If the genetics are present to finish steers and heifers to a higher quality grade, it is paying them to produce more cattle that yield choice and prime carcasses, and they are doing so, according to data from the USDA’s Agricultural Marketing Service and compiled by the Livestock Marketing Information Center in Denver.
Last year, the monthly USDA cutout value of beef carcasses showed a constantly higher value for USDA prime carcasses, followed by branded beef, followed by USDA choice carcasses with USDA select and ungraded beef following. Monthly differences may have been evident, but the progression was consistent.
Those value differences were most evident where it mattered most – in the higher-priced, better-eating-quality cuts like the rib and loin. There were some value position changes in the end cuts, like the chuck and round where branded beef tended to hold a slight value edge throughout the year.
PRIME CUTOUT RISES
As of Dec. 1, the average cutout value for prime beef was $364.07 per cwt. This was the highest of the four quality grades reported with branded beef second highest at $319.87 per cwt, choice at $310.21, select at $281.37 and ungraded at $265.76.
With such price disparities, it’s little wonder that US cattle producers are turning out a very high percentage of cattle that produce choice or prime carcasses, a market analyst said. USDA data show monthly US production of choice cattle since 2018 waffled between about 73% and 77% and in September was 75.1%.
Contrast that with the percentage of USDA select beef produced, which moved from about 12% of production to near 20% over the same period.
Prime, branded and ungraded beef production percentage data was not listed.
RIBS, LOINS IN DEMAND
The primal, or large, basic cuts of beef commanding the highest value in the prime and choice grades were the ribs and loins, which come from the center of the back. The problem for the cattle industry is that these cuts combined comprise only about 26% to 27% of the carcass.
The ribs and loins are the cuts that produce steaks and rib roasts, or the finest eating portions of the carcass. The chuck and round primals make up about 49% to 51% of the carcass.
As a result, the values of the middle meats can carry the value of the whole carcass, and this is what’s been happening to the beef cutout value.
Price graphs show no signs of anything changing in that regard, the analyst said. There may be some monthly variations, and a major recession could change consumer preferences, but for now, choice and prime beef rule.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $200.05 per cwt to $201.91, compared with last week’s range of $197.00 to $201.40 per cwt. FOB dressed steers, and heifers went for $312.04 per cwt to $317.84, compared with $304.49 to $315.25.
The USDA choice cutout Tuesday was down $0.37 per cwt at $332.98 while select was up $1.14 at $318.71. The choice/select spread narrowed to $14.27 from $15.78 with 123 loads of fabricated product and 32 loads of trimmings and grinds sold into the spot market.
The USDA-listed weighted average wholesale price for fresh 90% lean beef was $347.27 per cwt, and 50% beef was $117.48.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.20 to $1.35 a bushel over the Mar corn contract, which settled at $4.74 1/2, down $0.02.
The CME Feeder Cattle Index for the seven days ended Monday was $278.31 per cwt, up $1.01. This compares with Tuesday’s Jan contract settlement of $274.10, up $2.25.