FEBRUARY historically is the weakest beef demand month of the year, so it is no surprise that boxed beef cutout values continued to slide. They deteriorated last week despite a slaughter total that was expected to be no more than 565,00 head. This followed a total the week before of only 584,000 head. Monday hinted at a low kill total when USDA revised the estimated total of 100,000 head down to 95,000 head. The kill by Thursday was an estimated 454,000 head, down 22,000 head from the four days of the prior week. The reductions in large part reflected extremely negative margins for fed beef processors. Losses last Thursday were $216 per head, according to HedgersEdge.com. Margins might not improve until mid-March unless cutout values stage a big recovery, say analysts.
The national comprehensive cutout (cuts, grinds and trim) the week before last averaged $329.68 per cwt, down $0.83 per cwt from the prior week. This however did not reflect the sharp decline in the daily Choice and Select cutouts. They continued to slide last week, with the Choice cutout declining $4.47 per cwt in the first four days and the Select cutout declining $3.06 per cwt. The week before last saw spot market sales represent 28.4% of the total volume of 6661 loads. Formula sales represented 56.0%, forward sales represented 15.6% and export sales represented 12.1%.
Cash live cattle prices meanwhile moved sharply lower in a light trade the first four days. Prices averaged $202-203 per cwt live or $320-321 per cwt dressed. Prices the week before last averaged $207.05 per cwt live or $326.98 per cwt dressed. These were down $2.25 per cwt and $2.09 per cwt, respectively, from the prior week. Carcass weights increased in the latest reported week ended February 1 and remained far above year ago levels. Steer weights averaged 952 pounds, up 4 lbs on the week before and up 43 lbs on the same week last year. Heifer weights averaged 867 lbs, up 2 lbs from the week before and up 40 lbs on the same week last year. Overall weights averaged 875 lbs, up 3 lbs and up 44 lbs, respectively. This was the equivalent of adding 31,865 head to that week’s slaughter total of 601,785 head, according to HedgersEdge.com.
SENATORS WANT TO REINSTATE MCOOL
A BIPARTISAN group of U.S. senators reintroduce the American Beef Labeling Act that looks to reinstate mandatory country of origin labeling (MCOOL) for beef. The group includes Senate Majority Leader John Thune (R-SD) and Senator Cory Booker (D-NJ). South Dakota ranchers, who work tirelessly to produce some of the highest quality beef in the world, deserve a fair labeling system that provides consumers with basic information on the origin of their beef, said Thune. In order for legislation to work, it needs assistance from the US Trade Representative (USTR) and the Secretary of Agriculture to determine a means of reinstating MCOOL for beef while officials work within World Trade Organization compliance during the first year of enactment. Thune and Booker’s announcement said the USTR would have six months to develop a reinstatement plan, followed by a six-month window for implementation. If USTR does not reinstate MCOOL for beef within that first year, it will automatically be reinstated for beef only. Some producer organizations praised the reintroduction but a meat industry group opposed it. The Meat Institute and its members support voluntary COOL, said the Institute’s Sarah Little. Previous attempts to mandate COOL were found to be trade distorting and to have violated the U.S.’s World Trade Organization obligations. USDA studies have shown mandatory COOL drives up prices for consumers, with no identifiable benefits, and adversely affects producers, she said.
CATTLE ON FEED FORECASTS
David Anderson, Texas A&M University: COF 98.8%, placed 100.0%, marketed 102.5%; Kevin Coburn, S&P Global Commodity Insights: COF 98.6%, placed 98.3%, marketed 102.3%; Tyler Cozzens, Livestock Marketing Information Center: COF 99.2%, placed 101.0%, marketed 102.1%; Andrew Gottschalk, HedgersEdge.com: COF 99.9%, placed 106.1%, marketed 101.6%; Rich Nelson, Allendale Inc: COF 99.2%, placed 103.4%, marketed 102.4%; Lori Porter, Allegiant Commodity Group: COF 99.6%, placed 104.5%, marketed 102.2%; Mike Sands, MBS Research: COF 100%, placed 104%, marketed 102%
COF TOTAL IS CLOSE TO LAST YEAR
THE February 1 Cattle on Feed (total) was close to last year’s total for that date, as this Friday’s COF report will show. The average estimate from CBW’s seven analysts was 99.6% of a year ago or 138,000 below the previous five-year average. Feedlots placed 2.5% more cattle on feed in January than a year ago, with analysts’ forecasts varying from 98.3% to 106.1%. Feedlots marketed 2.2% more cattle, according to forecasts. Front-end supplies (COF 150 days or more) on February 1 were estimated to be 2.363M head, says Andrew Gottschalk, HedgersEdge.com. This was 0.8% below the previous year but 10% above the previous five-year average, an increase of 214,000 head. Seasonally, total cattle on feed should peak this month and then trend lower. The previous five-year average decline from February to August is 798,000 head, he says.
Carcass weight data continues to confirm that this category of cattle remains front-end loaded, says Gottschalk. With the cost of gain substantially below the selling price of fed cattle, carcass weights should remain substantially above prior year levels. While carcass weights seasonally should decline into the mid-May to June timeframe, carcass weights nonetheless project to remain at record high levels for each reporting week. The increase above the prior year by carcass weights is likely to also remain record wide, he says.
Although January feedlot placements likely exceeded last year, the year-over-year comparison is being made against last year’s small volume, says Mike Sands MBS Research. Last year was handicapped by extraordinarily adverse cold, wet winter feeding conditions. As a result, January 2024 placements dropped 8% below a year earlier and were the smallest since 2016. Even a modest 4% increase from last year’s small placements is still a historically small number. It would be the second smallest since 2016 and about 3% below the 2015-19 average, he says.
Underpinned by shrinking calf crops and declining feeder cattle supplies, feeder cattle prices surged to record highs in January, says Sands. This outstripped the advance in fed cattle prices and boosted projected breakeven selling prices this summer to record highs. Besides the smaller calf crops of recent years, feeder cattle supplies were also curtailed by the continuing closure of the Mexican border dating back to late November, which likely deprived the industry of 250-300,000 head before reopening to a limited volume in early February. Along with the smaller calf crop and reduced feeder imports, fewer cattle on wheat and small grains pastures likely will continue to limit feedlot placements through mid-winter, he says.
January marketings are projected near 102% of last year, bolstered by a larger carryover from late 2024, says Sands. The marketing pace out of feedyards may have been displaced by larger fed cattle imports from Canada during January. Still, the elevated marketings were generally consistent with summer placements and a slightly smaller feedlot inventory at the start of the year. The strong basis and record heavy carcass weights, along with rising fed cattle prices and favorable feeding margins, may have spurred some selling interest from cattle feeders, with fed cattle prices posting record highs at the end of the month. Projected January fed cattle marketings are slightly larger than net feedlot placements, paring the projected February 1 COF total about 100,000 head below a month earlier and slightly below the same month last year. But given larger heavier-weight feedlot placements during the last half of 2024 and only a small decline in feedlot inventories to begin the year, little if any significant decline in fed cattle supplies is expected before mid-year. Amid those generally ample fed cattle supplies, fed cattle carcass weights likely will remain above last year, he says.
PORK EXPORTS SET NEW RECORDS
EXPORTS of U.S. pork eclipsed previous highs in both volume and value in 2024, while beef export value climbed 5% from 2023 despite a slight decrease in volume, as unit export values were record high. Lamb exports trended higher than a year ago in both volume and value. December pork exports totaled 267,132 metric tons (mt), slightly below last year’s large volume, while value increased 1% to $771.8M, says the U.S Meat Export Federation (USMEF). These results pushed the full year volume to 3.03M mt, up 4% from a year ago, which topped the previous high of 2.98M mt reached in 2020. Export value totaled $8.63 billion, up 6% from the previous record set in 2023, says USMEF.
Market diversification has been a key goal of the U.S. pork industry for many years, and the resulting broad-based growth has never been more evident than in 2024, says USMEF President and CEO Dan Halstrom. While exports to Mexico were record-large for the fourth consecutive year, U.S. pork’s footprint expanded greatly in the Western Hemisphere and made gains in the Asia-Pacific region, which bolstered global export totals and pushed export value per head slaughtered to a new high of more than $66. In addition to Mexico, pork exports achieved annual volume and value records in Central America, Colombia, New Zealand, Malaysia and several Caribbean markets. Value records were reached in South Korea, Australia and the Dominican Republic.
Pork exports to Mexico totaled 1.15M mt in 2024, up 5% from the enormous total exported in 2023, says USMEF. Export value climbed 10% in 2024 to $2.58 billion, more than doubling since 2020. These results were achieved even as more competitors target Mexico as a growth market. Mexico eliminated duties on all imports of red meat and poultry in 2022 in an effort to contain food price inflation, and this policy remains in place. Brazil is the latest beneficiary, exporting about 43,000 mt of pork to Mexico in 2024, which equated to 3% of Mexico’s imported pork market. Brazil now trails only the U.S. and Canada as Mexico’s third largest supplier. Heightened competition underscores the importance of duty-free access to Mexico, which also imports pork from Chile and some European suppliers, says USMEF.
Exports To Colombia Soar
Colombia’s demand for U.S. pork reached new heights in 2024, with exports soaring 26% to 142,035 mt, far exceeding the previous record of 106,456 mt reached in 2021, says USMEF. Export value jumped 32% to just under $360M, shattering the previous 2023 high of $272M. Shipments to Colombia were more than six times larger than in 2012, the year the U.S.-Colombia Trade Promotion Agreement took effect, as U.S. pork has penetrated the retail, foodservice and further processing sectors, with further room for growth, says USMEF.
Region-wide growth also pushed pork exports to Central America to an annual record in 2024, with shipments climbing 21% to 166,086 mt, valued at $522.9M (up 29%), says USMEF. Exports to the region were nearly 30,000 mt above the previous year’s record and value was more than $117M above the previous record. Exports to the region increased by 70% from 2019 to 2024, while export value more than doubled as U.S. pork continues to make impressive strides in the retail and foodservice sectors. Access to the region is fully duty-free except for Panama, which is inconsistent with its trade agreement commitments with the U.S. and other suppliers, says USMEF.
December beef exports totaled 110,171 mt, up 1.5% from a year ago, while value climbed 4% to $897.6M, the highest since July, says USMEF. For the full year, beef exports were 1.29M mt, down 0.5% year-over-year, while value increased 5% to $10.45 billion. Considering the formidable headwinds in the large Asian markets, especially in the first half of the year, and the challenges on the supply side, beef exports exceeded expectations in 2024, says Halstrom. The economic climate in Asia has shown modest improvement and demand for U.S. beef strengthened in other regions, including double-digit growth in Mexico. The U.S. beef industry continues to export a steady percentage of production at higher prices, as evidenced by export value per head of fed slaughter reaching $415. U.S. beef always sells at a premium internationally and the strong U.S. dollar contributed to further increases in pricing in local currencies, says Halstrom. More on exports on the next page.
Diversification Paid Dividends
Market diversification also paid dividends for beef exports, which achieved annual volume and value records in a number of emerging markets, says USMEF. These included the Dominican Republic, Guatemala, Honduras, Panama, the Leeward-Windward Islands, Netherlands Antilles, Turks and Caicos, Cuba, Guyana, Singapore, and Morocco. Value records were reached in the Bahamas, Bermuda, Qatar, Jordan and Bahrain.
Mexico’s demand for U.S. beef was outstanding in 2024, with exports increasing 10% year-over-year to 232,488 mt, valued at $1.35 billion, says USMEF. The value was up 13% and the highest since 2009. While a rapid start to the year was attributed in part to the strong peso, shipments held up well in the second half even as the peso weakened by about 20% versus the dollar. Brazil emerged as the second largest beef supplier to Mexico, surpassing Canada and Nicaragua, with shipments of 46,000 mt benefiting from duty-free access, as noted in the pork section. This again illustrates that it is imperative to maintain duty-free access for U.S. beef in Mexico and other markets covered by trade agreements, says USMEF.
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Beef exports to South Korea topped $2 billion for the fourth consecutive year, gaining 4% year-over-year to $2.22 billion, says USMEF. This was achieved despite a 6% drop in volume to 232,481 mt. Political turmoil in Korea, triggered by the impeachment and arrest of embattled President Yoon Suk Yeol following his declaration of martial law in early December, has not slowed consumer demand for beef. But the situation has further weakened Korea’s currency and dampened the economic outlook for the coming year. After a slow start to the year, beef exports to Taiwan came on strong in the second half to reach 62,503 mt, up 4% year-over-year, valued at $709.2M, up 13% and the second highest on record. The U.S. is the dominant supplier of chilled beef to Taiwan, holding 71% market share, says USMEF.
Japanese Demand Held Steady
Similar to pork, Japan’s demand for U.S. beef held fairly steady in 2024, says USMEF. Although export volume was down slightly from a year ago at 242,869 mt, value increased 3% to $1.87 billion. While Japan’s foodservice sector has benefited from record high tourist arrivals and strong year-end wage increases largely through bonuses, some segments like pub dining have yet to recover to pre-COVID sales levels, says USMEF.
Although beef exports to China/Hong Kong trended lower in 2024, shipments rallied late in the year to just under $2 billion in value (down 2% from 2023), says USMEF. Export volume fell 6% to 215,603 mt. As USMEF previously reported, China’s Ministry of Commerce recently opened a safeguard investigation on the impact of rising beef imports on domestic producers, with an investigation period of 2019 through June 2024. China’s overall beef imports set another record in 2024, mainly due to growth from South America.
Led by Egypt’s rebounding demand for beef variety meat and an increase in muscle cut shipments to Kuwait and Qatar, beef exports to the Middle East rebounded to 52,337 mt, up 18% year-over-year, says USMEF. Export value increased 12% to $230M and export value was record large to Qatar, Jordan and Bahrain. Fourth quarter exports were hampered by an impasse with the United Arab Emirates (UAE) over halal certification. While this obstacle has been temporarily resolved, regaining full access to the UAE remains a top priority for the U.S. industry, says USMEF.
Record shipments to the Dominican Republic, Cuba, the Leeward-Windward Islands, the Netherlands Antilles and Turks and Caicos pushed beef exports to the Caribbean up 18% from a year ago to a record 32,349 mt, says USMEF. Value increased 11% to $282.4M, also the highest on record. Beef export value per head of fed slaughtered equated to $415.08 in 2024, up 5% from 2023. Exports accounted for just under 14% of total production and 11.5% of muscle cuts, each ratio down slightly from a year ago, says USMEF.