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As beef prices rise, shoppers shift within the beef case and challenge traditional demand indicators

In recent weeks the Choice/Select spread, which can be an indicator for beef demand, has been very narrow and in some instances negative.   

University of Kentucky ag economist Kenny Burdine says historically that shift would indicate a weakening in demand.  A wide Choice/Select spread typically indicates strong consumer demand for premium cuts.  “I don’t think the Choice/Select spread means what it used to,” he says. “The reality is there’s very little Select in the marketplace right now. It’s less than 10%.” 

He tells Brownfield the majority of beef produced today is Choice or better.  “A way larger number than usual or a larger share than usual is prime,” he says. “And then there’s kind of the upper two-thirds choice element. So I think because of that, I’m less worried about it than it would be otherwise.” 

Burdine says that’s a testament to the investment producers have made in genetics.  “Early in my career, 2 to 4 percent was kind of a normal percent prime,” he says.  “And now, we’re looking at 15 to 18 percent.” 

He says as beef prices have pushed higher, there’s been a shift in consumer buying habits. “We’re seeing consumers trade down within the beef space, trade down from choice to select if they’re going the steak route,” he says. “This is also why I think we’re seeing such strong demand for ground beef, it keeps you in that same category, but at a much, much cheaper entry point.” 

And with less Select quality beef available, he says it pushes the price point higher.