How is boxed beef cutout calculated?

Beef Cattle April 25, 2012|Print

The explanation of the box beef cutout values for a carcass basis are calculated from the primal cut values (primal rib, rib, chuck, round, loin, brisket, short plate, plate, and flank) which are calculated from the various subprimal cut values, lean trim values, fat, and bone values. This is detailed in the report that is posted on the website each day named "Boxed Beef Cutout & Cuts-Negotiated Sales Overview PDF." You can find this report by going to the Agricultural Marketing Service (AMS) homepage (www.ams.usda.gov): 1. Click on "Market News" on the left side of the page. 2. Select "Livestock, Meats, Grain, and Hay" in the middle of the page. 3. Then choose "Meat" in the "Browse by Commodity" section. 4. Click on "Daily Beef Reports." 5. Select "Boxed Beef Cutout & Cuts-Negotiated Sales Overview PDF" in the middle of the list. The document describes the following: THE BOXED BEEF CUTOUT VALUES AND CHANGES – The cutouts represent the estimated value of a beef carcass from the represented grade for a given day based on prices being paid for boxed beef cuts and credit items. The change in value from the previous day is shown immediately below each cutout value. Comparing the cutouts to one another can tell us a lot about the current market. The spread between the Choice and Select cutouts is a good indicator of the relative supply for each grade. A narrow spread indicates that cattle are grading better and that there are fewer Select cattle available. A widening spread indicates that the incidence of cattle grading Select is increasing. Seasonal demand patterns for either Choice or Select product can also influence the spread. Demand for Choice middle meats through the Christmas season often leads to increases in the Choice cutout not shared by the Select cutout. The daily change in cutout values is a good indicator of the overall marketplace as well. The magnitude of the change in either direction indicates some measure of imbalance in the supply/demand situation. For example, a sharp decline in the Select cutout when compared to the Choice cutout would be an indication of either increasing supplies of Select, decreasing demand for Select relative to Choice, or a combination of both. However, you should keep the reported load count in mind when looking at the changes as these two factors influence one another. One important thing to keep in mind is that the Boxed Beef Cutout Value is not the value of a beef carcass, as in a packer grid pricing. It is an estimate of the value of the carcass based on the value of meat cuts from the carcass for the price of the cuts reported that day.

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