As directed under Mandatory Price Reporting (MPR), USDA’s Ag Marketing Service (AMS) introduced the weekly National Comprehensive Boxed Beef Cutout Report in 2002. That report incorporates boxed sales of Prime, Choice, Select, Ungraded and Branded Beef products that are sold on a negotiated (spot and 22 days and out), formula, forward contract, other domestic or export basis. These primal cut values are combined into a single weighted average carcass cutout equivalent value and provide important insight into wholesale beef markets.
As expected, wholesale prices are greatest for the higher value primal cuts (i.e. rib prices are above chuck prices). Since last fall, the economic slowdown in the U.S. and global economies has impacted the cutout values for all the different primals as consumer demand has shifted towards lower valued beef items at both the retail stores and in restaurants. Since July, the value for all the different quality grades have declined as the economy has worsened however, Select and Ungraded items have held-up fairly well relative to higher quality primals.
For example, after peaking at a $193.33 per cwt. in July, the total value of Prime graded beef steadily declined hitting a low of $158.31 per cwt. in December, a 16 percent year-to-year decline. By January it improved to $163 per cwt., but was still about 11 percent lower than a year earlier. The Choice primal has shown a similar pattern falling about $18 per cwt. from July to January however; it only dipped below a year ago in December with the January average about even with 2008’s. Unlike the higher grades, Select beef has been able to remain above year ago values as consumers have traded down in their beef purchases. In January, Select beef averaged $141.35 per cwt. versus $138.58 per cwt. last year while on a monthly basis it gained about 3 percent from December to January. A similar pattern was seen in Ungraded beef items, in the last two months Ungraded beef has averaged 4 percent higher than a year earlier.