Lots of Choice Beef

Published on: 09:46AM Mar 20, 2009

The chart of the week is the change in select and choice cattle slaughter during the first two months of this year. As one can tell, choice and prime cattle slaughter have been notably above prior year levels. Now that may seem surprising to some. After all, through March 15th, the USDA is estimating 2009 cattle slaughter to be 5.5% lower than the previous year. So how can choice and prime cattle slaughter be up 5%? Good question. Roughly 77% of the makeup of total slaughter are steers and heifers. And those steers and heifers this year have been grading at premium levels- choice and prime- more so than any other year. During the first two months of 2009, the percentage of cattle grading prime averaged at 2.73% compared to 2.56% last year. The choice average for the same time period was 60.32% compared to 56.82% last year and 54.87% for the 5 year average. The percentage of cattle grading choice for the last week of February was 63.24%, the highest percentage since record keeping began in 1997. This is due to several factors and at this point, we expect the trend to continue. Our forecast for overall beef output this year is to be basically flat compared to 2008. But we actually expect choice beef production as an annual average to be higher this year than 2008 which could make it difficult for choice beef to stage any sustained significant rallies.


These comments and data are provided for information purposes only and are not intended to be used for specific trading strategies. Past financial results are not necessarily indicative of future performance. Any examples given are strictly hypothetical and no representation is being made that a person will or is likely to achieve profits or losses similar to those examples. Neither the information, nor any opinion expressed constitutes a solicitation to buy or sell futures or options on futures contracts or OTC products. Covered parties (as defined below) shall not be liable for any direct, indirect, incidental, special or consequential damages of any kind, whatsoever (including attorney’s fees and lost profits or savings) in any way due to, resulting from, or arising in connection with this email, including it’s content, regardless of any negligence of the covered party including but not limited to technical inaccuracies and typographical errors. “Covered Parties” is defined as American Restaurant Association Inc., ARA Trading and the employees of both companies.Commodity trading involves risks, and you should fully understand those risks before trading.