Choice/Select Beef Spread May Narrow Soon

Historically, the spread between wholesale choice and select beef prices should be nearing a seasonal high, although suitable grilling weather could flatten the top.

The wholesale price spread between choice and select graded beef was catapulted higher last week by renewed demand for the more-expensive choice product.  An influx of warmer, drier conditions for many large consuming areas correlates to this demand increase and fuels speculation that much of the product is destined for back yard grills.

The weekly choice/select beef price spread last week was listed by the USDA’s Agricultural Marketing Service at $11.28 per cwt, up $2.046, or 22.2%, from $9.23 the previous week.  The new spread closed in on last year’s seasonal spread top of $13.30, which came next week.

The price spread this year made an unscheduled rise beginning with the third week of February as a mild winter appeared to be melting into an equally mild and early spring.  But it couldn’t last.

The spread ran into problems by the second week of March as an early spring failed to materialize, teasing consumers with decent, but not perfect grilling weather.  The result was an uncharacteristic flat spot in the choice/select spread graph as the weather made it hard for grocers or restaurants to plan any advertising campaigns or features tied to enjoying the spring weather.

Seasonally, demand for choice products tends to fade on or around the Memorial Day holiday.

Intuitively, it might be assumed that demand for choice grilling beef products would continue through the Independence Day holiday.  But the fourth of July is generally a burgers and hot dogs day, which, at the wholesale end, tends to use up more select product, narrowing the wholesale price spread.




If history is any teacher, the choice/select beef spread should peak within the next three weeks and decline into summer.  The 2010-2014 average points to a bottom near $5.00 per cwt in the first week of August, although last year, the low came around $2.75 the second week of July.

The summer spread rally is fueled by tightening supplies of cattle that will yield choice-graded carcasses that bleeds over into fall demand for choice beef for the holidays.

Last year’s summer/fall rally was interrupted by a relatively mild summer and more abundant supplies of choice beef at a time when many consumers didn’t want it.




Cash cattle markets Tuesday were quiet after last week’s sharp jump with no packer buyer bids reported.  Feedlots were asking $136 to $137 per cwt, but showlists were estimated to be higher, dampening hopes for a repeat of last week’s gains.

Cash markets last week were $5 to $6 per cwt higher at $132 to $134 on a live basis.  Dressed-basis prices were up $7 to $9 at around $207.

The USDA’s choice cutout Tuesday was sharply higher at $225.33 per cwt, up $2.93, while select was up $3.06 at $211.60.  The choice/select spread narrowed to $13.73 from $13.86 with 72 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Monday was $148.37 per cwt, up $0.40.  This compares with the May settlement Tuesday of $149.52, up $0.87.