A biennial survey of the four largest packers conducted by Certified Angus Beef (CAB) showed the annual grid, formula and contract premiums paid on CAB carcasses in 2021 totaled $182 million, up from the 2019 record of $92 million.
According to Paul Dykstra, CAB director of supply management and analysis, the recent years of “once-in-a-lifetime events” propelled a higher volume of certified carcasses and increased boxed beef prices that helped drive CAB premiums to nearly double those paid in 2019.
“When the supply of finished cattle was overabundant and packers were able to be selective, they pursued the kind of carcasses that were most profitable and met their customers’ demand,” Dykstra said.
The top-end range for grid and formula premiums trended along the same line as the cutout (boxed beef) prices during the last two years, Dykstra said. The CAB-to-Choice cutout spread averaged $17.76/cwt in 2021, up from $10.39 in 2019. Dykstra continued that while the base price for fed cattle hasn’t performed in step with cutout values, quality premiums have increased.
