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The week of Sept. 15, 2018, almost 8% of all carcasses graded Prime, 70% graded Choice, and 18% graded Select.

Choice beef slightly harder to come by, but don’t panic

There’s been a slight reduction in the amount of Choice beef produced and a slight increase in Select. But there’s still plenty of Choice and Prime beef in the market pipeline.

By David P. Anderson

Federally inspected beef production over the last month is up 1.1% over the same period last year. During the same period, fed steer slaughter is down almost 2% while heifer and cow slaughter are 4.4% and 7% higher than a year ago, respectively.

So, all the increase in beef production in recent weeks is coming from heifers and cull cows. It's worth a reminder that cull cow beef goes to a different (but related) market than beef from fed steers and heifers. Cull cow beef most often goes to ground beef.

Consequently, beef production has continued to run above a year ago throughout 2018. As usual, digging a little deeper in the numbers reveals some interesting details on type and quality of beef being produced in recent weeks and some implications for prices.

Over the last 25 years, the beef industry has focused on producing higher quality and more consistent beef. That is evident in the percent of carcasses grading Prime and Choice versus Select.

For example, in September 1997, of the carcasses graded, 2%, 51%, and 37% of carcasses graded Prime, Choice, and Select, respectively. The week of Sept. 15, 2018, almost 8% graded Prime, 70% graded Choice, and 18% graded Select. An argument can eaily be made that an area of beef demand growth has been in higher quality beef.

While this example illustrates the long-term trend in beef production by quality grade, some large differences can occur from week to week. In fact, compared to a year ago, the percent of carcasses grading Choice is down 2.6 percentage points, from 73.02 to 70.42. Select beef carcasses are up almost 1.5% while Prime carcasses are up 1.4 percentage points.

The approximate production of Prime, Choice, and Select beef can be calculated using weekly slaughter, fed steer and heifer weights, and the percent of carcasses in each grade. Choice beef production over the last four weeks is about 3.2% below a year ago.

The effect of fewer carcasses grading Choice is compounded by fewer steers and relatively more heifers in the slaughter mix. Fed steer weights are about the same as a year ago while heifers are reflecting heavier weights. This lack of Choice beef is showing up in prices with the Choice cutout at about $204 per cwt compared to about $192 a year ago.

The same calculation indicates Prime beef production is up about 25% over the last month while Select beef production is up about 7%. The Choice-Select spread was about $10 per cwt at the end of September, up about $6 compared to last year. The wider spread than a year ago reflects reduced supplies of Choice and more Select beef.

Anderson is professor and Extension economist with the Texas A&M AgriLife Extension Service.

 

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