LUBBOCK, TX – CME launched two beef-trim futures contracts Monday, giving processors, packers, importers, and other commercial users new tools for managing ground-beef price risk. Kansas State University economist Brian Coffey says the contracts cover 50 percent and 90 percent lean trim.
Each contract represents 20,000 pounds. The two specifications reflect opposite ends of the blending process processors use to create the ground-beef percentages requested by restaurants, retailers, and consumers.
U.S. fed cattle produce substantial supplies of 50 percent lean trim because domestic production emphasizes highly marbled beef. That fattier product provides flavor but must be blended with leaner beef before reaching most consumers.
The 90 percent lean trim comes largely from cull cows, dairy cattle, bulls, and imported beef. Processors combine it with domestic fatty trim to produce hamburger blends, making imports complementary to much of the U.S. beef supply.
Ground products account for more than half of U.S. beef consumption. Trading volume will determine whether the contracts provide dependable hedging and clearer price discovery across the beef market.
Farm-Level Takeaway: The new contracts reflect how domestic fed cattle, cull animals, and imports jointly supply America’s ground-beef market.