American Angus Association's Mark McCully Talks About the Price Difference in Choice and Select MeatsTue, 02 Jul 2019 16:54:26 CDT
Choice-Select spread opportunities American Angus Association CEO and former Certified Angus Beef brand executive Mark McCully has long studied the price difference between Choice and Select beef. Today, he explains how that spread varies and why it matters.
The value spread between Choice and Select grade beef varies seasonally, but the highs and lows throughout the year are part of a bigger picture with some predictability.
“It’s really a combination of both demand and supply," McCully said. "So, demand – and we think about the Choice-Select spread it’s largely driven off the middle meats, in particular, the ribs. So, if you think about the calendar, typically we think about February of the seasonal low for the Choice-Select spread, which is logical. There’s very little or lower demand for the middle meats and specifically ribs. When we move into the springtime, specifically into May and June, what we have is both a combination of maybe some of our lowest grading periods as well as some of our highest demand periods for rib and grilling meat.”
Watch a short video-clip featuring Mark McCully, American Angus Association CEO, shares his thoughts on price difference between choice and select meats, by clicking or tapping the PLAYBOX in the window below.
Summer holidays like the Fourth of July and Labor Day heavily feature those grilling meats. That boosts demand for high-quality subprimals and therefore widens the Choice-Select spread.
Summertime, however, isn’t the only time producers can see a spike in the Choice-Select spread.
“We tend to see that get a little bit lower at the end of summer and into early fall," he said. "Again, a combination of demand softening as well as the grade – that’s typically pretty high with high cattle numbers. And then we see another big spike in the Choice-Select spread, usually running up toward the holiday season largely driven off the demand for holiday ribs in particular.
In the cattle market, anything predictable represents an opportunity, McCully says, to look at your production year and see if marketing plans can adjust to fit the best price patterns.
“As you’re thinking about your marketing approach, you know a lot of things can’t be managed in terms of calving season," McCully said. "You kind of have to work with your environment and your management scheme to do that, but there may be some opportunities to maybe modify your growing program to where those cattle may come out a little bit sooner and maybe take advantage of that spring high. I know cattle feeders would pay attention to what they’re going to pay for those high grading cattle based on the month that they’re placed against."
Source: Certified Angus Beef
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