in all but two weeks in the first half of the year, and they came in May and June.
The seasonal peak in the percentage of choice beef production comes in the first week of July at 72.82%, the USDA data showed. The annual low is recorded in the first week of November at 70.59%, although last year, it occurred in the first week of October at 70.26%.
OUTLOOK
Looking forward, there are strong seasonal tendencies for the percentage of choice beef produced to decline into the annual low in early fall. However, this year may have some things working that could influence the percentage to follow seasonal tendencies but at a higher level, a market analyst said.
Continued strong demand for choice beef over select at the retail level is prompting beef packers to discount the lower grading cattle. Slaughter-ready cattle are traded as if all cattle were grading choice. The packer then discounts those that produce a lower-grading carcass before they cut the check to the feeder. Higher-grading prime carcasses are given a premium.
That is prompting feedlot managers to feed cattle a little longer than might be optimum in order to pack in the extra marbling that choice or prime grades demand and is one reason cattle carcass weights have been running heavier than average.
There is a point at which any fed steer or heifer will not add any more marbling to the meat and will just get fatter. It’s a fine line, but packers continue to be willing to put up with the extra, lower-valued fat in order to obtain the well-marbled beef.
How long it will last will depend on the consumer.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $190.00 per cwt to $200.93, compared with last week’s range of $189.71 to $200.07 per cwt. FOB dressed steers, and heifers went for $300.74 per cwt to $310.70, compared with $298.67 to $309.14.
The USDA choice cutout Thursday was down $2.40 per cwt at $321.65 while select was down $0.56 at $303.38. The choice/select spread narrowed to $18.27 from $20.11 with 127 loads of fabricated product and 15 loads of trimmings and grinds sold into the spot market.
The weighted average USDA listed wholesale price for fresh 90% lean beef was $375.88 per cwt, and 50% beef was $115.64.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.62 to $1.78 a bushel over the Sep corn contract, which settled at $4.00 1/4 a bushel, up $0.04 1/2.
The CME Feeder Cattle Index for the seven days ended Wednesday was $261.53 per cwt, up $3.38. This compares with Thursday’s Aug contract settlement of $256.15, down $1.80.