CARCASS weights took a pummeling in January due to brutal winter storms across much of Cattle Feeding Country. But the way they have since advanced has shocked market analysts. It means that while total slaughter for the year to March 9 was down 5.6% on the same period last year, total beef production was down 4.5%. Carcass weights trends have advanced contra-seasonally, says Andrew Gottschalk, HedgersEdge.com. Steer weights for the week ended March 2 were 20 lbs above a year ago and heifer weights were 17 lbs above a year ago. Average carcass weights were 18 lbs above the prior year. It is imperative that marketing rates increase to limit any backlog of cattle supplies moving into the second quarter, he says.
Total slaughter the week before last was an estimated 583,000 head, down 16,000 head from the prior week and down 48,000 head from the same week a year ago. Last week’s slaughter was likely to be only 590,000 head The total harvest year to March 3 was already 349,000 head below a year ago. At this rate, the annual harvest this year would decline by 1.814 head from last year, says Gottschalk. His current estimate for the total harvest this year is 31.074M, down 1.662M head. Gottschalk notes that USDA upwardly revised its annual beef production estimate to 26.325 billion lbs, up 100M lbs from its prior forecast. This revised estimate is down only 638M lbs from last year. The latter production estimate is too high, unless widespread and persistent drought occurs this year throughout cattle country and causes significant herd liquidation, he says.
Cattle Prices Continue To Climb
Cash live cattle prices continue to climb despite reduced steer and heifer slaughter. The 5-area steer prices the week before last advanced for the third week in a row. They averaged $185.12 per cwt live or $293.39 per cwt dressed. These were up $1.82 per cwt live and $3.03 per cwt dressed from the prior week. The cash trade last week was slow to develop. A few cattle Tuesday traded up north at $186 per cwt live or $295 per cwt dressed. Just over 1000 head sold in Kansas at $185 per cwt live. Wednesday saw only 524 head reported sold in all regions. Trade turned more active up north Thursday, with prices at $187-190 live or $294-301 dressed.
Daily boxed beef values meanwhile increased last week after making solid gains the week before. That week saw the comprehensive cutout (cuts, grinds and trim) averaged $303.85 per cwt, up $3.19 per cwt on the prior week. Of note was that formula sales accounted for 60.2% of total sales, which was believed to be the highest ever percentage. Exports sales remained low at 9.6% of sales for the second week in a row. The Choice cutout the first four days last week advanced by $3.74 per cwt to $310.78 per cwt.
Meanwhile, Texas officials says the recent fires burnt more than 1.79M acres as of March 7, killed 7000 cattle and destroyed homes, barns, fences and other infrastructure. When the fire started, it moved slowly but by February 27 in the afternoon, the wind picked up and shifted directions. Electricity was lost, which caused a problem with pumping water needed to fight the fire. Texas A&M Forest Service investigators on March 7 said the fire was ignited by power lines belonging to utility provider Xcel Energy. The same day, the company released a statement. “Based on currently available information, Xcel Energy acknowledges that its equipment appears to have been involved in an ignition of the Smokehouse Creek fire.” Texas Agriculture Commissioner Sid Miller estimates that 3000 to 4000 miles of fences were destroyed by the wildfires, costing $10,000 per mile to replace. As many as 120 miles of power lines were burned and seven grain and seed dealers were also destroyed. That meant no electricity or water for livestock, says Miller.
CATTLE ON FEED FORECASTS
David Anderson, Texas A&M University: COF 100.9%, placed 108.0%, marketed 100.3.7%; Andrew Gottschalk, HedgersEdge.com: COF 100.5%, placed 105.9%, marketed 104.7%; Katelyn McCullock, Livestock Marketing Information Center: COF 101.1%, placed 108.8%, marketed 103.7%; Rich Nelson, Allendale Inc.: COF 101.3%, placed 106.8%, marketed 99.7%; Lori Porter, Allegiant Commodity Group: COF 100.8%, placed 107.2%, marketed 103.9%
COF TOTAL STAYS ABOVE LAST YEAR.
THE Cattle on Feed (COF) total for March 1 stayed just above year ago levels even though February marketings benefited from one more slaughter day than last year. This likely brought marketings just above a year ago after subtracting 4.5 percentage points for the extra day. February feedlot placements were likely 6-9% larger than a year ago. This was in part due to January weather moving placements into the following month, says Katelyn McCullock, Livestock Marketing Information Center. Auction data showed strong increases of over 30%. Feeder cattle imports into the U.S. were larger than last year when calculating numbers from Mexico and Canada. The placement rate looks large, she says But if one takes into account January declines and compare the total placements of January and February compared to last year’s two-month total, the numbers are even. This was with two more slaughter days in 2024 across those two months, she says.
Cattle on feed on March 1 are estimated to be 11.747M head, up 0.5% from the prior year, says Andrew Gottschalk, HedgersEdge.com. This is 148,000 head below the previous five-year average and 446,000 head below the previous March peak made in 2022. The decrease in total COF from January 1 to March 1 is 183,000 head, versus an increase of 20,000 head during this period for the previous five-year average. Front-end supplies on March 1 (cattle on feed 150-plus days) are estimated at 2.707M, 214,000 head or 8.6% above the prior year’s total, he says.
Adverse winter storms during January only delayed near-term the impact of this supply increase, says Gottschalk. This relief has not been sufficient to eliminate the ongoing build-up in front-end supplies. Carcass weights, which collapsed during January, have recovered and are now well above prior year levels. February marketings are estimated at 1.815M head, up 4.7 % from a year ago, given the benefit of an additional marketing day. With the help from this one extra day, February marketings just eclipsed the prior year’s levels. This is the first month since May 2023 (seven months ago) to post a year-on-year increase. The extended decline in monthly marketings is leading to a buildup in front-end supplies, he says.
BRAZIL PRODUCES RECORD PROTEIN
BRAZILIAN meat companies processed unprecedented volumes of chicken and hogs in2023 and recorded the second highest cattle slaughter in history. That is according to data released by the national census bureau. The fresh data from statistics agency IBGE confirms that the South American nation, which is the world’s biggest beef and chicken meat supplier and the fourth largest hog meat exporter, is well positioned to retain or expand its share of the global meat trade. IBGE said cattle slaughtering in Brazil, which commands about a fourth of the global beef trade, grew by almost 14% in 2023 from 2022 to 34.06M head. The country exported 2.01M metric tons of fresh beef last year, an all-time record, IBGE said. Only the U. S. produces more beef than Brazil, said a Reuters story. But low U.S. cattle inventories have hampered defied meat producers in recent quarters, including Brazil-headquartered JBS and Marfrig. Even as cattle slaughtering increased last year, Brazil still boasts one of the world’s largest cattle herds, with over 230M head, according to IBGE data.
WAGES LAWSUIT: Tyson Foods and JBS USA agree to pay a combined $127M to settle a U.S. lawsuit that accused the meat companies of conspiring to keep workers’ wages low. Under the terms of the agreement, JBS will pay $55M and Tyson $72.3M in compensation. The lawsuit, heard in Colorado, accused multiple meat companies and two consulting businesses of conspiring to artificially keep the wages of the employees low.
BEEF EXPORT VALUES RISE 9%
U.S. beef exports are showing an improvement at last, notably in value terms. January exports totaled 99,764 metric tons (mt), down 1% from a year ago. But export value climbed 9% to $763.8M as value trended higher year-over-year to South Korea, Japan, Mexico, Canada, Central America, the Caribbean and Hong Kong. But the star red meat export performer in January was pork. Although January exports were led by another powerful performance in leading market Mexico, U.S. pork continued to make gains in a wide range of Western Hemisphere and Asia-Pacific destinations, says the U.S. Meat Export Federation (USMEF). Pork exports in January totaled 251,424 mt, up 6% from a year ago, while export value also increased 6% to $682.1M. Lamb exports were also strong in January, posting the highest value in more than four years, says USMEF.
Mexico’s demand for U.S. pork is so spectacular that it tends to overshadow other great success stories, says USMEF President and CEO Dan Halstrom. It is especially gratifying to see other markets following the trail blazed by Mexico, as purchases expand beyond raw material for further processing to include center-of-the-plate cuts, including loins, which are gaining popularity at retail and foodservice. January saw strong gains for U.S. pork in Mexico, South Korea, Central and South America, and Australia. January pork exports to Mexico reached 102,181 mt, up 6% from a year ago and the second largest on record, trailing only December 2023. Export value increased 8% to $207.2M, the seventh largest on record, says USMEF.
After a very strong finish in 2023, January pork exports to Korea soared 53% from a year ago to 20,727 mt, says USMEF. Export value was up 51% to $67.6M. This follows a remarkable performance in December, when shipments reached nearly 24,000 mt, the highest since 2019. Despite a rising presence of Canadian, Mexican and Brazilian pork in Korea, U.S. pork continues to make gains as the U.S. industry retakes market share from the European Union. Despite lower shipments to leading market Honduras, January pork exports to Central America jumped 22% from a year ago to 11,846 mt, while value increased 29% to $35.7M. Exports climbed significantly year-over-year to Guatemala, El Salvador, Costa Rica, Panama and Nicaragua, says USMEF.
Pork Exports Surge To South America
Led by outstanding growth in Colombia, January pork exports to South America climbed 53% from a year ago to 11,464 mt, valued at $32.1M (up 62%), says USMEF. Exports to Colombia have rebounded strongly since October 2023 and have held above 10,000 mt for each of the last four months. Exports to Australia, which rebounded dramatically in 2023, continued to build momentum in January. Exports more than quadrupled from last January’s low volume, jumping 374% to 9059 mt. Export value increased 363% to $32.8M. U.S. pork has also retaken share from the EU in the Australian market, says USMEF. January pork shipments to Japan were the largest since August but were down slightly year-over-year in both volume (28,216, down 1%) and value ($114.8M, down 1%). U.S. pork faces intense competition from Canadian and Mexican chilled pork and from defrosted Spanish pork being sold at retail. The weak Japanese yen continues to cause customers to seek out the most affordable options, including Brazilian pork, says USMEF.
Exports of U.S. pork variety meat, which were record large in 2023, continued to perform well in January, says USMEF. Despite trending lower to leading destination China, variety meat shipments increased 7% from a year ago to 50,353 mt, valued at $109.3M (down 1%). Exports increased to Mexico, the Philippines, Canada, Central and South America, and Korea. Pork export value equated to $60.00 per head slaughtered in January, up 4% from a year ago. Exports accounted for 28.3% of total January pork production and 24.3% for muscle cuts.
While USMEF expects 2024 to be another challenging year in terms of beef supply availability, the upward trend in export value is a positive sign, says Halstrom. Inventories have been cleared and customers in Asia are reloading on U.S. beef. There is also more optimism in Asia’s foodservice sector, especially in Korea. Combined with the recent strength that USMEF has seen in the Western Hemisphere, this bodes well for beef demand in the coming year. January was also an excellent month for beef variety meat exports, which are especially important for maximizing the value of every animal, he says. More on beef exports on the next page.
Beef Value To Korea Rose 13%
While January beef exports to South Korea declined slightly from a year ago in volume (18,789 mt, down 1%), export value increased 13% to $170.5M, says USMEF. Rising consumer prices continue to weigh on Koreans’ spending power, including sharply higher prices for fruits and vegetables due to crop issues. The cost of dining out in Korea rose 3.8% in February but this was the smallest year-over-year increase in more than two years. Although trading below a year ago, the Korean won has been relatively steady and is nowhere near the challenge of the weak Japanese yen, says USMEF.
Beef exports to Mexico continued to strengthen in January, increasing 15% in volume from a year ago to 20,111 mt, says USMEF. This was the second largest volume since 2020 following exports of 21,325 mt in December 2023. January export value jumped 19% to $112.9M. This was the highest value since 2020. Beef supplies remain tight in Mexico as it exports more feeder cattle to the U.S., imports more beef from the U.S. and exports less beef to the U.S., says USMEF.
U.S. beef exports to the Middle East struggled mightily in 2023, says USMEF. This was primarily due to a slowdown in beef liver shipments to Egypt. But they have showed signs of a rebound the past two months. January exports jumped 68% compared to the low year ago totals, reaching 4869 mt, while value increased 73% to $19M. Exports to Egypt, the largest destination for U.S. beef livers, increased 58% to 3627 mt valued at $5.5M (up 33%).
January beef shipments to Japan declined 6% from a year ago to 21,149 mt but export value increased 6% to $153.8M, says USMEF. Beef variety meats (primarily tongues and skirts) were definitely a bright spot, with exports increasing 33% to 3721 mt, while value climbed 40% to $39M. Demand from yakiniku restaurants remains strong and it is not possible for them to replace U.S. beef tongues and skirts. Lower tariffs on beef variety meats under the U.S.-Japan Trade Agreement also contributed to relatively stronger demand for these items. Hong Kong’s demand for U.S. beef strengthened last year and exports performed well in January, climbing 62% from a year ago to 2715 mt, while value soared 93% to $32.3M. Exports to China did not fare as well, declining 12% in volume (11,755 mt) and 6% in value ($102.1M). The combined result for the region was a 3% decline in volume to 14,490 mt, while value increased 7% to $134.4M, says USMEF.
TYSON WILL CLOSE PERRY PORK PLANT
TYSON Foods is to permanently close its pork processing plant in Perry, Iowa, as the largest meat producer in the U.S. continues to streamline its operations following a plunge in profits. Tyson will close the plant in late June, which will affect 1276 employees. Tyson is encouraging workers at the facility to apply for other roles within the company and is working with state and local officials to provide additional resources to those being impacted by its decision, it says. The plant’s future appeared to be doubt because of its age, its size and a decline in pork processing margins. The plant began operations 61 years ago and processes about 9000 hogs per day. This accounts for less than 2% of total U.S. pork production and makes it Tyson’s smallest pork plant.
The move emphasizes the Springdale, Ark.-based meat processor’s focus to optimize the efficiency of its operations, it told Bloomberg News. It is the latest of a series of plant shutdowns announced by Tyson over the past year, which included six chicken facilities and the elimination of at least 4700 jobs. Tyson is slowly recovering from a combination of setbacks, including a chicken and pork glut, that sent its profits plunging 85% in the latest fiscal year. Tyson’s pork operations returned to profit in the three months ended December 31 after five straight quarters of losses, as increased volumes more than offset a decline in prices. Tyson’s pork business had an adjusted operating loss of $128M in fiscal 2023 that ended September 30. This was down from income of $198M in the previous year. Its sales volumes fell 2.2% while average prices slid 7.9%.