Live Beef Evaluation & Pricing. History 1916 Standards for U.S. grades developed 1924 Market...

Live Beef Evaluation & Pricing

History• 1916 Standards for U.S. grades developed• 1924 Market classes and grades of dressed beef developed• 1927 Voluntary grading specifications• 1941 Adopted Prime, Choice, Good Comm., Utility, Cutter,

Canner• 1956 Commercial spilt by age into Standard & Commercial• 1965 Adopted standards for cutability “Yield Grades”• 1973 Changed “Bull” grade to “Bullock”• 1975 Elimination of conformation – Changed Good to be leaner• 1980 10 minute minimum required after ribbing• 1987 U.S. Good to Select• 1989 Only Quality or Yield Grade assigned – “No Rolls”• 1997 Select Grade restricted to A maturity; • B maturity - Standard

History

1930’s

1950’s

1900’s

1940’s

HistoryEarly 1960’s

Late 1960’s

HistoryEarly 1960’s

Late 1960’s

History1970’s

1980’s

History

1990’s

2000

History1990’s

2000

National Beef Quality Audit’s

Carcass wt 679 760 748 787Fat thickness, in. .62 .59 .47 .49REA, sq in 11.8 12.9 12.8 13.1USDA Yield Grade 3.4 3.2 2.8 3.0

Quality Grade Ch- Sel86 Sel79 Sel85

% Prime &Choice 75% 55% 48% 51%% YG 1 & 2’s 30% 44% 58% 49.2

USDA NBQA NBQA NBQA1974 1991 1995 2000

Market Animal Evaluation

• USDA Grading Service– Livestock & Grain Market News Branch– Voluntary– Paid for by the packer

• USDA Grades– Yield grade – measures the lean to fat ratio

– Quality – measures the palatability of the meat

Evaluation Factors

• Yield Dressing Percent

• Yield Yield Grade

• Palatability Quality Grade

Dressing Percent

Dressing Percent = Hot Carcass Weight Live Weight

X 100

Dressing Percent

Dressing Percent

- Fill- Hide- Mud

- Fill - Sex- Fatness- Muscle

Avg 62.5% 12881000 - 1505

Dressing Percent

Live Price Dressing % Carcass Price $ 80.00 61 % $ 131.15 $ 80.00 65 % $ 123.10

Dressing Percent

Carcass Price Dressing % Live Price $ 127.00 61.0 % $ 77.47 $ 127.00 65.0 % $ 82.55 $ 127.00 62.5 % $ 79.40

Live Price Dressing % Carcass Price $ 80.00 61 % $ 131.15 $ 80.00 65 % $ 123.10

Market Cattle Evaluation

• USDA Yield Grade– Measures cutability or the amount of lean to fat– Classified from 1 (High % Lean) to 5 (high % fat)

% Boneless Trimmed

Yield Grade % Retail Cuts

1 53.5 2 51.2 3 48.9 4 46.6 5 44.3

Yield Grade Factors

• HCW Weight

• 12th Rib back fat

• Ribeye area

• Internal fat – kidney, pelvic, heart fat

Yield Grade Factors

• HCW Weight

• 12th Rib back fat

• Ribeye area

• Internal fat – kidney, pelvic, heart fat

USDA Yield Grade

Step 1:

• Determine back fat – starting point for determining Y.G.

12th rib depth inches Preliminary Y.G. .0” 2.0 Most desirable .2” 2.5 .4” 3.0 .6” 3.5 .8” 4.01.0” 4.5 Least desirable

USDA Yield Grade

Step 1:

• Determine back fat – starting point for determining Y.G.

12th rib depth inches Preliminary Y.G. .0” 2.0 Most desirable .2” 2.5 .4” 3.0 .5” 3.3 .6” 3.5 .8” 4.01.0” 4.5 Least desirable

Avg .50Currently Avg .4

USDA Yield Grade

Step 2:

• Determine Muscling– Average muscling 1.1 sq. inches of REA per 100 lbs

live wt.– 1200lb steer should have 13.2 sq. in. REA– Greater than 1.1 sq. in. then Lower the Y.G.

(Desirable)– Less than 1.1 sq in. then Increase the Y.G.

(Undesirable)– For every 1” difference + .3 from PYG

USDA Yield Grade

Step 2:

• Determine Muscling

HCW Required REA 600 11.0 700 12.2 800 13.4 900 14.4

USDA Yield Grade

Step 3:

• Determine Internal Fat (K.P.H. fat)

– Most cattle have 2.5 % internal fat.

– If cattle have less than 3.5% internal fat then lower Y.G. by .2 for every 1% decrease

KPH,% Adjustment 4.0 +.1 3.5 none 3.0 -.1 2.5 -.2

Quality Grade Evaluation

• USDA Quality Grade– Estimates the palatability (eating quality) of

the meat

• Factors to consider when estimating Q.G.– Maturity – Young to Old – 5 classifications– Marbling – 10 degrees of marbling

USDAQuality Grades

Prime

Choice

Select

Standard

30 96 42Age 72

2.5 3.5 6 8

Practice ComparisonsHeifer – 1365 lbs

Practice ComparisonsSteer – 1350 lbs

Cattle Maturity

• Past– Ossification of vertebrae

• Post-BSE– Dentition to identify cattle 30 mo of age– FSIS as set the following…

• Cattle with a full set of the first incisors are 24-30 mo

• Cattle with at least one of the second set of incisors are considered 30 mo of age or older

?

750 lbsChoice-Y.G. 2.5

960 lbsPrimeY.G. 4.0

850 lbsSelect +Y.G. 2.3

820 lbsSelect -Y.G. 2.2

990 lbsChoice-Y.G. 3.0

620 lbsPrime -Y.G. 3.3

730 lbsSelect -Y.G. 1.5

891 lbsChoice O

Y.G. 4.0

788 lbsSelect +Y.G. 2.5 838 lbs

Select -Y.G.1.6

675 lbsChoice -Y.G. 3.5

USDA Certified or Verified

• Certified - 52 – Specifications – ie. CAB– Company requests – Government Issues– Reviewing requirements www.ams.usda.gov

• Process Verified - 4 programs– Process (origin, handling, carcass cuts, ect.)– Simple - Nolan Ryans Tender Aged Beef

Alliances/Branded Beef Programs

• 52 Programs Currently

• Four Categories

– Breed Associated

– Commercial Beef Carcasses

– Natural/Implant-Free

– Vertical – Integrated Beef Cooperatives

Breed Breed Associated

• Angus – CAB– Supreme Angus Beef– Angus Alliance

• Hereford• Limousin

– Laura’s Lean– Nebraska Lean Limousin

Beef Breed Associated

Dominated by British breeds– of 52 programs 40 Angus based

Provided by USDA Marketing & Regulatory Programs

Commercial Beef

• Western Beef Alliance

• Montana Beef Network

• Fewer Specifications

• Pay fee for data

Natural/Implant Free

• Laura’s Lean 20-30,000

• Colman Natural Beef

• Maverick Ranch 30-40,000

Vertical Integrated Alliance

• Northern Plains Premium Beef

• U.S. Premium Beef– Share holders

• Future Beef– Selected producers

• Ranchers Renaissance– Share profit or loss

Current Methods of Marketing

• Live Price Bids

• Carcass Price Bids – “In the Beef”

• Grade & Yield – “Grid Pricing”

• Formula Pricing

CERTIFIED ANGUS BEEF® ProductSold by Program Licensees*

30 43 64 71 85 80 88123

172227

260

332

411

493555 537 540 560

0

200

400

600

'86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03

Year

Mil

lion

Pou

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s

* Fiscal Year (October 1 - September 30)

The Big Three’sGrids

• IBP – Real Time Market Value – RTMV

• Monfort – “Cutability” & “Quality”– Nebraska average for base - Adjusts to Choice Y3

• Excel - Many Breed specific– Angus based on Quality no Premium for Sel Y1&Y2

• Angus Gene Net, Angus Alliance etc.

– Sterling Silver, Iowa Quality Beef, Nebraska Corn Fed– Ranchers Registry / Ranchers Renaissance

Figure 1. Quality Premiums and Discounts

-40-35

-30-25-20

-15-10

-50

510

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Prime Select Standard Certified Dark

I II III IV

Figure 2. Cutability Premiums and Discounts

-20

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YG 1 YG 2 YG 3 YG 4

Figure 3. Carcass Weight Discounts

-19

-18.5

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-17

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-14.5

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LWTs HWTs