The past year provided another leg upward in the recent trend toward higher quality grades in fed cattle, which drive boxed beef prices.
"USDA Choice and Select are the two leading volume grades," explains Paul Dykstra, beef cattle specialist with Certified Angus Beef LLC, who tracks weekly variations in grading reports. "Brands and specifications further define a pleasurable dining experience, but quality grade still sets the baseline bar for price."
Choice beef is usually worth more than Select, and the difference, the weekly Choice/Select spread is a key to value-based grid marketing.
"Certainly, the Prime grade is more valuable, but only 2% to 3% of cattle typically hit that level of marbling," Dykstra notes. "Some branded programs capitalize on the distinct difference in marbling premium Choice and the lower third, further driving value there."
In 2000, the share of cattle grading Choice in U.S. packing plants averaged 52.6%. Through 2007, that number only wavered by about 1% on an annual basis. Those figures don't jibe with most USDA historical charts, because those tend to log pounds of beef rather than cattle.
But something was starting to happen in the Southern Plains in late 2006, with Texas and especially Kansas grades moving significantly higher.
"When Nebraska joined in, we saw the national Choice percentage break short-term records, and the 2008 national average hit 56.2% Choice," he says. "The surge was still rooted in Kansas, where that seed of an upward trend took on a monumental slope."
The annual level of Choice product in Kansas moved 8.3 percentage-points higher to 54.4%. That increase not only stuck, but it was bested in 2009, when Kansas packers enjoyed another 3.8 percentage-point annual average increase in the share of Choice grading cattle. That moved the state's average to 58.2% for the year, a level normally reserved among the big three packing states for quality-rich Nebraska.
The 2009 national average for Choice finished 3.5 points higher to the 59.8% mark, the highest in 15 years.