Choice/Select Beef Spread Narrowing Seasonally

The spread between wholesale prices for choice and select beef is following the seasonal path downward, even if it remains above average.

A graph of the choice/select spread for the year to date shows the spread starting out above the average and then mirroring the seasonal move lower.  The latest weekly choice/select spread was at $4.15, $1.94, or 87.8%, above the 2009-2013 average of $2.21.

A graph from the Livestock Marketing Information Center shows the path of the choice/select spread this year, compared with last year and the previous five-year average.  It shows a strong inclination toward a narrowing of the relative wholesale values of choice and select beef at this time of year.  A secondary decline is seen during the dog days of summer.

The graph also shows that the weekly choice/select spread last year made its annual low early and that the subsequent rally to spring’s widest point was rapid.

The current early season narrowing of the choice/select spread can be correlated to an increase in the percent of beef carcasses grading choice at this time of year.

This LMIC graph shows a distinct rise in the average percent of total carcasses grading choice, with a peak occurring about the second week of February.

An LMIC graph also shows that this year’s percentage of choice carcasses in the total slaughter mix declined for the first two weeks of January and then turned higher, pretty much right on schedule, although at a higher level than either last year or the previous five-year average.

The percent of beef carcasses grading choice then jumped and continues to reflect the movements of the average over last year.  The average direction of the percentage of beef in the total slaughter turns lower from this point in the year and shows a late spring/early summer firmness only to fall off again into late September.

If the seasonal tendencies hold this year, the percentage of choice beef in the totals being offered to grocers and restaurants will decline, forcing higher prices for choice product over select to respond by moving higher into early summer.




Cash cattle markets remained quiet Tuesday, although a few trades were recorded in Nebraska’s dressed market at $250 to $252 per cwt, compared with last week’s range of $254 to $258.  Most asking prices were holding around $260.

No bids were reported in the live basis market, but asking prices hovered around $162, versus last week’s trade at $158 to $160.

Spot market boxed beef prices were sharply higher amid moderate volume.  The USDA’s choice cutout was $244.24 per cwt, up $3.16, and select was at $242.65, up $3.27 with 98 fabricated loads sold.

The CME Feeder Cattle Index through Monday was $208.76 per cwt, down $0.79, and well below the Mar feeder cattle futures settlement of $195.60.