Packers were aggressive last week on a smaller total volume of fed cattle trade as the market average price moved nearly a dollar higher to $186.59/cwt. Weekly spot fed cattle prices have charted a $5.50/cwt. recovery since the $181/cwt. early September low that ended the futures-induced lower cash prices beginning in early August. Weekly fed cattle harvest head counts continue to run at an impressive pace contrasted against multiple previous months. Each of the latest four weeks have featured head counts larger than a year ago with an average of 496,750 per week, a 2.1% increase for the period compared to 2023.
Amidst the upturn in live cattle prices, boxed beef cutout values have been locked in a downward pattern since mid-September. Larger weekly fed cattle slaughter in recent weeks, coupled with carcass weights 30 pounds heavier than a year ago, has pushed fed cattle carcass tonnage 2% higher than a year ago. Even so, cull cow harvest has been 14.5% smaller than a year prior for the recent four-week period.This pulled the weekly count lower by about 16,000 head. Seasonally, weak beef demand during the month of September tends to extend into the first half of October. In the past five years, the price drop for the comprehensive cutout value has been 7% from the last week of August through mid-October. The current market shows a 4% decline since late August through last week. This suggests that the boxed beef price action is well within the historical trend although we’ve yet to cross the mid-point in October. The daily trend this week shows strength in cutout values with a $4/cwt. increase in the USDA Choice cutout over last Friday’s quote. This is aligned with last year’s trend where the price increase began a bit earlier in the month than is typical.
10% Narrowly Miss Certification
Product supply is a key metric in growing the reach of the Certified Angus Beef® brand. With U.S. beef cow numbers projected to decline by 200,000 head in 2024, supplying downstream brand partners with product becomes even more challenging. That’s one reason that our team annually captures data on several million head of Angus-type carcasses from our packer partners. Understanding why roughly 64% of eligible carcasses are unsuccessful in reaching the brand’s 10 specifications is a big step toward informing cattlemen of their opportunity to capture more dollars through improved carcass quality. First, it’s important to realize that 83% of eligible carcasses missed the brand’s “Modest or higher” marbling requirement for certification in 2023. Easily the most influential factor, marbling outpaced ribeye area, the second most common specification failure, by 60 percentage points. It’s easy to understand that improving marbling achievement across the entire brand-eligible pool of cattle would make a big difference in the share of carcasses certified. Inspection of the 2023 data on more than 2 million carcasses reveals that moving the marbling needle may have been in close reach. The chart indicates that 10% of the total, measured carcasses fell within just 30 marbling degress below the required “Modest 00” marbling score, the minimum requirement for CAB certification.
Understandably, most cattlemen don’t make a study of the USDA marbling score system or the relevance it may have to live cattle value. Further understanding of what may be required to shift marbling scores within a calf crop or management group upward by 1 to 30 marbling degrees may also be a bit of a guessing game. Since there are genetic, management and environmental factors at play the issue is more complex than a single strategy appropriate for all circumstances. In 2024 the culmination of annual incremental increases in feedlot days-on-feed has correlated with higher marbling achievement. This is seen as industry average percentages for USDA Choice, Prime and Certified Angus Beef® brand carcasses jumped well above prior years this summer, as carcass weights also soared to 25-plus pounds above last year. Extending the feeding period for cattle is a winning recipe only as long as feedlots have pricing leverage. Feed is cheap relative to fed cattle price and the cattle supply is much smaller than packing capacity. Profitability of the above conditions aligning this year has not been driven by pursuit of improved carcass marbling. Rather, marbling has been the beneficiary of those conditions. As well, the proportion of Yield Grade 4 and 5 carcasses have concurrently swelled to record-highs. Given the discount nature of these carcasses and lost production efficiency in surplus external fat, it seems that simply “adding days” can be overdone from the viewpoint of ideal carcass composition. Most likely a combination of genetic selection, nutrition and implant/beta-agonist management need to work jointly to achieve the most profitable outcome with carcass quality playing a significant role. The relatively high genetic heritabilty of marbling has allowed rapid advancement in carcass quality through positive selection pressure, among other factors, since the early 2000’s. The American Angus Association’s “Marbling” EPD is a powerful tool when used strategically within a cow herd. There are arguably more balanced-trait Angus genetics (phenotype included) with marbling EPDs above breed average today than ever before. For many producers simply setting a strategic threshold for the Marbling EPD within selection parameters may move 10% of future terminal calves from just-below the line to “certified” status.
