It has taken several decades to reach this point but the U.S. beef industry is now producing the highest-quality beef in its history. This comes from improved genetics in the beef cow herd, innovations and advances in all aspects of cattle feeding, encouragement of packer premiums through grid pricing and growing consumer demand for higher-quality beef.
The result is that cattle are grading at a percentage of Prime and Choice that would have been unheard of 20 years ago. Cattle graded an average 10.08 per cent Prime, 72.48 per cent Choice, 14.36 per cent Select and 3.08 per cent Other in 2021. The weekly record for Prime and Choice is 86.07 per cent set the week of February 20 last year.
The increased production of Choice beef has had some interesting price consequences. For example, the price spread between the Choice and Select cutouts has narrowed this year and the Choice cutout was discounted to Select on February 22 by $2 per cwt. The last time this occurred was on September 12, 2017 (a negative seven cents), and then on January 31, 2014 (a negative $1.36).
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Analysts say the latest negative Choice-Select spread was because items like Choice ribs, short loins and tenderloins all sold at elevated volumes at price levels below the Select cuts which showed small volumes. The Choice volume that day was 82 loads of cuts, while the Select volume was 12 loads of cuts.
The high quality of U.S. beef is increasingly recognized around the globe. That is why U.S. exports smashed volume and value records last year, surpassing US$10 billion for the first time. This means they almost doubled in value in ten years. Exports in 2012 totalled US$5.51 billion in value.
December beef exports totalled 121,429 metric tonnes (mt), up one per cent from a year ago, while value climbed 33 per cent to $991.8 million, the third-largest month on record, said the U.S. Meat Export Federation (USMEF). These results pushed 2021 volume to 1.44 million mt, up 15 per cent from a year ago and seven per cent above the previous record set in 2018. Export value soared to US$10.58 billion, up 38 per cent from 2020 and shattering the previous record (also from 2018) by 27 per cent. Exports accounted for 15 per cent of total beef production and 12.8 per cent for muscle cuts only, up significantly from the respective 2020 ratios of 13.5 per cent and 11.3 per cent, says the USMEF.
The beef export results were truly remarkable, especially considering the COVID-19-related obstacles in the global food service sector and all the supply-side and logistical challenges faced by the U.S. industry, noted USMEF president and CEO Dan Halstrom last month. Obviously, the U.S.’s large Asian markets accounted for much of the growth but it really took broad-based global demand to reach these impressive levels. This success story is not just about Korea, Japan and China but also a strong performance in Taiwan, excellent growth in Central and South America and a rebound in Mexico and Southeast Asia, he said.
Another remarkable milestone in 2021 was that beef exports to South Korea, Japan and China/Hong Kong each topped $2 billion, with Korea becoming the highest-value market for U.S. beef for the first time.
Variety meats were another export success story last year and showed why by product values remain high. Often referred to by packers as the fifth quarter of a cattle carcass, the combined value of 16 items often approaches or exceeds US$200 per head. This is for a slaughter steer reported daily by USDA, using a 1,400-pound live weight. Many of those 16 items have no domestic market outlet, making their exports vitally important in adding value to fed cattle.
