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Rebounding from LFTB, 50% beef trim is now pricier than ever
Story Date: 7/12/2013
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Source: Rita Jane Gabbett, MEATINGPLACE, 7/12/13
If you are reading this, you probably already know how hamburger is made, but as a refresher: lean (90 percent) beef trim is often blended with fattier trim (50 percent) to create the popular 80 percent and 85 percent lean burgers most people grill in the summer and fry in the winter.
In the aftermath of the media storm that all but ended demand for finely textured beef (LFTB) as a ground beef component, there was a glut of the 50 percent trim typically blended with it to make hamburger and prices plummeted.
Today, however, 50 percent trim is making a big price comeback to even higher levels than before LFTB demand declined (see chart), even though the market for LFTB has yet to recovered to anything close to earlier levels.
Livestock Marketing Information Center Director Jim Robb researched the reasons why and shared his findings with Meatingplace.
More cows
With beef herds at historic lows, the percentage of total slaughter animals that are dairy cows has increased. Cows produce lean beef, most of which is ground into hamburger. Because these animals are so lean, they don’t produce much 50 percent trim. In fact, 50 percent trim from other sources is needed to blend lean cow beef into hamburger. This demand increase has pulled prices up with it, Robb explained.
Other uses
After demand declined for the lean trimmings previously sold to further processors like Beef Products Inc. to make LFTB, packers found other uses for that trim, including doing more of their own grinding, according to Robb. In that process, they started using more of their own 50 percent trim to blend into their own lean trimmings. The result: less 50 percent trim being sold by packers to other grinders. As supply decreased, prices rose.
Rising imports
Another result of the shrinking U.S. cattle herd is increased beef imports. Robb pointed out that imports from Australia New Zealand and South America are largely lean beef imports. “With extra 90s in the market, they have to blend it with something to make hamburger,” said Robb, boosting demand for 50 percent trim.
Canadian connection
Robb also pointed to an at least temporary decline in 50 percent trim coming across the border from Canada. At the Cargill plant near High River in Alberta, slaughter production was recently halted for nearly two weeks due to massive flooding in surrounding areas.
Earlier this year, the XL Foods plant in Brooks, Alberta shut down temporarily in the wake of a massive E. coli-related recall. That plant was subsequently purchased by JBS and is back in production. Still, these disruptions could have had slightly decreased 50 percent trim supplies in the United States.
Robb also said a Quebec dairy slaughter plant closed, pushing some dairy slaughter into the United States and adding to the lean meat production in need of 50 percent trim for blending.
Leaner steers?
The final factor — possibly a minor one according to Robb — is the impact of growth promoting feed additive beta agonists on the lean/fat ratios of steers for slaughter. While accurate data is hard to come by, many people in the industry believe there is a resulting decrease in 50 percent trim coming from those steers. “It is hard to prove and our assessment is that it is only a small factor,” said Robb.
Still, all taken together, this variety of intersecting factors is pushing trim prices up.
“Several factors have come together to change this market,” Robb concluded. “Markets work and companies do adapt.”
Regular, in-depth market data and analysis are made available to Livestock Marketing Information Center members.
For more stories, go to http://www.meatingplace.com/.
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