Speer: Quality is Driving the Market
Quality is driving the market like never before. During the past six months, beef consumers have reinforced their preference for product at the top end of the market. Both branded (mostly upper 2/3 Choice) and Prime products have been supported by unprecedented demand.
Most significant, Prime wholesale prices have skyrocketed duing the second half of 2021; the Prime/Select spread has averaged nearly $85/cwt during the past six months. Setting aside the surge in late ’19 following the fire at Tyson’s Holcomb plant – the current run-up in prices easily surpasses the previous peak in late-March, 2012.
Even more impressive, that’s occurred on larger volume. For example, at the close of the first quarter in 2012 just a little over 3% of the slaughter mix graded Prime. At the end of November, the current grading percentage for Prime is surpassing 9%! In other words, the beef industry is garnering higher prices on bigger volume – the very definition of a positive shift in demand.
Quality and consistency never go out of favor. Consumers continue to signal the importance of both in their purchasing habits. That’s always been true at the restaurant level; and seemingly, the stay-at-home / cook-at-home trend resulting from Covid has now strengthened that trend at home, too. Quality grade matters in the marketplace.
Nevil Speer is based in Bowling Green, KY and serves as Director of Industry Relations for Where Food Comes From (WFCF). The views and opinions expressed herein do not necessarily reflect those of WFCF or its shareholders. He can be reached at nspeer@wherefoodcomesfrom.com.
