Coice select spread.......

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dun

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Choice-Select Spread Tumbles
What a difference a month makes. The Choice-Select spread that had continued to run ahead of the five-year average has plummeted in recent days. For the week ending July 2, the spread had dropped to $2.76! That's less than half of what it was at the same time a year ago ($6.94/cwt.) and 46% lower than the prior week.

This current reality not only flies in the face of the $20.37/cwt. spread that existed the last week of May, it runs counter to the typical tendency of the gap to grow wider during the second half of the year.

Chalk it up to consumer sticker shock at the meat case if that's what your Ouija Board tells you -- though demand for beef overall remains strong -- or lay it off on increased demand for leaner cuts. Perhaps the lack of total available cattle supplies have overwhelmed buyer ability to pay a lot less for Select. Or, perhaps the loss of export markets is finally catching up to the fatter end of supply. Conjecture abounds, but the fact is chasing Choice at the expense of yield is going to get tougher to do if the trend continues.

Quality Management
Feeding For Choice Has Limits
It's true that the potential of cattle to grade Choice increases with carcass weight and the amount of external fat, but it's only true to a point.

An analysis of data from the VetLife Benchmark® Performance program shows that, past a certain threshold, both carcass weight and external fat are poor indicators of grade-ability. This data, supported by research, indicates that extremely light carcasses (up to about 550 lbs.) are unlikely to grade, while increasing weight past this threshold increases the percentage of Choice by only 10-20%. Using that same weight window of 550-950 lbs., the data shows that as weight increases, only about 10% more will achieve premium grades, namely the upper two-thirds of Choice or greater.

"This doesn't mean the likelihood of an individual animal grading Choice would increase only slightly if they were fed from a carcass weight of 550 lbs. to 950 lbs.," explains Pete Anderson, VetLife director of technical services. "Rather, this probably reflects that the cattle feeders were able to market the cattle at approximately 65% Choice, at whatever weight they needed to accomplish that."

For perspective, the analysis is based on two large sets of data -- one representing cattle fed in the upper Midwest and one representing cattle fed in the High Plains or further south -- from an aggregate of commercial yards. The cattle in the set were unsorted and reflect the industry average in terms of genetics and type.

"There is no hot-carcass weight at which all the carcasses will grade," Anderson says. "Even at 1,000 lbs., only 70% (in the dataset) graded Choice or higher."

Likewise, the same VetLife Benchmark analysis indicates the percentage of cattle grading Choice will increase with external fat, up to about 0.6-0.7 in. Beyond that, the increase in quality grade is minimal. On the other end of the spectrum, penalized quality grades (worse than Select) decrease steadily until about 0.5 in. of external fat is achieved, but never reach zero.

"According to yield grade equations, at 0.8 in. of fat thickness, half of the cattle should be Yield Grade 4, and that was exactly the case with the analysis of this data set," Anderson explains.

"There are virtually no Yield Grade 4s with less than 0.65 in. of external fat. And, at 1.0 in. of fat, all the carcass are either Yield Grade 4 or 5. The sweet spot which allows a relatively high chance to grade, along with a very low chance of being a Yield Grade 4, is 0.4-0.6 in. of external fat," he says.

Further, given the standard deviation associated with fat (calculated with limited data), even in a pen of cattle averaging 0.8 in. of fat, about half of them would be Yield Grade 4 or worse. And, there would still be approximately 20% of the cattle that wouldn't grade Choice.

The crux of all of this, according to Anderson, is that feeding cattle longer to heavier weights and higher levels of external fat deposition as a strategy for hitting Choice must be considered in tandem with other factors that affect quality grade. These include genetics, cattle health and the energy content of rations.

Bottom line, Anderson points out:


Fat thickness and hot carcass weight are related to quality grade and yield grade, in predictable directions, but they are not perfect predictors of quality grade.


Carcasses that weigh less than 550 lbs. and/or have less than 0.2 in. of external fat are unlikely to grade Choice, have almost no chance to receive a premium quality grade, and are very likely to receive a penalty quality grade.


As carcass weight increases above 800 lbs. or fat thickness increases above 0.6 in., improvements in quality grade will be minimal but yield grades will increase (become poorer).


There is no weight or fat thickness that guarantees cattle will or will not grade.


Endpoint choice will differ based on the economic signals that a cattle feeder receives. As grid conditions evolve, cattle feeders will have to learn to hit different targets, while also considering the cost of production associated with quality grade factors.


Use of pre-harvest technology to predict marbling or marketing programs that do not utilize marbling will dramatically alter carcass endpoint choices.
 

hillbilly

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over my head.

Maybe the spread of quality is also getting closer? Our freezer is getting a little low. My wife bought around 8 lbs. of sirloin for $34. [4.25 per #]
Nothing fancy, wasn't marked select, choice, prime...nothin.

I thought it was going to be like the last store bought steaks we had in the early 80's.....it wasn't, These steaks were very good!

Dr. Atkins has had great effect on beef demand, no doubt. But lets go ahead and pat ourselves on the back a little too.
The quality of beef in our grociers case is very good.

As you said [I think] maybe we have found the top, maybe consumers have found that a cut below is still pretty darn good.

Hillbilly
 

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