Cattle Markets Impacted By Camera Grading Inaccuracies

Beef carcasses graded by USDA’s new camera-grading technology may have been over-graded in recent months, delivering higher premiums to producers, but leaving packers with a short supply of high quality beef heading into a peak holiday demand season.

The new technology, called the Gigabyte Ethernet or “Gig E,” launched in February 2017, and is now in place at nine steer and heifer harvest facilities. That means 50% of the fed cattle market share could be affected by incorrect grading scores produced by those cameras.

USDA informed packers last week of their intention to reprogram the cameras, and sources told Drovers that a statement may be issued from the Agricultural Marketing Service this week. The grading cameras are used to determine marbling scores for Quality Grades, and sources told Drovers those scores were likely higher than what they should have been.

Packers and feedyards became suspicious of the system this summer when calf-fed cattle were producing dramatically higher percentages of Choice and Prime than previous averages. USDA told packers last week it plans to make revisions to the camera system, which is widely expected to reduce the number of Prime and Choice carcasses going forward.

The news also suggests, sources said, that packers do not have the amount of high quality beef they need to fill orders in the short-term. How the news impacts the current market is uncertain. Only 50% of the market has been affected by the cameras, and no hard data is available as to how many retail orders are impacted by the lower grades.

Sources said packers may seek more cattle to fulfill existing commitments, or they may choose to price beef cuts higher to reduce retail demand.