Ground Beef Demand Continues Strong

Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

 

Memorial Day is perhaps the biggest hamburger grilling day of the year, possibly rivaled by Independence Day.  Ground beef demand has continued strong for the past twelve months after rising sharply in the second quarter of 2021 (indicated by the prices in the figure below).   The ground beef market is large and complex with two major demand channels in retail grocery and food service.  These market channels utilize different and largely separate supply chains that depend on a wide variety of lean and fat sources. Clark (2019) provides a more detailed account of the ground beef market, which is summarized below.

 

 

Ground beef at retail grocery typically depends almost exclusively on domestic sources of fresh beef, often marketing ground beef from specific primal sources such as ground chuck, ground round or ground sirloin.  Retail grocery ground beef utilizes fatty trimmings from fed steers and heifers as well as lean beef from cow and bull slaughter, all frequently primal specific, and may include whole muscle grinds.  Retail grocery frequently includes a wide range of lean to fat ground beef products ranging from 70 percent lean (the minimum to be called ground beef) to over 90 percent lean.    

 

Food service ground beef uses a wider range of lean and fat sources.  In Quick Service Restaurants (QSR), in particular, margins are extremely narrow and specialized grinders monitor a wide range of ground beef sources to control the price of ground beef within the specifications of each restaurant customer.  Each restaurant chain specifies one or more lean to fat formulations, with the exact lean to fat ratio proprietary to each company.  Food service ground beef will include a wide range of fresh and frozen beef trimmings from domestic as well as (mostly frozen) imported lean beef trimmings.    

 

The ground beef market plays a critical role to balance supply and demand for the vast array of products produced by the beef industry.  While the trimmings are always utilized in ground beef or other processed products, whole muscle cuts may move into or out of ground beef formulations as the supply as well as the demand for those products as muscle cuts fluctuates.  Chuck products may enter ground beef grinds if they are cheap enough but increased export demand for these products, particularly in Asian markets, have reduced the use of chuck muscles in hamburger grinds.  Beef products from the round are leaner and may be used to provide the additional lean needed for ground beef, but compete with higher value uses of these products, especially for processed products such as jerky.

 

Fed steers and heifers produce significant amounts of fatty trimmings, which require additional pounds of lean product to make ground beef.  For example, one pound of 50 percent lean trimmings, mixed with five pounds of 90 percent lean trimmings, will produce six pounds of 83.3 percent lean ground beef.  While there are many ground beef formulations and many product mixes to achieve them, this 5:1 ratio of 90 percent lean to 50 percent lean trimmings is representative of the ground beef market.  The figure below shows the wholesale price for this combination of 90s and 50s for the past several years.  Strong demand for the past year has kept the wholesale price of ground beef near record levels, exceeded only by the brief spike that occurred in the initial stages of the pandemic in 2020 and a few months of reduced supply in 2014/2015.   

 

Clark, Lauren Elizabeth. “Disaggregating Beed Demand: Data Limitations and Industry Perspectives.”   Unpublished M.S. thesis, Department of Agricultural Economics, Oklahoma State University, April 2019. 

 

 

Creep Grazing

Mark Z. Johnson, Oklahoma State University Extension Beef Cattle Breeding Specialist

 

As a result of drought, higher priced feed grains and fertilizer prices, this week we consider the potential benefits of creep grazing.  While creep feeding, based on grains, has been studied in the animal science field for many years and quite a lot of data is available, typically when the question of whether creep feeding is cost-effective practice comes up. The simple answer for commercial cow/calf operations is “not in most circumstances”. This is particularly true for spring calving operations. Calf weaning weights can be increased anywhere from about 20 to 80 pounds. However, in most cases, the value of added weight gain will not cover the added feed, labor and equipment costs unless feed is exceptionally inexpensive, which is definitely not the case as of now.  Even so, not all operations make this decision based on the economics at the time of weaning. For example, seedstock producers may have entirely different objectives when it comes to creep feeding. Chief among those include marketing and expression of genetic potential for growth. 

 

Creep grazing, on the other hand, has potential to be a more cost effective solution.  Creep grazing programs can produce additional calf gains using forage rather than the traditional grain-based creep diets. There are many ways to adapt this system to each individual situation, but the bottom line is that it must be profitable.

 

Most forages can be used for successful creep grazing as long as they are high in nutrient quality and readily available. Time of year will affect which forage is used for creep grazing. During the warm season months, most producers will use legumes, pearl millet, or sorghum-sudan grass. During the cool season months, annual grasses like rye, oats, wheat or ryegrass will be used. Two different methods have been used to allow calves access to creep forage while keeping cows out. One method is to build a typical creep gate with entrance slots 18 inches wide and place the creep gate in the fence line or at the gate separating the creep grazing area from the main pasture. Another method is to use one strand of electric wire to allow calves to graze while keeping cows out. Placing this single strand of wire 36 to 42 inches above the ground will allow calves to pass under while keeping the cows out.

 

Similar to grain creep feeds, the added weight gain from creep grazing depends on pasture quality. Regardless of forage quality, if forage quantity is a problem, creep grazing should have a positive effect on calf performance and possibly cow performance as well. Daily gains tend to be less than the full fed energy creep systems. Daily gains are usually increased by 10 to 20 percent with creep grazing. However, improvements in daily gains of 0 to 50 percent have been reported. This underscores the effects that pasture quality and quantity exert on gains of creep-grazed calves.

 

Creep grazing has a few other indirect benefits. One is that calves do not get as fat as when they are fed a grain-based creep feed and may not receive price discounts often applied to calves fed an unlimited high energy creep feed. Replacement heifers may get too fat if fed a grain-based creep feed and have reduced milk production. This problem is less likely to occur when using forage as a creep feed.

 

Most experiments that track cow weight change and calf milk intake show that calves consume all the milk available whether they are fed creep fed or not. Creep feeding simply does not change or improve cow weights or body condition.  Calves prefer milk first, palatable creep feed second, then forage.

 

Reference: Creep Feeding Beef Calves.  University of Georgia Extension Bulletin 1315.

 

 

Memorial Day

Paul Beck, Oklahoma State University Extension Beef Cattle Specialist

 

To our city cousins Memorial Day is the kickoff of summer, the first chance to get the boat or barbeque grill out for a long weekend and benchmark for us to change out our wardrobe.  On the farm, Memorial Day may signal it is time to work calves, turn out bulls, or ship feeders. Also, for many of my friends in southern Oklahoma it is time to get the combines out in the field to thresh the wheat fields we have been managing all winter. For others, it is the start of a busy hay season.

 

When I think of what Memorial Day really means, the commemoration of those that died in our Nation’s wars, I think of the many farmers and ranchers I know that did their part and the sacrifices they made. Most never made much of it. It was shocking to find out the quiet rancher that everyone said was an awesome roper when he was younger, was also a pilot that flew B-25 bombers in the southwest Pacific in World War II. Many summer days when I was growing up, older farmers from Kingfisher County would come to the family business and talk to dad under a shade tree about their experiences with the 45th in Korea in 1950.

 

When I was a kid in the 1970’s, the older established cattlemen and farmers often turned out to be veterans of World War II or Korea while many of the younger more progressive producers were Vietnam veterans. Now it is the Vietnam vets that are older and more secure in their operations and it is the newer generation served in places like Afghanistan or Iraq.

 

Try to thank a veteran today, and remember heroes are among us even those that we may not recognize.