Live Beef Evaluation &
Pricing
History
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1916 Standards for U.S. grades developed
1924 Market classes and grades of dressed beef developed
1927 Voluntary grading specifications
1941 Adopted Prime, Choice, Good Comm., Utility, Cutter,
Canner
1956 Commercial spilt by age into Standard & Commercial
1965 Adopted standards for cutability “Yield Grades”
1973 Changed “Bull” grade to “Bullock”
1975 Elimination of conformation – Changed Good to be
leaner
1980 10 minute minimum required after ribbing
1987 U.S. Good to Select
1989 Only Quality or Yield Grade assigned – “No Rolls”
1997 Select Grade restricted to A maturity;
B maturity - Standard
History
1900’s
1930’s
1940’s
1950’s
History
Early 1960’s
Late 1960’s
History
Early 1960’s
Late 1960’s
History
1970’s
1980’s
History
1990’s
2000
History
1990’s
2000
National Beef Quality Audit’s
USDA
1974
NBQA
1991
NBQA
1995
NBQA
2000
Carcass wt
Fat thickness, in.
REA, sq in
USDA Yield Grade
679
.62
11.8
3.4
760
.59
12.9
3.2
748
.47
12.8
2.8
787
.49
13.1
3.0
Quality Grade
Ch-
Sel86
Sel79
Sel85
% Prime &Choice
% YG 1 & 2’s30%
75%
55%
48%
51%
44%
58%
49.2
Market Animal Evaluation
• USDA Grading Service
– Livestock & Grain Market News Branch
– Voluntary
– Paid for by the packer
• USDA Grades
– Yield grade – measures the lean to fat ratio
– Quality – measures the palatability of the
meat
Evaluation Factors
• Yield
Percent
Dressing
• Yield
Yield Grade
• Palatability
Grade
Quality
Dressing Percent
Dressing Percent =
Hot Carcass Weight X 100
Live Weight
Dressing Percent
Dressing Percent
- Fill
- Sex
- Fatness
- Muscle
Fill
- Hide
- Mud
-
Avg 62.5%
1288
1000 - 1505
Dressing Percent
Live Price
$ 80.00
$ 80.00
Dressing %
61 %
65 %
Carcass Price
$ 131.15
$ 123.10
Dressing Percent
Live Price
$ 80.00
$ 80.00
Dressing %
61 %
65 %
Carcass Price Dressing %
$ 127.00
61.0 %
$ 127.00
65.0 %
$ 127.00
62.5 %
Carcass Price
$ 131.15
$ 123.10
Live Price
$ 77.47
$ 82.55
$ 79.40
Market Cattle Evaluation
• USDA Yield Grade
– Measures cutability or the amount of lean to
fat
– Classified from 1 (High % Lean) to 5 (high %
fat)
% Boneless Trimmed
Yield Grade
1
2
3
4
5
% Retail Cuts
53.5
51.2
48.9
46.6
44.3
Yield Grade Factors
• HCW Weight
• 12th Rib back fat
• Ribeye area
• Internal fat – kidney, pelvic, heart fat
Yield Grade Factors
• HCW Weight
• 12th Rib back fat
• Ribeye area
• Internal fat – kidney, pelvic, heart fat
USDA Yield Grade
Step 1:
• Determine back fat – starting point for determining
Y.G.
12th rib depth inches
Preliminary Y.G.
.0”
2.0
Most desirable
.2”
2.5
.4”
3.0
.6”
3.5
.8”
4.0
1.0”
4.5 Least desirable
USDA Yield Grade
Step 1:
• Determine back fat – starting point for determining
Y.G.
12th rib depth inches
Preliminary Y.G.
.0”
2.0
Most desirable
.2”
2.5
.4”
3.0
Avg .50
.5”
3.3
Currently Avg .4
.6”
3.5
.8”
4.0
1.0”
4.5 Least desirable
USDA Yield Grade
Step 2:
• Determine Muscling
– Average muscling 1.1 sq. inches of REA per 100 lbs
live wt.
– 1200lb steer should have 13.2 sq. in. REA
– Greater than 1.1 sq. in. then Lower the Y.G.
(Desirable)
– Less than 1.1 sq in. then Increase the Y.G.
(Undesirable)
– For every 1” difference + .3 from PYG
USDA Yield Grade
Step 2:
• Determine Muscling
HCW
600
700
800
900
Required REA
11.0
12.2
13.4
14.4
USDA Yield Grade
Step 3:
• Determine Internal Fat (K.P.H. fat)
– Most cattle have 2.5 % internal fat.
– If cattle have less than 3.5% internal fat then
lower Y.G. by .2 for every 1% decrease
KPH,%
4.0
3.5
3.0
2.5
Adjustment
+.1
none
-.1
-.2
Quality Grade Evaluation
• USDA Quality Grade
– Estimates the palatability (eating quality) of
the meat
• Factors to consider when estimating Q.G.
– Maturity – Young to Old – 5 classifications
– Marbling – 10 degrees of marbling
USDA
Quality
Grades
Prime
Choice
Select
Standard
Age
30
42
72
96
2.5
3.5
6
8
Practice Comparisons
Heifer – 1365 lbs
Practice Comparisons
Steer – 1350 lbs
Cattle Maturity
• Past
– Ossification of vertebrae
• Post-BSE
– Dentition to identify cattle 30 mo of age
– FSIS as set the following…
• Cattle with a full set of the first incisors are 24-30
mo
• Cattle with at least one of the second set of
incisors are considered 30 mo of age or older
?
788 lbs
Select +
Y.G. 2.5
891 lbs
Choice O
Y.G. 4.0
850 lbs
Select +
Y.G. 2.3
960 lbs
Prime
Y.G. 4.0
838 lbs
Select Y.G.1.6
675 lbs
Choice Y.G. 3.5
730 lbs
Select Y.G. 1.5
750 lbs
ChoiceY.G. 2.5
620 lbs
Prime Y.G. 3.3
820 lbs
Select Y.G. 2.2
990 lbs
ChoiceY.G. 3.0
USDA Certified or Verified
• Certified - 52
– Specifications – ie. CAB
– Company requests – Government Issues
– Reviewing requirements www.ams.usda.gov
• Process Verified - 4 programs
– Process (origin, handling, carcass cuts, ect.)
– Simple - Nolan Ryans Tender Aged Beef
Alliances/Branded Beef
Programs
• 52 Programs Currently
• Four Categories
– Breed Associated
– Commercial Beef Carcasses
– Natural/Implant-Free
– Vertical – Integrated Beef
Cooperatives
Breed Breed Associated
• Angus
– CAB
– Supreme Angus Beef
– Angus Alliance
• Hereford
• Limousin
– Laura’s Lean
– Nebraska Lean Limousin
Beef Breed Associated
Dominated by British breeds
– of 52 programs 40 Angus based
Provided by USDA Marketing & Regulatory Programs
Commercial Beef
• Western Beef Alliance
• Montana Beef Network
• Fewer Specifications
• Pay fee for data
Natural/Implant Free
• Laura’s Lean 20-30,000
• Colman Natural Beef
• Maverick Ranch 30-40,000
Vertical Integrated Alliance
• Northern Plains Premium Beef
• U.S. Premium Beef
– Share holders
• Future Beef
– Selected producers
• Ranchers Renaissance
– Share profit or loss
Current Methods of Marketing
• Live Price Bids
• Carcass Price Bids – “In the Beef”
• Grade & Yield – “Grid Pricing”
• Formula Pricing
CERTIFIED ANGUS BEEF® Product
Sold by Program Licensees*
555 537 540 560
600
Million Pounds
493
411
400
332
227
260
172
200
71 85 80 88
64
30 43
123
0
'86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03
Year
* Fiscal Year (October 1 - September 30)
The Big Three’s
Grids
• IBP – Real Time Market Value – RTMV
• Monfort – “Cutability” & “Quality”
– Nebraska average for base - Adjusts to Choice Y3
• Excel - Many Breed specific
– Angus based on Quality no Premium for Sel Y1&Y2
• Angus Gene Net, Angus Alliance etc.
– Sterling Silver, Iowa Quality Beef, Nebraska Corn Fed
– Ranchers Registry / Ranchers Renaissance
$/cwt
Figure 1. Quality Premiums and Discounts
10
5
0
-5
-10
-15
-20
-25
-30
-35
-40
Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul99
99
99
99
99
99
99
99
99
99
99
99
00
00
00
00
00
00
00
Date
Prime
Select
Standard
Certified
Dark
I
II
III
IV
Figure 2. Cutability Premiums and Discounts
5
$/cwt
0
-5
-10
-15
-20
Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul99
99
99
99
99
99
99
99
99
99
99
99
00
00
00
00
00
00
00
Date
YG 1
YG 2
YG 3
YG 4
Figure 3. Carcass Weight Discounts
-14.5
-15
-15.5
$/cwt
-16
-16.5
-17
-17.5
-18
-18.5
-19
Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul99
99
99
99
99
99
99
99
99
99
99
99
00
00
00
00
00
00
00
Date
LWTs
HWTs