Long-term trends in beef demand make it clear that US consumers, at least, continue to demand more high-eating-quality beef. USDA data show that prime beef values exceeded the value for choice and even branded beef in every month last year.
Information gathered by the USDA’s Agricultural Marketing Service and compiled by the Livestock Marketing Information Center showed the comparisons in grade values on a monthly basis.
By now, it’s pretty clear that the seasonal rush for high-quality beef cuts is over. But long-term trend remains in place. Seasonalities will always be there, a market analyst said. What’s important is that time periods and seasons are compared with each other.
What emerges from a study of the relative values of similar cuts is that the carcass’ middle meats are providing more of the total carcass value than they were in the past.
About 90% of the cutout is comprised of the four major primals – the round, the loin, the rib and the chuck, said Nevil Speer, vice president of US operations for AgriClear Inc., in an article for Beef Magazine.
Twice each day, the USDA aggregates sales price data from beef packers for individual-item wholesale values based on actual sales. The indexed result is the overall cutout value.
RIB, LOIN VALUES RISE
The strong surge in middle-meat, or loin and rib, values began in early January 2015, Speer said. The surge peaked in late summer of 2016, but it appears the rib and loin are finding new pricing power. In other words, consumers want, and appear willing to pay for, quality and high-end beef cuts.
As a result, the rib and loin consistently have driven a greater portion of total carcass value compared with the chuck and round, Speer said.
GOOD NEWS FOR PRODUCERS
A market analyst said this is good news for cattle producers, or should be. Producers now have an attainable target for differentiating their product from other meats and even from lower-quality beef.
Such targets are hard to hit, but are attained through close attention to genetics and breeding within their own herds. Sire and dam selection become even more critical.
But the goals are attainable, the analyst said. It takes close, accurate record-keeping and selling on a carcass basis so the carcass grading data can be obtained from the packer.
That may take a quantum shift in the breeding and selling habits of producers, the analyst said. But at least the goal is attainable and not left up to chance and the eye of breeders trying to judge the relative quality of parent cattle based on how they look.
And even if another great recession should occur and knock the current consumption trend back, cows with quality genetics are still there, eating just as much as low-quality genetics would, he said.
CATTLE, BEEF RECAP
Cash cattle traded last week at $119.50 to $121 per cwt on a live basis, mostly $120, down $1.50 to $2 from the previous week. Dressed-basis trade took place at $192, down $3.
Fed cattle then sold Wednesday on the Livestock Exchange video auction at $119.
The USDA’s choice cutout Tuesday was down $2.45 per cwt at $2085.58, while select was off $2.15 at $199.89. The choice/select spread narrowed to $5.69 from $5.99 with 116 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Monday was $145.38 per cwt, down $0.46. This compares with Tuesday’s Jan settlement of $145.60, up $1.25.