CAB demand surges in 2011

by Meat&Poultry Staff
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MANHATTAN, Kan. – A general decline in annual premiums for Certified Angus Beef ended after a 40 percent jump in packer-reported CAB premiums in 2011, according to new CAB data.

Owners of CAB-accepted finished cattle received $32.3 million from licensed packers in 2011, compared to almost $23 million in 2010, according to February reports. The figures do not include related premiums paid for Choice and Prime grades.

CAB volume made gains of more than 40 percent since 2002. Premiums often decline on increased supply. CAB said the additional value of CAB outweighed the weakening premium for USDA Choice over Select beef. Fundamentals on the boxed beef side support the latest fed-cattle premium spike.

“A simple average across five middle-meat items – the rib, strip, tender, butt and short loin – shows that the CAB product premium in 2011 jumped roughly 20 percent over 2010,” says industry analyst Julian Leopold, of Leopold Foods.

That was after a “pretty flat” period for CAB premiums following the 2008 crash in the overall economy, he says. “It looks like demand is picking back up though, and likely at restaurants as well as retail," Leopold said. “The other side of the equation would be the volume, as the 4 percent increase in 2011 CAB sales over 2010 could have further increased the total dollar premiums in the system.”

Grid premiums for CAB-accepted cattle have reached a cumulative total of $352 million, with packers paying producers about $28 million per year for hitting that target over the past 10 years.

“We’re seeing the premium nature of our brand on both the product and cattle side of the industry, with rewards to all of the stakeholders and partners who are committed to quality,” said John Stika, Certified Angus Beef LLC president. “The investment and focus in taking the high road above commodity beef pays off with more and more satisfied customers.”

The numbers are from the “Here’s the Premium” project, a survey of packers on annual CAB grid premiums paid since 1998. The packers report total dollars but not volume of grid cattle bought, and individual data remains confidential.

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