Cattle Fax ® recently reported that during the past 2 years (2003-2005), price spreads on various grades of boxed beef have widened significantly. Cyclically low beef production totals have limited the available supply at the same time that the demand for higher quality beef products has increased.

The Premium Choice (Avg. & Hi Choice) – Select spread has averaged $15.66/cwt. Assuming an average carcass wt. of 750 lbs, this indicates that a Premium Choice carcass is worth $117.45 more per head than a Select grade carcass. A Prime grade carcass (2.8% of available supply) has generated $23.73/cwt or about $178 more per head than a Choice carcass and $247.50 more than a Select carcass. Other price spreads have been $6.38/cwt for Premium Choice – Choice, and $9.28/cwt for Choice – Select. These price spreads show why more producers are inclined to sell fed cattle on programs that reward carcass merit as opposed to selling on the average cash market.

Cattle-Fax analysts went on to predict that during the next 3 to 4 years, fed cattle supplies will grow, and product branding and niche markets will become more prevalent. As this happens, a growing percentage of the total fed cattle supply is expected to sell on grids, formulas, alliances, and branded beef programs. Producers that hit the target can reap significant rewards (SOURCE: Randy Blach, Cattle-Fax®).