Just six months ago, Select grade boxed beef was selling for more than Choice grade.  Choice has not only returned to its usual place as higher priced – the spread has widened to its largest premium since 2007.

In February, Select beef briefly sold for about 55 cents per hundredweight more than Choice beef, an anomaly exacerbated by snowstorms across the country that kept consumers off the road and out of restaurants. 

This past week, however, Choice beef sold at a premium of $16.68 per hundredweight compared to Select, the largest spread since the highs in December of 2006 and 2007, according to Oklahoma State University Extension Livestock Marketing Specialist Derrell Peel. In the university’s Cow/Calf Corner newsletter, Peel said while the Choice/Select spread typically widens at the end of the year, the increase has been larger and earlier than usual this fall.

USDA also noted the widening spread and, once again, weather is a factor.

“Several factors are contributing to the widening spread: Marketings from feedlots of 1,000 head or more have been such that fed cattle have not been allowed to put on any extra weight -- partly due to high costs of gain, adversely affecting total beef production,” the agency explained in its Livestock, Dairy and Poultry Outlook report issued today.

The report went on to explain the shortened feeding periods and some pulling of cattle forward (marketing them earlier in the feeding/finishing period) have also resulted in slightly fewer carcasses grading Choice and more Select grading carcasses, which has affected the Choice-Select spread since July.

Peel put the widening spread to three factors. The first is falling total beef production.

The second is increased cow slaughter (typically grading Select) as a percentage of total slaughter compared to last year. This means that the decrease in fed beef is even more pronounced than the total would imply.

 A third factor is that the Choice grading percentage in 2011 has remained mostly even with year ago levels.  For the past several years, a growing Choice grading percentage has contributed to a generally narrow Choice/Select Spread.

“These factors all combine to result in lower total beef supplies and proportionately lower Choice supply compared to Select beef supply,” Peel wrote. “The unusual demographics of this year contributed to these changes and more impacts are expected in the coming months.”