While in the American vernacular, all cattle may be commonly referred to as “cows,” the term “cow” accurately refers only to female cattle who have given birth. Bulls, meanwhile, are reproductive male cattle, while heifers and steers are pre-reproductive, sterilized or otherwise non-reproductive female and male cattle, respectively. Calves are immature cattle of either sex. Cattle raised for beef in the United States, at the time of finishing at the feedlot (where they are “fed”), are almost exclusively steers and heifers, since curtailing the sex hormones of cattle early in their lives results in growth patterns consistent with higher-quality beef containing more of the intramuscular fat known as “marbling”. Beef bulls and cows generally live much longer lives than beef steers and heifers, having produced several calves over years before processing (i.e., slaughter for meat). Dairy cows too are ultimately processed and like that of beef cows and bulls, their meat is leaner and lower-graded than meat from fed steers and heifers. 

The biological origins of beef trimmings are thus differentiated by animal age and finishing protocols, with 90% lean and 50% lean grades sourced from separate segments of the cattle population. 90% lean trim is predominantly derived from mature cull cows and bulls from dairy or beef herds, which yield significant lean muscle mass with minimal fat cover. By contrast, 50% lean trim is a primary output of the fed cattle industry, involving steers and heifers finished on high-energy grain rations to facilitate the development of intra and intermuscular fat requisite for retail beef. Processors blend complementary 90% and 50% beef trimmings, or other percentages when cost-effective, in precise weight ratios to achieve standardized lean percentages, such as the 80% lean ground beef typically sold in supermarkets. 

While fed cattle, whose trimmings generally comprise the 50% lean pool of product, produce higher quality steaks and cuts with greater intramuscular fat (or marbling), their 50% lean trimmings are of significantly lower value than 90% lean trimmings due to the preponderance of lower-valued intermuscular fat (or fat outside and between muscle, including back fat). Prices for both 90% lean and 50% lean beef trim have been rising, as have Live Cattle futures and other bovine products. An historically low national cattle herd combined with an ever-growing national appetite for protein provide strong tailwinds to price.

Prices of 50% lean trimmings exhibit much greater volatility than those of 90% lean trimmings, despite 50% lean trimmings being underlined by significantly greater physical domestic supply. Among the most imported forms of beef is 90% lean beef trim, which is sourced largely from retired dairy cows and breeding cows and bulls. Historically, the United States has relied on Australia, New Zealand and Brazil for this lean supply. This imported lean meat differs sharply from 50% lean trim, which is abundantly produced in the United States from fed steers and heifers raised exclusively for beef. Because the production of ground beef requires a leaner input to complement high-fat trim, 90% beef trim imports actually benefit domestic producers and processors whose fattier trim may be worth less without a leaner mix-in. 

Settlement of 90% and 50% Beef Trim futures is based on the relative values of the CME 90% and 50% Beef Trim Indices®. Behind the calculation of each index are prices and volume published under the USDA’s The Livestock Mandatory Reporting (LMR) program, administered by the USDA Agricultural Marketing Service (AMS). The LMR mandates that federally inspected packing plants slaughtering an average of at least 125,000 head of cattle annually electronically submit encrypted data on first-time wholesale beef trim transactions twice daily for public release. This regulatory workflow requires packers to report precise transactional variables, including F.O.B. plant pricing in dollars per hundredweight, total poundage, destination, sale type and refrigeration status for product configurations no older than seven calendar days from manufacture with additional quality control standard to prevent packer overconcentration.

The rigorous standards of the LMR that ensure that the CME 90% and 50% Lean Beef Trim Indices on which the 90% and 50% Lean Beef Trim futures and options are based maintains utmost market relevance. A new benchmark for a new era of protein. Explore 90% and 50% Lean Beef Trim futures and options at www.cmegroup.com/livestock.