Economic slowdown increases demand for lower-grade beef

by Bryan Salvage
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WASHINGTON – Since last fall, the economic slowdown in the U.S. and global markets has impacted the cutout values for primals as consumer demand has shifted toward lower-value beef items at retail and foodservice and retail outlets, according to the Livestock Marketing Information Center.

Since July, the value for all the different quality grades have declined as the economy has worsened. However, Select and Ungraded items have maintained their positions relative to higher-quality primals. For example, after peaking at a $193.33 per cwt. in July, the total value of Prime graded beef steadily declined hitting a low of $158.31 per cwt. in December, a 16% year-to-year decline. By January it improved to $163 per cwt., but was still about 11% lower than a year earlier.

The Choice primal has shown a similar pattern falling about $18 per cwt. from July to January, however, it only dipped below a year ago in December with the January average about even with 2008’s.

Unlike the higher grades, Select beef has been able to remain above year-ago values as consumers have traded down in their beef purchases. In January, Select beef averaged $141.35 per cwt. versus $138.58 per cwt. last year while on a monthly basis it gained about 3% from December to January. A similar pattern was seen in Ungraded beef items; in the last two months Ungraded beef has averaged 4% higher than a year earlier.

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