March 17, 2018
Coincidental or not, consumer beef demand continues stronger than many expected, amid growing total supplies of red meat and poultry, as the percentage of cattle grading USDA Choice and higher continues to grow.
For instance, according to USDA, for the week ending Feb. 24, the percentage of cattle grading USDA Prime continued at a record pace, according to Isaac Olvera, livestock and meat market analyst for Informa Economics IEG. He points out the 8.62% Prime that week was 2.4 points (30.5%) more than last year and 3.7 points (76.8%) more than the 5-year average.
“Typically, overall quality grading declines from late winter into mid summer, but the Prime category continues growing counter seasonally. From the weekly comprehensive report, total Prime load counts averaged near 20% larger than a year ago throughout the first nine weeks of 2018, with the Prime cutout running 6% over last year,” Olvera explains.
“With the Choice cutout up closer to 8% year over year, the Prime/Choice spread has narrowed considerably, declining from an expected early-year $25 range towards the $11 area reported last week. The spread tends to widen seasonally, from mid spring into late summer, but the larger supplies of Prime grade appear to be pressuring the marketplace, with the spread declining 48% over the past four weeks. At narrowing prices, expect a greater degree of emphasis to be placed on Quality grades as more Prime product is expected to show up at both retail and food service, as well as sold for export.”
Besides the genetic trend toward increased marbling, Olvera explains the increase in higher quality grades likely reflects revisions USDA made to assessing carcass maturity. Bone ossification was key to classifying carcass maturity until last December, when USDA began allowing documented birth and dentition to determine age.
“Likely, cattle that used to be pushed out of the A maturity group (9-30 months of age) based on bone ossification are now being allowed under more scientific maturity assessments, and are now grading Prime,” Olvera says.
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