Kay’s Cuts: Savouring the beef experience

Steve Kay, Cattle Buyers Weekly, 11/11/2016

A monthly column on the US beef market written exclusively for Beef Central by Steve Kay, publisher of US Cattle Buyers Weekly    


Steve Kay 2013 conferenceI’VE been fortunate in my lifetime to have enjoyed many different types of beef.

I grew up in New Zealand so my very first experience was with grassfed beef from Hereford-Holstein crosses that my family raised. Understandably, it counts as some of the best beef I’ve had. Plenty of fat and age gave it a flavour I still remember.

Then, after moving to the UK, I experienced a wide variety of beef from all over Europe. Some was great, some was not. I had heard about the special flavor of US corn-fed beef but it wasn’t until I moved to the US in 1986 that I got to eat it. I immediately realized it was different from anything I had previously experienced.

I’ve since also eaten great Argentine grassfed beef and Canadian and Australian grainfed (and grassfed) beef.

One memorable occasion was with Beef Central’s Jon Condon, when we and other guests were treated to Wagyu beef in the Brisbane penthouse of one of Australia’s best-known restaurateurs, John Kilroy. That beef – just being discovered as a premium beef option at the time – melted in my mouth, and the annual Riverfire fireworks display on the Brisbane river perfectly complemented the experience.

Several factors make beef different in different countries. The most dominant are what and how cattle are fed, their age at slaughter and their genetics. With genetics in mind, I began buying Certified Angus Beef on a regular basis just over a year ago. That’s after a northern California (where I live) supermarket chain began offering CAB.

The American Angus Association (AAA) launched CAB in 1978 mainly to improve the value of Angus cattle. The association could not have dreamed about how successful CAB would become as a branded beef program, and how it would propel the Angus breed to dominate the US beef cow herd.

I occasionally search out specialty beef here in California. But CAB is my go-to beef for most occasions. It ticks off the boxes for taste, tenderness and texture, and it’s extremely consistent. Above all, it’s great value (quality versus price).

Countless other people also think like me. That’s why CAB this past year reached a remarkable milestone in its history.

Global sales in CAB’s latest year ended September 30 surpassed one billion pounds for the first time. The 460,000 tonnes sold was up 13.3pc on last year. The record sales were fuelled largely by US retail sales.

After several years of record high beef prices brought on by tight supplies, the last fiscal year began with the pendulum swinging back to favor beef marketers, says CAB. A 15pc increase in exports also helped.

Slow burn before success

CAB’s success was a long time in coming. The program paid no premiums over the commodity market to producers in its first 19 years. But they gradually appeared, and now Angus seedstock and cow-calf producers, and cattle feeders are being rewarded in several ways. The industry’s four largest beef processors, all CAB-licensees, have in the past 20 years paid more than US$550 million in premiums to cattle feeders for cattle that qualify for the CAB program. They paid a record US$52 million in 2015 alone.

Sales of registered Angus bulls in the association’s latest fiscal year averaged US$5605 per head and registered females averaged US$5036 per head. Sales of Angus genetics remained highly valued in spite of almost 10,000 more animals marketed by members versus the prior year, says the association.

“Consumers in the US and around the world are literally stepping up to the plate to give US red meat processors a highly profitable year.”

Average prices in fiscal year 2016 remained 12pc higher for registered Angus bulls and nearly 40pc higher for registered Angus females than average prices received in 2014.

The association has also been at the forefront of adopting key technologies involved in cattle breeding. Of the nearly 335,000 calves registered with the association in fiscal 2016, more than 53pc were produced by artificial insemination, while embryo transfer calves represented 11pc of total registrations.

Total females enrolled in the association’s MaternalPlus program were up more than 56pc. This inventory-based reporting system is designed to capture reproductive trait data. Meanwhile, cattle that have been genomically tested represented about 33pc of total Angus registrations.

Five-year low in US retail beef prices

CAB’s record year reflects consumers’ desire for high quality beef and the Angus breed’s ability to produce just that. More broadly, the Angus breed and CAB have helped raise the quality of all US cattle and the beef they produce.

My local supermarket has been promoting CAB aggressively this fall (northern hemisphere autumn). In fact, retailers all across the country have run beef features at prices lower than have been seen in more than five years.

In contrast to the wholesale price of beef in Australia, US prices have gotten cheaper almost every month this year. That’s because weekly slaughter of grainfed steers and heifers has been larger than forecast. This reflects aggressive beef herd expansion in 2014 and cattle feeders’ aggressive marketings this year.

As I wrote in last month’s column, the result has been record losses for cattle feeders.

But October saw record profits for fed beef processors. Margins, as calculated by private firm, averaged US$128.54 per head. The main reason was that packers bought cattle far cheaper than expected, and this outweighed a decline in wholesale beef prices.

The latter, though, has allowed retailers to feature beef aggressively and US consumers are responding.

Some concern exists that the larger cattle slaughter and record hog slaughter are putting too much red meat on the US market. But beef imports are down sharply from last year, notably from Australia, and exports continue to grow, as they do for pork.

US beef exports January through September were up 8pc in volume from the same period last year and pork exports were up 5pc.

Consumers in the US and around the world are literally stepping up to the plate to give US red meat processors a highly profitable year.





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