By Bill Pendergrass, Executive Vice President
By the time you read this, everyone will have learned that President Trump has closed a trade deal with China that will re-open their market to U.S. beef. The U.S. has been blocked out of the Chinese market since the infamous. “cow that stole Christmas” in 2003. The positive repercussions of the Chinese market opening is great for all U.S. cattlemen.
Over the past several months the U.S. market has been steadily building again. All classes of cattle, especially replacement females, have been increasing in value. Some of this is because of herd rebuilding in the southern plains and Midwest. What I think we will be seeing over the next few months is a robU.S.t market for feeder cattle, finished cattle and replacement females. This is because once we begin shipping product to China demand will increase across all classes of cattle.
Since news of this trade deal began to trickle out weeks ago, prices for USDA Choice carcasses have taken major jumps. As I write this article, the Choice-Select spread is up to $20. On an 850-lb. carcass that is a difference of $203. On a pen of 100 steers that would be $20,300. As recently as late March the Choice-Select spread was at $9. Why this major price increase?
First, China is reopening to U.S. and secondly, we are going into summer grilling season. Both of these events are driven by the same thing, high marbling and great tasting beef. Consumers, both in the United States and China (and almost everywhere else), are willing to pay more for beef with more marbling. That is what sets U.S. beef apart from the rest of the world. The U.S. was the first beef grading system in the world to account for Quality Grade (marbling) and Yield Grade (lean cutability). Simply put, the emphasis on marbling is what makes U.S. beef the most expensive and sought after product in the world protein market.
So why am I talking about carcass value, marbling and international export markets? Simple. As a Beefmaster breeder you are directly affected by these issues. True, we are a maternal breed (I happen to think that we are the greatest maternal breed out there), but at the end of the day all of our genetics will end up in the food chain. It is vital for you as Beefmaster breeders to do your part to improve carcass merit in your herd. I’m not telling you to single trait select for IMF. However, I am telling you that it is time to pay attention to the carcass merit in your cattle and make turns to improve it.
Step one is to begin collecting ultrasound carcass data on your replacement females and bulls. Refer to the BBU website and you will find some great information about ultrasound. Many larger breeders are planning “scan days”, where breeders can bring their cattle to a central location and have them scanned by reputable ultrasound technicians. I want to compliment Melvin Scherer, President of the Live Oak satellite, for planning and promoting his recent scan day. Hopefully, you attended and brought cattle to be scanned.
Step two is paying attention to the ultrasound EPDs and individual scans as you purchase new genetics to bring into your herd and mate your cows. Carcass traits are moderately heritable and they can be improved quickly, if you select for them. The fastest way to improve carcass merit is to use the ultrasound EPDs for IMF and REA. This past year BBU made carcass selection even easier with the introduction of $T, our terminal index. $T combines growth EPDs, ultrasound carcass EPDs and real world carcass pricing data to give you one simple number that reflects feedyard and carcass merit and puts in $form. By Using $T and balancing it with $M, our maternal index, you can maintain maternal excellence AND improve carcass merit in your herd.
Traditionally, when the Choice-Select spread widens such as it is doing now, we see bull buyers lean heavily into carcass rich genetics. The reason is simple, these terminal genetics are worth more to the packer who passes along premiums to the feeder, who in turns passes them to the order buyers who show up at your local sale barn, who in turn pay more for what they perceive to be superior feeder and harvest cattle.
Our challenge is to keep improving our carcass merit, so as to alleviate feeder calf discounts while at the same time put out an effective message that the maternal merit of Beefmasters will make the cow calf operator more money over time. This is why the beef cow efficiency argument is so important to Beefmasters and the entire industry. When the Choice-Select spread was $9 there was much more emphasis on maternal traits and rebuilding our commercial cowherd. The current $20 Choice-Select spread de-emphasizes our maternal message. This is why we mU.S.t maintain our maternal excellence and serioU.S.ly begin improving carcass merit.
Shifting gears slightly, last month Beefmasters got great news from a piece of research conducted by the USDA Meat Animal Research Center in Clay Center, Neb. In an 18-breed feed efficiency comparison study, Beefmasters made a statement. The study compared the 18 breeds for individual feed intake, compared to the individual weight gained, using very sophisticated equipment (that is very similar to the Growsafe LLC equipment used by several of our breeders). When the breeds were compared for average daily gain (ADG), using this methodology, Beefmasters were ranked #2 for steers and #2 for heifers across all 18 breeds. Incidentally, the other breeds that slightly outranked U.S. in the gender categories, did not retain their #1 rankings across gender. In other words, the #1 steer category breed didn’t rank in the top five for heifers and the #1 heifer category didn’t rank in the top five for steers. Beefmasters were the most consistent in their efficiency.
This study proves what we have known for a long time, Beefmasters are efficient. We also have a very valuable set of grid enhancing, value drivers other than marbling. Beefmasters consistently have higher dressing percentages and better yield grades. Until the recent $20 Choice-Select spread, this combination was actually adding more value to carcasses than Quality Grade or marbling. On the “live side” Beefmaster sired steers are healthier, fewer health pulls in the feedyard and death loss usually at least 1 percent lower than yard averages. This, combined with the documented feed efficiency advantages, is a super message. The Beefmaster combination of better feed efficiency, stronger immune systems, higher dressing percentages and lower yield grades are a perfect counterbalance to the less efficient cattle dominating the daily kill.
At the end of the day, for Beefmasters it all comes down to crossbreeding. We know our genetics will improve the maternal attributes of the nation’s Angus-dominated cowherd. We also have a great, value adding terminal message that BBU will be developing over the next few months to compliment the fantastic Choice-Select spread we are seeing. We live in exciting times.