United States Department of Agriculture Agricultural Marketing Service January 2021 Through comprehensive market surveys, case studies, and research partnerships, AMS provides insight into direct-marketing trends and emerging food system models. A User’s Guide to USDA’s Pork Carcass Cutout WHAT IS IT? The PCC refects the Figure 1: Typical USDA cutout value report overall supply and demand The cutout value of an situation for wholesale USDA ESTIMATED COMPOSITE PORK CARCASS CUTOUT individual pork carcass is pork cuts. Composite Based on FOB Plant Pork Prices and Industry Yields based on the amounts of values are calculated each Calculations for a 215 lb. Pork Carcass the various cuts produced day for the various pork 55-56% lean, 0.55” - .70” backfat at last rib by that carcass and the primals and these values Total prices of those cuts. Its value are combined to refect a Date Loads Cutout Loin Butt Pic Rib Ham Belly is expressed in cents per single composite value of a 01/18 307.2 76.10 68.87 78.36 60.43 104.74 79.86 99.32 pound or dollars per hundred pork carcass. These cuts Change 1.79 2.43 2.30 3.66 -0.40 2.12 1.21 pounds (centi-weight or cwt). refect a standard cutting 01/17 260.1 74.31 66.44 76.06 56.76 105.14 77.74 98.11 Theoretically, each hog has a specifcation and must be unique cutout value. 01/16 350.4 73.32 64.31 77.04 54.09 106.35 76.85 97.47 traded on a negotiated basis 01/15 456.9 73.88 66.95 78.10 58.89 107.34 73.18 97.96 Every pork slaughter plant to deliver within ten days of 01/14 191.7 74.81 65.71 79.13 58.23 104.93 77.47 99.69 computes a plant cutout the time of sale for combos value that represents (large totes or containers Current Five Day Simple Average the average value of the that hold approximately 2000 74.48 66.46 77.74 57.68 105.70 77.02 98.51 carcasses produced by that lbs of product) and 14 days NOTE: Value may change without adequate test. plant in a specifed time for boxed product. Figure 1 period. The plant cutout value shows a typical cutout value The Pork Carcass Cutout (PCC) is an estimate of the value is determined by the amount price report as it appears in of a 55-56% lean, 215 lb. hog carcass based upon current of pork cuts produced and USDA’s National Daily Pork whole-sale prices being paid for sub-primal pork cuts. prices received for those Report (LM_PK602). cuts. A plant’s cutout value is confdential, proprietary information and is the single BACKGROUND INFORMATION most important determinant of the price the plant will pay In the fabrication process, The potential value of sub- Seasonal shifts in the for hogs. pork carcasses are broken primals generally depends relative amount and types into primal units which, in on how much work must be USDA’s Estimated Pork of cut styles are refected turn, are broken into various done on the primal cut to Carcass Cutout (PCC) is in the PCC by weighting the sub-primal cuts. Primals can be extract the specifc sub- the estimated value of a various styles according to cut in different styles to make primal. Boneless cuts require standardized pork carcass the volume of each cut style different sets of sub-primals more fabrication and thus (currently % lean, reported to USDA. 55-56 215 to ft different customer and cost more to produce than lbs.) based upon industry- consumer needs. Sub-primal do bone-in cuts. They are average cut yields and fabrication also produces by- also worth more to end users average market prices of sub- products of varying type and because they require less primal pork cuts. Industry- quantity. These by-products end-user labor and contain average cut yields are (such items as trimmings, less waste product. The updated by USDA annually in bone, fat and skin) have value same is true of fat trimming. January based on the results that must be added into the Styles produced and sold in of a survey of packers the primal value to fully account for larger volume will have more previous July. Market prices all parts of the carcass. impact on the overall cutout. come from USDA wholesale pork, lard, and meat and bone meal price reports. USDA is an equal opportunity provider, employer, and lender. 1 2019 United States Department of Agriculture. Agricultural Marketing Service. MARKET INFORMATION101 HOW DOES IT WORK? The PCC is a series of mathematical calculations which uses STEP 1: SUB-PRIMAL CUTS current sub-primal pork cut prices and industry-average cut yields TO PRIMAL VALUE cut that is not accounted for in to calculate primal values. Industry-average primal cut yields are the primary sub-primal. In our A value for each component is then used to translate primal values to a carcass value. These example, the primary sub- determined by deducting steps and their accompanying calculations are best illustrated primal (bone-in center cut packaging costs from each through a sample calculation. The same series of steps is followed tender-in loin) yield from the component’s market price. for all of the other pork primals. primal loin is 61.36%. Labor Each component’s contribution was required to remove the For example, the steps of determining the value of a ¼” trimmed to the primal value is comput- remaining 38.64% of the pork loin cut in the bone-in center cut, tender-in vacuum-packed ed by multiplying its individual primal. To calculate labor loin cutting style are outlined below. This cutting style breaks the value by its yield factor. Those costs, USDA multiplies primal cut (a ¼” trimmed pork loin) into four primary sub-primals are summed to determine the 38.64% by an industry (bone-in center-cut tender-in loin, boneless sirloin, blade ends and primal’s gross value and a standard $27.50 processing butt tender) and three by-products (72% trim, 42% trim and bone). labor factor is deducted to cost. This results in $10.63 in The yields of these components appear in Figure 2 and in Ap- compute its net value. pendix A, Table A-1 under style #7. Note that 0.50% of the loin is labor cost which is subtracted unaccounted for in these yields and assigned to “shrink” at a value USDA bases its labor costs on to arrive at a labor-free value of zero. Shrink is caused by moisture loss and cutting loss. the total percent of the primal of the original primal. Figure 2: Calculation of the value of a ¼” Trim Primal Loin using the Bone-in Center Cut, Tender-In cutting style. Bone-in Center Cut, Tender-Ln Loin 61.36% * $130.42 = $80.03 Step 1: + Component Boneless Sirloin 8.23% * $93.32 = $7.68 Values to + Primal Value Blade Ends 12.77% * $57.23 = $7.31 + Butt Tender 1.50% * $198.52 = $2.98 + 72% Trimmings 6.35% * $59.78 = $3.80 + 42% Trimmings 4.53% * $22.25 = $1.01 + Bone 4.79% * $5.26 = $0.25 + Shrink 0.47% * $0.00 = $0.00 - Labor 1 - 61.36% = 38.64% * $27.50 = $-10.63 $92.43 Value of a 1/4” primal loin cut into a bone-in center cut, tender in loin = $92.43 USDA is an equal opportunity provider, employer, and lender. 2 MARKET INFORMATION101 STEP 2: PRIMAL VALUES TO values of the various cutting COMPOSITE PRIMAL VALUE style values are combined based on the volumes of the The calculations outlined in various cutting styles reported Step 1 determine a primal to USDA. These calculations value for each cutting style are shown in Figure 3. The based on the sub-primals result is an average compos- produced by that style. As can ite value for a ¼” trimmed be seen in Figure 1 and Table primal loin. In this case, the A-1 in the Appendix, there are value is $70.22 per cwt. or nine specified cutting styles for 70.22 cents per pound. loins. To determine an overall primal value, the Figure 3: Creating a composite primal value from sub-primal style values Loin 11/4" Trim Loin VAC STEP 3: COMPOSITE PRIMAL 9.40 lds @ $70.69 Note that there is no “trimmed- Step 2: + TO UNTRIMMED (DROP) to-untrimmed” adjustment for Sub-Primal Loin 2 - 1/4" Trimmed Loin Paper PRIMAL 1.00 lds @ $86.50 hams since the beginning ham Styles to + The next step is to convert subprimals (Selected Hams Primal Loin 3 - 1/4" Trimmed Loin Combo 5.87 lds @ $64.45 the “trimmed” primal value to an 20-23# and 23-27#) are + untrimmed or commodity primal untrimmed (i.e. have a yield of Loin 4 - 1/8" Trimmed Loin value. The appropriate “Trimmed 100% in Table A-5). For pic- VAC 12.72 lds @ $70.83 + Primal to Untrimmed” table is nics, all three styles in Table Loin 5 - 1/8" Trimmed Loin Paper used to determine this value A-3 start with an untrimmed 0.29 lds @ $86.25 + (see Figure 4). picnic so no “trimmed-to- Loin 6 - 1/8" Trimmed Loin Combo untrimmed” adjustment is 2.15 lds @ $60.14 necessary. + Loin 7 - Bone-in CC, Tender-in Loin VAC 3.96 lds @ $87.06 + Figure 4: Trimmed composite primal to untrimmed (drop) primal Loin 8 - Bnls CC Strap-on Loin 28.00 lds @ $68.36 + Component % Value Total Loin 9 - Bnls CC, Strap-of Loin 33.14 lds @ $70.43 Step 3: 1/4” 1/4" Loin 84.93% $70.22 $59.64 Trimmed T/Trace 0.28% $34.05 $0.10 Primal to Fat 11.08% $19.60 $2.17 $70.22 Untrimmed Primal Skin 3.71% $28.55 $1.06 Drop Loin 100% $62.97 Composite 1/4” Trimmed Primal Loin Value = $70.22 USDA is an equal opportunity provider, employer, and lender.