LIVE CATTLE PRICES RALLY

CASH live cattle prices looked set to rally last week after falling sharply the week before that. Virtually no trade occurred through Wednesday, with only 699 head reported sold at $208-209 per cwt live or $328-335 per cwt dressed. A light trade Thursday saw similar prices. The week before last saw live prices average $207.70 per cwt, versus $211.14 per cwt in the prior week. Dressed prices averaged $322.73 per cwt, versus $336.47 per cwt in the prior week.

Overall carcass weights in the latest reported week ended April 5 remained well above year ago levels. Steer weights averaged 949 lbs, up 5 lbs on the week before and up 30 lbs on the same week last year. Heifer weights averaged 874 lbs, down 2 lbs from the week before but up 25 lbs on the same week last year. Overall weights averaged 877 lbs, up 1 lb on the week before and up 30 lbs on the same week last year. This was the equivalent of adding 20,755 head to that week’s slaughter total of 586,034 head, says HedgersEdge.com.

Beef Cutout Values Remain Steady

Boxed beef cutout values remain steady after advancing sharply three weeks ago. The national comprehensive boxed beef cutout (cuts, grinds and trim) the week before last increased slightly from the prior week. It averaged $336.53 per cwt, up $0.25 per cwt on the prior week. The Choice cutout averaged $334.48 per cwt, down $2.01 per cwt. Spot market sales accounted for 31.8% of the total volume of 6596 loads, formula sales accounted for 55.9%, forward sales accounted for 12.3% and export sales accounted for 13.2%. The Choice cutout the first four days of last week declined by $1.32 per cwt to $334.22 per cwt.

Meanwhile, USDA reports that live cattle contract signings for April and May delivery are much greater than last year, says analyst Kevin Grier.  The pace of new contract signings is accelerating compared to last year and the five-year average. Agricultural Marketing Service data shows that over the past four weeks, formula-procured harvest share has been more than average for this time of year. Grier notes that the June live cattle futures market undertone is weakening. The fed cattle basis is much stronger than normal. With that said, it is unlikely to have much impact on feeder marketing decisions, he says.

Calf and yearling prices were on an upward trend but stumbled the week before last, says Grier.  Meanwhile, boxed beef cutouts slid modestly after five weeks of gains.  Packer margins are deep red.  February consumer demand eased off the torrid pace it showed in January.  Total slaughter four-week average ending April 12 was down 3% versus last year. Fed cattle kill four-week average ending March 29 (latest) vs 2024 was up 1%. Non-fed kill four-week average week ending March 29 (latest) was down 8%. April and May should see fed kills steady with last year.  Packer negotiated cash and dressed inventories are very light. Last week was a holiday week but this level of inventory is still short.  Packers are more comfortable with contracts than last year, he says.

JBS LISTING: Global meat giant JBS S.A. gets closer to its goal of achieving dual stock market listing. It filed an F-4 form on April 11 with the Securities and Exchange Commission, in which JBS laid out a tentative schedule for listing shares on the New York Stock Exchange. JBS plans to hold a board meeting on April 22, where members will vote to call a general shareholder meeting to approve the company’s dual listing plan. The tentative date for the shareholder meeting is May 23.

COF TOTAL REMAINS BELOW LAST YEAR

THE number of cattle on feed on April 1 remained below a yar ago even though March placements were 5.1% higher than last year. Last Thursday’s monthly Cattle on Feed (COF) report showed the April 1 COF total of 11.638M head was 1.6% or 188,000 head lower than a year ago. March placements totaled 1.841M head while March marketings totaled 1.725M head, up 1.1% on last year. Analysts’ average forecasts had the COF total at 98.3% of a year ago, placements at 104.2% and marketings at 100.6%.  The April 1 COF total included 7.26M steers and steer calves, down slightly from the previous year. This group accounted for 62% of the total inventory. Heifers and heifer calves accounted for 4.380M head, down 4% from 2024.

Six states had fewer cattle on feed April 1 than last year. They are Arizona, down 11%, California, down 6%, Idaho, down 1%, Kansas, down 2%, South Dakota, down 4%, and Texas, down 6%. Texas had the most cattle on feed with 2.670M head, with its total down 170,000 head from a year ago. Nebraska was second with 2.600M head, up 60,000 head, and Kansas was third with 2.340M head, down 60,000 head.

Three states placed fewer cattle than last year. They were California, down 17%, Iowa, down 1%, and Oklahoma, down 2%. Five states marketed more cattle in March than last year. They were California, up 18%, Kansas, up 3%, Nebraska, up 3%, Oklahoma, up 10%, and South Dakota, up 3%

Regarding placement weights, all categories saw year-on-year increases in placements. The under 600 lb category saw 5000 more cattle placed than last year (335,000 head). The 600-699 lb category saw 25,000 more cattle placed (285,000 head). The 700-799 lb category saw 10,000 more placed (475,000 head). The 800-899 lb category saw 39,000 more placed (506,000 head). The 900-999 lb category saw 5000 more cattle placed (175,000 head) and the 1000 lbs plus category saw 5000 more placed (65,000 head).

SENATORS DECRY OFFICE CLOSURES

THREE U.S. Senators decry plans by the Department of Justice (DOJ) to close two large field offices. Senate Judiciary Committee Chairman Chuck Grassley (R-Iowa), Ranking Member Dick Durbin (D-Ill.) and Chairman of the Judiciary Subcommittee on Antitrust Mike Lee (R-Utah) on April 11 wrote to Deputy Attorney Todd Blanche with their concerns of the Antitrust Division’s field offices closings. The DOJ on March 25 said it proposed eliminating the field offices in Chicago and San Francisco to cut costs and secure savings for American taxpayers.

“We strongly urge you to reconsider the department’s plans to shut down these critical field offices,” the lawmakers wrote. “We should be ramping up our enforcement operations across America, not scaling them back. At a time when Americans are deeply concerned about food prices and the influence of Big Tech, DOJ must root out any anticompetitive behavior that drives up prices, decreases quality or stifles innovation. Maintaining these field offices will further that objective.”

The senators argued that the Chicago field office is critical in enforcing antitrust laws in the agricultural sector, serving as the main antitrust enforcement team in the Midwest. The office helped spearhead the prosecution of Archer Daniels Midland for price-fixing of animal feed additives. The investigation culminated in the defendant pleading guilty and agreeing to pay the largest antitrust fine ever imposed at the time, the senators said.

Meanwhile, the San Francisco field office focuses on civil enforcement, including technology and media industries, as well as criminal enforcement, prosecuting violations including bid-rigging and price-fixing, wrote the senators. Now more than ever, antitrust enforcement is needed in the agricultural and technology sectors.

Industries like meatpacking, fertilizers and seeds are consolidating at an alarming rate, wrote the senators. And Americans are struggling to afford their groceries. Additionally, the Antitrust Division has ongoing investigations into, and litigation against, large technology platforms, they wrote.

AUSTRALIA WORRIES ABOUT TARIFF

AUSTRALIAN beef exports in March held up remarkably well during March despite serious logistical challenges caused by Cyclone Alfred. But beef exporters are now concerned that the 10% tariff imposed by the U.S. on Australian beef will impact exports to the U.S. Total export shipments to all markets in March reached 112,423 metric tons (mt), only 5000 mt less than February and 6000 mt higher than March last year. The Port of Brisbane, by far the largest loading port for Australian beef exports, was closed for a week to March 10 because of the cyclone. But stevedores evidently caught up quickly with the backlog once the facility re-opened, says Beef Central’s Jon Condon.

Another surprise in March export activity was the relatively small impact seen on trade into the U.S, says Condon. Anecdotally, Australian export meat traders were reporting lack of appetite among U.S customers to purchase beef during the back half of March because of uncertainty surrounding the size of U.S. tariffs on Australian and other imported beef consignments to the U.S. after April 2. As it turned out, Australia’s March shipments to the U.S. remained high at 32,300 mt. That was only 2800 mt or 8% lower than February. Forward purchasing may have been a factor. Last month was more than 5700 mt or 21% higher than exports to the U.S. in March last year.

The big question now is whether April trade patterns will reflect the new 10% tariff on beef exports to the U.S., or whether more export product finds its way into markets like China, Japan and Korea as a result, says Condon. Major export competitor Brazil now faces an even larger U.S. tariff burden, with tariffs for the remainder of the year into the U.S. of 36.5% (26.5% out-of-quota tariff plus the new 10% retaliatory tariff). Condon asks several questions that he says this month’s shipments in the new tariff era will provide answers to. Will the U.S. appetite for Australian beef decline with the extra 10% tariff burden? Will other customer countries be more competitive for Australian beef? Does Australia pick up trade into the U.S. at Brazil’s expense, given the tariff difference? Will China’s new 34% tariff imposed on U.S. beef imports have a bearing on trade out of Australia?

Brazil Bets On Having Advantages

Meanwhile, the Wall Street Journal says Brazil is betting it has some distinct advantages in the unfolding global trade war. Chinese buyers are already stockpiling Brazilian soybeans as Beijing retaliates against President Trump’s tariffs with levies on U.S. agricultural producers. Brazilian suppliers of everything from cotton to chicken are banking on higher Chinese demand. The commodities-heavy Brazilian benchmark stock index is up 9% this year. In Trump’s first term when he imposed new tariffs on Chinese imports into the U.S., China bought more soybeans, grain and beef from Latin America in retaliation against U.S. trade measures. U.S. farmers lost almost $26 billion in agricultural exports in 2018 and 2019, according to USDA, says the WSJ. 

Another recent WSJ story said that in two months, the Trump administration has injected uncertainty into agriculture, an industry already struggling with low prices, high expenses and unpredictable and at times destructive weather. Now, farmers, who are traditionally a key block of support for Trump, are also contending with a host of other challenges. USDA and foreign-aid funding is frozen or in limbo. Deportations are expected to squeeze an already tight agricultural labor market. Tariffs are being aimed at the industry’s main trading partners: Canada, Mexico and China. When President Trump announced new tariffs on April 2, White House press secretary Karoline Leavitt said there would be no exemptions for farmers. “It’s hitting us on all fronts,” said Caleb Ragland, president of the American Soybean Assn and a soy farmer in Magnolia, Ky. “You’re talking about the potential of a flat-out crisis in rural America and the farm economy.”

Meanwhile, just over half of farmers, 54%, said they don’t support Trump’s use of tariffs as a negotiating tool. That’s according to a poll of nearly 3000 farmers conducted in March by AgWeb, an agricultural news website. Farmers accustomed to dealing with uncertainty from the weather and the markets said the federal government, which spends tens of billions of dollars to support them each year, is usually a force helping them offset that instability. Even before Trump took office, weaker prices and higher costs were such a drag that Congress approved $10 billion in new aid and USDA began distributing it earlier in March, said AgWeb.

TWO NEW PLANTS ARE SET TO OPEN

TWO brand new beef processing plants are close to opening. The plants have cost a combined $1.2 billion and will have a combined processing capacity of just under 3000 head per day. American Foods Group, Green Bay, Wis., says its greenfield beef harvest facility, America’s Heartland Packing, is in the final stages of construction. The $800M state-of-the-art mixed cattle facility based in Wright City, Mo., will begin operations this month. The plant will have the capacity to process 2400 head of cattle per day once fully operational. It is reportedly doing some slaughtering already and is going to harvest mostly cows.

Sustainable Beef LLC meanwhile confirms the completion of its $400M beef processing plant in North Platte, Neb. To mark the occasion, 1200 people gathered March 24 for a ribbon cutting ceremony at the plant. The 560,000 square foot facility broke ground in October 2022. Sustainable Beef plans to be fully operational by this summer, with a processing capacity of approximately 1500 head per day and 850 employees. Funding for the project was supported by $20M of Nebraska’s American Rescue Act funds and through an equity partnership with Walmart. Walmart will sell beef from the North Platte facility to consumers nationwide once the plant begins operating. As part of the equity investment, the retailer will have representation on Sustainable Beef’s board of directors.

This is Nebraska’s ranchers coming together to work together to create this facility to be able to get better prices for their cattle, said Nebraska Senator Pete Ricketts in an interview during the event. That’s where you have founders like Rusty Kemp that worked hard to pull together a group of investors and find the right people to invest in the plant that is going to be so much for the state and for the community of North Platte, he said. Walmart is thrilled to work with Sustainable Beef and help create more capacity for the beef industry and help ensure more long-term sustainable growth for cattle ranchers, for family farms and for Walmart, said Tyler Lehr, senior vice president at Walmart, at the ribbon cutting ceremony.

JBS Invests In Vietnam

Meanwhile, JBS S.A. is investing $100M to build two new plants in Vietnam to strengthen its presence in the region and in the global market. The plants will produce beef, pork and poultry, using raw materials mainly imported from Brazil that will supply the Vietnamese market and other Southeast Asian countries. The new factories in Vietnam will not only be an expansion of production capacity but an investment with purpose, says Renato Costa, president of Friboi, a JBS subsidiary. That purpose is to generate value for the local economy and create qualified jobs, thus contributing to food security throughout Southeast Asia. JBS is investing in the future, with a focus on innovation, sustainability and development, he says.

The first phase of the project will be the construction of a logistics center with storage capacity, covering pre-processing, cutting and packaging operations, sys JBS. The second phase will consist of a facility in southern Vietnam with a similar infrastructure, including a new logistics center and processing plant. JBS entered a Memorandum of Understanding (MOU) with the Vietnamese government on March 29 to proceed with the project. In the MOU, the agreement estimated that the second phase of construction will take place approximately two years after the first facility begins operations.

The partnership between JBS, the Vietnamese government and JBS’s local partners represents an essential strategic step for JBS’s geographic diversification, says Costa. This move not only strengthens JBS’s ability to serve the local market but also expands its global presence, creating a robust and sustainable production chain that positions JBS even more competitively on the international stage. JBS plans to generate 500 new jobs in the region through the two plants, which will boost the country’s productive sector through the promotion of technical training and technology transfer programs for Vietnamese workers, says JBS.