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Peel: Slaughter Cows and Ground Beef

One of the principal ingredients in many ground beef formulations is 90 percent lean beef trimmings (90s). The wholesale price of 90s reached a record level of $338.56/cwt. the last week of March and appears to still be moving higher. Nonfed beef (cull cows and bulls) is the source of 90s. Fed beef (fed steers and heifers) produce fatty trimmings, commonly reported as 50 percent lean trimmings. The current wholesale price of 50s is $102.84/cwt. A reference formulation of ground beef consists of a 5:1 ratio of 90s to 50s, that is, five pounds of 90s and one pound of 50 percent lean, producing an 83.3 percent lean ground beef product. This wholesale ground beef formulation is currently priced at $299.27/cwt., also a record level.


Cull cows and bulls contribute to nonfed beef production, which is calculated as cow slaughter multiplied by cow carcass weight plus bull slaughter multiplied by bull carcass weight. Monthly average nonfed beef production peaked cyclically in January 2023 and has dropped 8.1 percent in the last 14 months. By contrast, fed beef production has decreased 4.4 percent since the recent cyclical peak in 2022. Thus, the supply of nonfed beef is tightening faster than that of fed beef.




By DERRELL PEEL - OKLAHOMA STATE UNIVERSITY

April 1, 2024

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