In The Cattle Markets
Overall beef production has increased in 2022, but Choice and Prime are down.
The first three quarters of 2022 saw beef production 1.7% higher than year-ago levels. Since the end of August, beef production has averaged a weekly year-over-year increase of 3.7%.
Not all beef is the same. The first three quarters of 2022 saw steer slaughter down 1.7%, while heifer slaughter was up 0.9% and cow slaughter was up 0.7%. Dressed weights for all cattle have averaged 0.86 pounds (lb.) lower than the 2021 average for the first three quarters. The average decrease is due to the decrease in cow slaughter dressed weights — down an average of 7.8 lb. relative to 2021. Dressed weights for steer and heifers are more than 4 lb. heavier relative to 2021.
Combining weekly slaughter and dressed weights leaves fed-beef production about 1.6% higher than a year ago, while cow beef is up 4.3%. The percent of carcasses presented for grading during the last month that are grading Prime and Choice are averaging about 1.4% and 0.7% less than a year ago, respectively. About 0.7% more carcasses are grading Select than a year ago.
The decrease in beef produced from finished steers and heifers relative to cows has tightened the supply of Choice-graded beef, which in turn is widening the Choice-Select spread.
The Choice boxed-beef cutout has averaged $252.65 since Sept. 1, compared to $316.90 during the same period in 2021. The Select cutout has averaged $228.38 vs. $284.21 during the same period in 2021. The Choice-Select spread since Sept. 1 has averaged $24.26 per hundredweight (cwt.) this year compared to $31.69 last year.
The Choice-Select spread tends to increase seasonally from the end of January until mid-June, and then decrease through the end of September, before resuming an increase until before the December holidays. Except for a short-lived dip after Labor Day, the Choice-Select spread has been steadily increasing since the end of February when the spread was at a negative $2.00 Feb. 23, 2022 (meaning Select boxed cutout was higher than Choice boxed cutout).
Even though beef production has remained higher than 2021 levels, the makeup of the beef production is important. The decrease in beef produced from finished steers and heifers relative to cows has tightened the supply of Choice-graded beef, which in turn is widening the Choice-Select spread.
Editor’s note: Brenda Boetel is a professor of agricultural economics at the University of Wisconsin–River Falls.
