There are no market signals indicating beef carcass weights will go down, said Mark Johnson, Oklahoma State University beef cattle breeding specialist, in a letter called Cow-Calf Corner.
Even long-term, pending increased heifer retention and a larger national cow inventory, market signals indicate more days on feed and heavier carcass weights will be the new normal, Johnson said.
DAYS ON FEED MAXIMIZED
The cattle feeding industry has maximized the number of days on feed in order to produce the tonnage of beef needed to meet consumer demand during a time of decreasing national cow herd inventory, he said.
According to seasonal norms, carcass weights could increase through the end of the year and top out at around 980 pounds, he said. Heifer carcass weights, currently around 872 pounds could be near 900 pounds at their peak in December.
QUALITY GRADES UP
One of the most dramatic and interesting market signals is the proportion of higher USDA quality grade carcasses in the weekly harvest mix relative to robust consumer demand for consistently great tasting, higher quality beef, Johnson said.
For example, the average harvest mix for 2005 was 36.5% select and 55.8% choice and rime, he said. Of those higher quality carcasses in the choice and prime grades, only 15.3% were in the upper two-thirds of choice or prime, with only 1% to 2% grading prime. In 2005, the biggest determinant of carcass value was the choice/select spread.
This year to date, only 13.2% of carcasses were grading select with 84.4% reaching choice and crime, Johnson said. Of these higher-quality carcasses, a staggering 36.7% were in the upper two-thirds of choice or prime, with more than 10% reaching the formerly thought to be rarified air of prime.
In fact, for a stretch of more than two months earlier this year, the weekly harvest mix yielded more prime carcasses than select, he said. Currently, the prime/choice spread is having the greatest effect on the value of a beef carcass. This also could become a new normal as the consumer demands higher-quality product.
GENETICS INVOLVED
Beef carcass quality is a result of the genetic potential to marble as well as the environment in which cattle are raised, Johnson said. Marbling is a highly heritable trait in which cattle breeders have made significant improvement.
Increased days on feed is an environmental influence permitting fed cattle to express their full genetic potential to reach higher marbling scores, he said. Consumer preference for high-quality beef and their willingness to pay for a great tasting product have created the need to supply this demand.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $240.62 per cwt to $240.92, compared with last week’s range of $234.39 to $237.11 per cwt. FOB dressed steers and heifers went for $370.29 per cwt to $371.94, compared with $365.05 to $373.86.
The USDA choice cutout Monday was up $2.41 per cwt at $369.18 while select was up $3.19 at $353.46. The choice/select spread narrowed to $15.72 from $16.50 with 61 loads of fabricated product and 24 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $411.50 per cwt, and 50% beef was $144.42.
The USDA said basis bids for corn from feeders in the Southern Plains were up $0.05 to $0.10 at $1.00 to $1.10 a bushel over the Dec corn contract, which settled at $4.23 1/4, up $0.00 3/4.
No new live cattle delivery intentions were tendered Monday.
The CME Feeder Cattle Index for the seven days ended Friday was $376.15 per cwt, down $0.36. This compares with Monday’s Oct contract settlement of $372.95, up $1.05.