Less cattle, more Prime
It doesn’t take a mathematician to think, “Something doesn’t add up.”
Fed steer and heifer harvest is down 6.2% for the first 32 weeks of the year, but it’s no even distribution across all quality grades.
“In pounds of Prime, we’re up 2.5% to 3% [from 2013], and adding in Premium Choice, it’s still pretty much a wash,” says Mark McCully, our vice president of supply.
Looking at lower quality grades, Select and No-Roll production has decreased 12% to 15%.
“We’ve taken all that supply away from Select. You’d think that would be supportive to a narrow Choice-Select spread, but we’re basically running at the same spread we were a year ago,” he says.
In fact, the trends show a widening valuation gap in beef quality grades. Four years ago, an 850-pound Prime carcass would fetch $190 more than Select. Today, that’s jumped by 65%, to $314.
It doesn’t take a lot of studying numbers to analyze that, but Mark summarizes the signal:
“This is telling me that we need to bring on the higher quality beef.”
May your bottom line be filled with black ink,
Miranda
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