BOXED beef cutout values, notably the Choice cutout, show welcome strength after under-performing in May. The comprehensive cutout (cuts, grinds and trim) the week before last increased $1.39 per cwt from the prior week to average $312.08 per cwt. This was the second highest average of the year and was up 0.1% from the same week last year. Daily Choice cutout values increased last week so the comprehensive cutout likely went higher as well. But values might not go much higher from now on as the best beef demand period of the year is quickly coming to an end, says Andrew Gottschalk, HedgersEdge.com. Father’s Day weekend (just ended) should provide the last big seasonal push by consumers for middle meats. July beef demand seasonally declines approximately 3.0% from June, he says.
The Choice cutout the week before last averaged $311.96 per cwt, up $2.20 per cwt from the week before. The Select cutout averaged $300.01 per cwt, up $0.84 per cwt. Of note that was spot market and formula sales again dominated the sales volume. They represented 28.3% and 55.6%, respectively. Forward sales represented 16.1% and export sales represented 10.3%. The weekly price of domestic lean manufacturing beef (90CL) set another new record by averaging $357.64 per cwt. It was up 26.9% on the same week last year and continues to carry a huge premium to the Choice cutout. The daily Choice cutout the first four days of last week increased by $1.56 per cwt to $318.31 per cwt but the Select cutout declined by $1.89 per cwt to $299.25 per cwt. The four-day volume was positive at 414 loads of cuts.
Cash Cattle Prices Remain Steady
Cash live cattle prices last week were fully steady with the week before, which meant prices were level for three weeks in a row. Prices the week before last basis USDA’s 5-area steer averaged $188.92 per cwt, down one cent from the prior week. Dressed prices averaged $300.71 per cwt, down ten cents. Trade was light last week through Wednesday. One surprise was that the only trade on Tuesday was of 1904 head selling in Nebraska at $190 per cwt live. Wednesday saw a smattering of sales at $188-190 per cwt in Iowa-Minnesota or at $303 per cwt dressed, and at $185-186 per cwt live down south. Texas reported the most cattle sold but its total was only 1423 head. Thursday saw a more active trade across the region, with cattle selling up north at $190-195 per cwt live or at $301-305 per cwt dressed. Trade down south was at $185-186 per cwt live.
Carcass weights meanwhile remain far above last year’s levels. Steer weights in the week ended June 1 averaged 924 lbs, up 4 lbs from the prior week and up 37 lbs from the same week last year (the same as the week before). Heifer weights averaged 842 lbs, down 4 lbs but up 26 lbs, respectively. Overall weights averaged 851 lbs, flat with the prior week but up 34 lbs from last year. This was the equivalent of adding 22,425 head to that week’s holiday-shortened slaughter total of 538,910 head.
CARGILL WORKERS TAKE STRIKE VOTE: A secondgroup of Cargill workers in Canada vote to strike at Cargill’s case-ready plant in Calgary, Alta, if the two sides do not reach an agreement. The United Food and Commercial Workers Union (UFCW) Local 401 said it saw a 100% vote in favor of striking at the facility. It has bargaining dates scheduled with the company but there is a very real possibility that workers will ultimately go on strike, it said. Cargill in response said the next bargaining sessions are June 20-21 and will be facilitated by a mediator. During May, 1000 workers at Cargill’s Guelph, Ont. beef processing plant who belong to UFCW Local 175 and 633 went on strike.
APRIL BEEF EXPORTS ROSE SLIGHTLY
U.S. beef exports in April rose slightly from a year ago and, like March exports, were the largest since June 2023. The volume totaled 111,580 metric tons (mt), while export value increased 5% to $898.7M, also the highest since last June. Through the first four months of 2024, beef export value was also up 5% year-over-year to $3.38 billion despite a 3% decline in volume (423,445 mt), says the U.S. Meat Export Federation (USMEF). April exports of U.S. pork reached their highest volume and value since May 2021. Fueled by a record performance in leading market Mexico, pork exports totaled 277,910 mt in April, up 14% from a year ago and the fifth largest on record. Export value climbed 18% to $778.8M, the third highest on record. For January through April, exports increased 8% to 1.04M mt, valued at $2.89 billion, up 10% from last year’s record pace.
While Mexico was definitely the pacesetter in a tremendous month for pork exports, it was only part of the story, says USMEF President and CEO Dan Halstrom. Demand continued to build in South Korea, Central America, Colombia, Australia and the ASEAN region, and USMEF saw encouraging growth in Japan. It was also great to see export value per head above the $70 mark for the second consecutive month, he says. Pork exports to Mexico in April climbed 34% from a year ago to a record 107,594 mt, as Mexico’s buying surged following the Easter holiday, says USMEF. Export value soared 61% to $240.5M, also a record. For January through April, exports to Mexico achieved double-digit growth over last year’s record pace, surging 11% in volume to 388,855 mt and 18% in value to $815.6M. Mexico’s domestic pork prices are strong and poultry and pork production have been impacted by productivity challenges, limiting availability of domestic product at a time of strong demand and economic growth, says USMEF.
South Korea continued to show strong demand for U.S. pork in April, with exports reaching 26,286 mt, up 23% from a year ago and the fourth largest on record, says USMEF. Export value totaled $88.9M, up 33% and the third largest on record. These results pushed January-April exports to Korea 44% above last year’s pace at 95,738 mt, with value soaring 51% to $316.5M. As USMEF noted last month, Korea has surpassed Canada as the fourth largest export destination for U.S. pork, trailing only Mexico, China and Japan. The U.S. share of Korea’s pork imports has increased from 29.5% last year to 37% in 2024, it says.
Pork To Japan Hits Two-Year High
April pork exports to Japan were the largest in two years at 34,569 mt, up 3% from a year ago, while value increased 5% to $138.7M, says USMEF. Through April, exports to Japan remained slightly below last year’s pace at 123,042 mt, with value steady at $496.4M. While the persistently weak yen continues to weigh on Japan’s demand for imported meat, domestic pork prices jumped in May, up 11% from last year. Inventories of imported pork at the end of April were down almost 15% from a year ago. Japanese customers have also been looking to U.S. pork to offset limited availability from the European Union, says USMEF.
Mexico also continued to shine on the beef side, along with the Caribbean, Central America and the Middle East, says Halstrom. These markets are benefiting from foodservice demand and currency advantages compared to the main Asian markets. The headwinds in Asia remain formidable but the tourism boom in Japan has helped solidify demand. Exports have stabilized this year despite the continued weakness in the yen and strong competition from Australia. Robust retail and e-commerce demand has helped U.S. chilled beef continue to dominate in Korea and Taiwan. Through April, U.S. beef accounted for 69% of Korea’s chilled imports and 72% for Taiwan, says USMEF.
Bolstered by strong foodservice and retail demand, April beef exports to Mexico climbed 46% from a year ago to 21,031 mt, says USMEF. Export value increased 48% to $120.8M, the highest since December 2020 and the seventh highest on record. Coming off a strong rebound in 2023, January-April exports to Mexico increased 19% to 77,530 mt, while value jumped 24% to $454.3M. Beef variety meat exports increased 23% from a year ago in volume (40,490 mt) and 16% in value ($108.7M). With a severe drought and surging corn imports, Mexico is exporting more feeder cattle but less beef to the U.S and is importing more U.S. beef, says USMEF.
Exports To Korea Were 20% Lower
Beef exports to leading value market Korea trended lower in April, down 20% to 19,929 mt, while export value fell 8% to $186.M, says USMEF. Through the first four months of the year, shipments to Korea declined 11% in volume to 78,897 mt but still climbed 5% in value to $740.1M. April beef exports to Taiwan fell 4% from a year ago to 5402 mt but volume was the highest since August. April export value achieved a slight increase at $58.8M. January-April exports to Taiwan fell 14% to 17,514 mt and were down 4% in value to $191.5M.
April beef exports to China/Hong Kong were down 12% from a year ago at 18,665 mt and value fell 9% to $170M, says USMEF. But exports to China (16,526 mt) were the largest since May 2023. Through April, exports to China/Hong Kong declined 9% in volume (69,787 mt) and 4% in value ($639.8M). Chinese demand for U.S. beef continues on a separate track from that of the massive volumes of grass-fed beef from South America, says USMEF. Although export prices for Brazilian beef have recently fallen by one third and volumes have soared, China is buying more consistent volumes of U.S. beef, with vast premiums compared to prices paid for competitors’ products, it says.
April beef exports to Japan increased 6% from a year ago in volume (21,028 mt) and 11% in value ($162.9M), says USMEF. For January through April, shipments to Japan were down 6% from a year ago at 83,720 mt but value achieved a 2% increase at $632.7M. Japan remains the leading value destination for beef variety meat exports, mainly purchasing tongues and skirts. These exports increased 2% through April to 15,042 mt, while value climbed 19% to $162.3M. Imported beef inventories at the end of April were down 16% from a year ago and Japan’s purchases of U.S. beef are expected to remain relatively steady, as has been the case through the first four months of the year. The weak yen is a significant challenge, especially when combined with Japan’s high import duties, but there is still demand for grain-fed U.S. beef at retail and foodservice, says USMEF.
Exports Shine To Caribbean
Beef exports to the Caribbean continued to shine in April, reaching 2891 mt, up 47% from a year ago and the fourth largest on record, says USMEF. Export value increased 17% to just under $23M. January-April exports to the region totaled 11,928 mt, up 24% from a year ago, valued at $99.3M (up 15%). Beef variety meat exports increased 25% through April to 2066 mt, valued at $4.8M (up 22%), led by outstanding growth in Trinidad and Tobago and a continued rebound in shipments to Jamaica, the region’s top destination for beef variety meats. Total April exports of beef variety meat jumped 14% from a year ago to 25,242 mt, while value increased 9% to $97.6M. Through April, variety meat exports increased 4% to 94,661 mt, valued at $367.7M (up 5%). In addition to the gains achieved in Mexico, the Caribbean and Japan, exports also rebounded from last year’s low levels to Egypt and increased to Peru, Gabon, Chile, Honduras and Morocco, says USMEF.
April beef exports to Canada totaled 8247 mt, up just 1% from a year ago, but value climbed 18% to $77.3M, says USMEF. January-April exports followed a similar trend, increasing 17% in value to $271.6M despite a slight decline in volume (30,327 mt, down 1%). Sharply higher beef muscle cut exports to the United Arab Emirates, Kuwait and Qatar, along with larger variety meat shipments to Egypt, fueled a strong April for U.S. beef in the Middle East. April exports increased 26% to 4882 mt, valued at $25M (up 32%). January-April exports climbed 37% from a year ago to 19,444 mt, valued at $86.4M (up 38%). Led by growth in Panama and Honduras, April beef exports to Central America increased 20% from a year ago to 1784 mt, while value was up 3% to $11.9M. January-April exports to the region increased 8% in volume (7492 mt) and 12% in value ($54.4M) as export volume continued to increase to top market Guatemala, says USMEF.
April beef export value equated to $416.87 per head of fed slaughter, down 6% from a year ago, says USMEF. But the January-April average was up 5% to $410.25. Exports accounted for 14.1% of total April beef production and 11.7% for muscle cuts, down from the high ratios reported a year ago (15.7% and 13.5%, respectively). For January through April, exports accounted for 13.9% of total production and 11.6% of muscle cuts, each down about half a percentage point from a year ago, says USMEF.
CATTLE ON FEED FORECASTS
David Anderson, Texas A&M University: COF 98.3%, placed 95.0%, marketed 100.4%; Tyler Cozzens, Livestock Marketing Information Center: COF 98.5%, placed 96.8%, marketed 100.4%; Andrew Gottschalk, HedgersEdge.com: COF 99.4%, placed 100.9%, marketed 99.8%; Rich Nelson, Allendale Inc: COF 99.4%, placed 99.1%, marketed 99.3%; Lori Porter, Allegiant Commodity Group: COF 98.7%, placed 97.7%, marketed 100.4%: Mike Sands, MBS Research: COF 99%, placed 100%, marketed 100%
COF TOTAL DECLINES MORE SHARPLY
THE monthly Cattle on Feed (COF) total has fallen much more sharply so far this year compared to the five-year average for the period. This Friday’s COF report is expected to show a June 1 total of around 11.5M head, which would be down 0.6% from the prior year. This would be 195,000 head below the previous five-year average and 377,000 head below the previous June peak made in 2022, says Andrew Gottschalk, HedgersEdge.com. The decrease in the COF total from January 1 to June 1 was 406,000 head, versus a decrease of 156,000 head for the previous five-year average, he says. The report is expected to show that May placements and marketings were flat with last year.
Front-end fed cattle supplies on June 1 (COF 150 days or more) were estimated at 2.757M head or 9.5% above the previous year, says Gottschalk. Within this category, more numbers are at the extreme front-end of marketable supplies, a situation confirmed by carcass weight data. Steer and heifer carcass weights for the week ended June 1 were 37 lbs and 26 lbs, respectively, above year ago levels (as noted in CBW’s first story). Carcass weights have failed to decline, as would normally be consistent with their seasonal trend, for 16 consecutive weeks, says Gottschalk. This is adding approximately 4% to weekly beef production.
Placements may post their first year-on-year advance since February, says Gottschalk But they will likely resume their decline, reflecting the reduction in the feeder cattle and calf supply outside feedyards. This supply was estimated to be down about 750,000 head on June 1 versus last year, with the year-on-year projected decline for this year’s calf crop of 675,000 head still ahead. This should lay the foundation for an improved fed cattle supply situation later this year, provided marketings projections are realized, he says.
Wheat Cattle Bolstered Placements
Wheat pasture graze-out cattle likely bolstered feedlot placements during May, says Mike Sands, MBS Research. They were estimated about 325,000 head larger than a month earlier and likely will be the largest placement month until late summer-early fall. Besides the active placement pace, placement weights likely were skewed toward the heavy end of the weight spectrum. Some of the cattle moving through southern auctions were too heavy to be included in the feeder index calculation. Similar to earlier in the spring, lighter-weight cattle likely were diverted to summer grass rather than to feedyards. As a result, lighter-weight placements may have been smaller than last year, while heavier-weight placements were larger. At any rate, placements against the early fall period do not suggest a significant shortfall in prospective fed cattle supplies, he says.
Although the marketing-slaughter pace slowed after mid-month, total May marketings likely exceeded last year’s total but only fractionally, says Sands. Still, the marketing volume fell far short of being sufficient to reduce carcass weights. Rather, weights remained historically heavy and may pose a merchandising challenge in the weeks ahead, he says. Feedlot inventories on June 1 were estimated near 99% of last year, down about 65,000 head from a month earlier and about 100,000 head below last year. Inventories of cattle on feed over 150 days remain historically large but were seasonally much smaller than a month earlier. Feedlot inventories likely will continue to erode toward summer lows, falling below 11M head, and will be around 700,000 head smaller than the June 1 count, he says.