We focused on fourth-quarter middle-meat demand as a beef price driver in the last edition of the CAB Insider. This is certainly the case in the current data, as rib and tenderloins are pricing near their annual highs. However, a look at annual price trends across the beef carcass shows increasing contributions to Certified Angus Beef^® (CAB^®)-brand premiums from both ends of the carcass.

One of the unique attributes about the Certified Angus Beef brand is the fact that value creation through premium attributes and branding is not isolated to the middle-meat steaks and roasts. The chart shows widening price spreads between Select, Choice and CAB end meats as they are summarized by total value per hundredweight (cwt.) in both the chuck and round primals. The cutout values represented by the bars in Fig. 1 show both the USDA Choice and CAB values for the chuck and round primals in relation to USDA Select. Notice that in 2018 and 2019 the Choice premium vs. Select is virtually indiscernible, well below $1.00 per cwt. for both Choice chuck and round items for each of those years. In 2020 the Choice round value began to build a premium to Select with a $2.50-per-cwt. value that would increase in the following two years. Despite this, the Choice chuck price somehow notched a $3.51-per-cwt. discount to Select in 2020 before correcting and building rapidly into 2023.

One of the unique attributes about the CAB brand is the fact that value creation through premium attributes and branding is not isolated to the middle-meat steaks and roasts. Indeed, both the CAB rib and loin primals carry a larger price premium than the chuck and round. However, the higher trending premiums derived from the less famous end meats are to be credited with a good portion of the increasing total carcass cutout premium that CAB-brand carcasses command today.

Comprising 29.6% and 22.3% of total carcass weight, respectively, the chuck and round are the heaviest primals, followed closely by the loin at 21.3%. This means that while the premium per pound is much smaller for the end-meat primals, total dollars per carcass are not insignificant. The chuck, weighing more than the round and commanding a higher premium per pound, wins the day, generating a $33.99 premium per head over Choice and $48.32 per head over Select so far in 2023.

CAB round primal cutout premiums are not quite as attractive, but still increasingly adding value where USDA Choice has, until most recently, struggled to find any price differentiation from Select. In 2023, the total carcass premium contribution from the CAB round has been $15.44 per head vs. Choice and $20.44 per head above Select.

This year, cuts from the round have pulled back slightly in value in proportion to total carcass value. The pullback is only to the degree of half of a percentage point, yet the lighter demand also set the CAB round premium contribution slightly lower than a year ago. However, the CAB chuck premium is at its largest ever at $13.05 per cwt. vs. Choice.

Editor’s note: Paul Dykstra is the director of supply management and analysis for Certified Angus Beef. This article was first published in the CAB Insider. Subscribe at  https://cabcattle.com/newsroom/cab-insider/. [Photo courtesy Certified Angus Beef LLC.]