Consumer shifts playing havoc with beef cut-out values
As consumers have shifted from eating at restaurants to eating at home, the demand for hamburger has gone up while steak demand has declined--a combination that has narrowed the spread between Choice and Select cutouts significantly.
In its Livestock, Dairy and Poultry Outlook report, U.S. Department of Agriculture said in 2008 the Choice/Select cutout spread narrowed to well below both 2007 levels and the five-year average.
However, even as Choice beef wholesale prices have declined, retail prices have been slow to follow.
According to USDA statistics, retail Choice beef prices began 2008 at $4.10 per pound and climbed steadily to a new record of $4.53 per pound in August. However, while Choice cutout values declined by 14 percent from July to December, Choice retail beef prices remained at a near-record $4.51 per lb. in both September and October before declining to a December low of $4.38.
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