Choice/Select Beef Spread Near High

The price relationship of choice beef over select likely is about to turn south within the next two weeks as seasonal demand begins its winter decline.

Last week, the spread between the choice and select USDA carcass cutout value was placed at $11.26 per cwt, up from $10.63 the week before but below last year’s $12.83 and the 2009-2013 average of $13.83.

A graph of the choice/select spread shows an uncharacteristic downturn in late September.  At the time, many market analysts said retail grocers and restaurants then stepped in to fill their needs for choice ribs and steaks.

Choice and prime rib roasts have their own followings for Thanksgiving Day, Christmas and New Year’s celebrations, although their most common meal is the office party near Christmas and New Year’s.

During the late summer and early fall dip, high beef prices and unusually high supplies of competing meats kept buyers away from beef markets, and all major carcass cuts languished.

However, the seasonal pull was too great, and demand for choice items returned to widen the choice/select spread back to near-normal levels by last week.  This should demonstrate the extent of that seasonal pull when the spread can widen in the face of growing competition.




Economists have been saying for months that this year’s decline in gasoline prices is driving demand for other goods and services.  The less people have to pay at the pump, the more “jingle in their jeans.”  This increased demand for things other than gasoline likely is helping to underpin demand for choice holiday items.

And it can be demonstrated that the seasonal beef demand is aimed at the most expensive holiday meats.  USDA data show that boneless, light wholesale beef ribeye prices now are up to record-high prices while prices for many other primal cuts languish.  Wholesale prices for this item, while more volatile this year than the average or last year, have more or less followed the seasonal path to holiday highs.

At the same time, average prices for bottom rounds have been sliding since June in a counter-seasonal move.  They now are nearly down to the 2009-2013 average and well below last year when gasoline prices were very high.

Lower-cost roasts and ground beef take center stage for many families after the holidays.  Demand for choice steaks doesn’t improve until restaurants begin gearing up for Valentine’s Day.  A slow demand uptick also occurs as the nation awakens from winter and dusts off the back yard grills.




Scattered cash cattle sales were reported Tuesday, mostly in the western Corn Belt.  The USDA reported small batches traded at $118 to $119 per cwt on a live basis and at $186 to $190 on a dressed basis.

Prices last week were down about $3.00 per cwt to a range of $123 to $125, mostly $124 on a live basis.  On a dressed basis, cattle traded at $190 to $192, down $3 to $5.

Wholesale beef prices Tuesday were higher, with the USDA choice cutout up $1.27 per cwt on the day at $204.14 and the select cutout up $0.37 at $190.73.  The choice/select spread widened to $13.41 from $12.51 on Monday, and there were 97 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Monday was $163.70, down $1.96.  This compares with the Jan settlement Tuesday of $153.85, down $2.60.