CASH live cattle prices set another record high for the second week in a row. Fed beef processors continue to scramble to buy market-ready cattle as the grilling season begins. The 5-area fed steer price the week before last averaged $220.97 per cwt live, up $4.65 per cwt from the prior week’s $216.32 per cwt, which was the previous record. The price was 19.0% higher than the price the same week last year. This meant that prices rose by $13.27 per cwt in three weeks. Dressed prices the week before last also averaged a new record high of $349.37 per cwt, up $7.95 per cwt from the prior week’s $341.42 per cwt, which was the previous record. It was up 18.6% on the same week last year. This meant that prices rose by $21.64 per cwt in three weeks. Last week saw similar to higher prices, with 11,816 head selling in early trading Monday and Tuesday on the Southern Plains at $218-220 per cwt live.
Further light trade (14,202 head) on Wednesday saw prices up north average $220-225 per cwt live or $352-360 per cwt dressed. Prices down south averaged close to $218 per cwt live. Steer and heifer carcass weights in the latest reported week ended April 26 were flat with the week before but remained well above year ago levels. Steer weights averaged 946 lbs, flat with the week before but up 26 lbs on the same week last year. Heifer weights averaged 873 lbs, flat with the week before but up 25 lbs on the same week last year. Overall weights averaged 878 lbs, down 1 lb from the week before but up 29 lbs on the same week last year. This was the equivalent of adding 18,990 head to that week’s slaughter total of 555,260 head, says HedgersEdge.com. That slaughter total was the smallest this year for a regular week.
Beef Cutout Values Increase
Meanwhile, boxed beef Choice cutout values hast week rose each of the first four days. The week before last saw the national comprehensive boxed beef cutout (cuts, grinds and trim) average $337.46 per cwt, up from $332.92 per cwt in the prior week. The Choice cutout averaged $338.46 per cwt, up from $333.08 per cwt. Spot market sales accounted for 30.8% of the total volume of 6296 loads, formula sales accounted for 58.2%, forward sales accounted for 10.9% and export sales accounted for 13.0%. The Choice cutout the first four days of last week increased by $4.95 per cwt to $347.89 per cwt.
Seasonally, weekly harvest levels need to be trending higher, says Andrew Gottschalk, HedgersEdge.com. Beef cutout values should also continue trending higher seasonally, at least into mid-May. If beef demand is maintained, beef cutout values should be supported or even trend modestly higher through June. It is clear that beef cutout values need to advance if higher fed cattle prices are to be supported, he says.
The undertone in the June live cattle futures market is firming, says Kevin Grier in his bi-weekly analysis of the U.S. market. The fed cattle basis is wide but is unlikely to play a role in marketing decisions. Calf and yearling prices have returned to their uptrend. The Choice beef cutout jumped on average the week before last but late week moves were weaker. Packer margins are deep red. February consumer demand eased off the torrid pace it showed in January, he says. The total slaughter four-week average ending May 3 was down 8% from last year. The fed cattle kill four-week average ending March 29 (latest) was up 1% on the same period last year. The non-fed kill four-week average week ending March 29 was down 8%. May should see fed kills steady with last year while June kills will slide 1%. Packer negotiated cash and dressed inventories improved but remain tight. Packers are more comfortable with contracts than last year, says Grier.
TYSON WILL HAVE RECORD BEEF LOSSES
TYSON Foods’ beef segment looks set to have its biggest annual loss in its history. The segment had a $258M operating loss in Tyson’s fiscal 2025 second quarter. This meant a $322M loss for the six months ended March 29. The segment’s previous biggest annual loss was $244M in 2006. Beef is experiencing the most challenging market condition that Tyson has ever seen, CEO Donnie King told analysts last Monday. Beef sales in the quarter were $5.196 billion, versus $4.954 billion a year earlier. Volume was down 1.4%, primarily due to a lower number of cattle harvested than a year ago, partially offset by higher average carcass weights. The operating loss went against a $35M loss a year earlier. This meant the operating margin was a negative 5.0% versus a negative 0.7%. As in the prior quarter, chicken was Tyson’s star performer, with volume growth for the second consecutive quarter and the best second quarter adjusted operating income in nine years.
Tyson overall in the quarter reported $13.074 billion in sales, flat compared with 2024 results. Adjusted operating income was $515 million, up 27% year-over-year, and after stripping out one-time items, adjusted earnings per share rose 48% to 92 cents compared to last year. Net income was $7M or two cents per share, versus $145M or 42 cents per share in the year earlier quarter.
Tyson delivered another solid quarter with growth in both sales and adjusted operating income, driven by strong execution across the business, said King. Tyson’s consistent focus on operational excellence, winning with customers and consumers, leveraging data and digital and enhancing its financial strength have resulted in four consecutive quarters of year-over-year improvements in its top and adjusted bottom lines. Looking ahead, Tyson’s diversified multi-channel, multi-protein portfolio positions it well to capitalize on consumer demand for high quality protein and deliver continued value to its shareholders, he said.
Tyson Pork Also Performed Well
Tyson’s chicken segment had sales in the quarter of $4.141 billion versus $4.065 billion a year earlier. Volume was up 3.0% but the average selling price was down 1.1%. Tyson’s pork business delivered the second best adjusted operating income in three years with $55M, up from $33M last year. But it had an operating loss of $195M in the quarter, versus a $1M loss last year. Sales dipped year-over-year to $1.244 billion from $1.486 billion. Prepared Foods’ sales remained flat compared to the same period last year at $2.396 billion versus $2.404 billion. Adjusted operating income was $244, up from $233M the previous year.
Operating income in beef decreased as beef margins remained compressed, partially offset by improved operational execution, said Tyson. Additionally, operating income for the second quarter and first six months of fiscal 2025 was impacted by the recognition of legal contingency accruals and network optimization plan charges. But beef sales increased primarily due to a higher average price per pound, reflecting ongoing healthy demand, it said. Tyson in beef is navigating a challenging environment with discipline, King told analysts. It is managing costs and enhancing its mix for more value-added offerings. While limited cattle availability is pressuring spreads, consumer demand has remained resilient. Tyson’s teams are executing well across procurement, production and distribution to meet customer needs and stay on price, he said.
It is important to note that cattle on feed from a weight perspective are extremely heavy, Brady Stewart, Tyson’s Group President, Prepared Foods, Beef & Pork and Chief Supply Chain Officer told analysts. We’re at record weights throughout the business as well. The weights are offsetting from a volume perspective some of the lower head counts as the supply has been obviously lower than a year ago, he said.
Relative to heifer retention, if the industry is not at the bottom relative to cow inventories, Tyson can definitely see it from here as well, said Stewart. The industry has an extreme drop of almost 18% in beef cow harvest numbers. It has also seen a drop relative to heifers on feed, which means that if the heifers are not on feed, they are being retained by farmers and ranchers. The signs are really aligning to a rebuild to start to occur. From a liquidation standpoint, Tyson is really seeing the bottom at this point as well, he said.
SMITHFIELD STARTS YEAR STRONGLY
SMITHFIELD Foods, the world’s largest pork company, starts 2025 strongly. This showed up in its second earnings call on April 29 since reentering the U.S. public equity market. Covering financial results for the first quarter of fiscal 2025 ended March 30, the company demonstrated a positive outlook for the year ahead. With a sharp rebound in hog production and strong execution of its strategies during the first quarter, Smithfield begins the year on a firm foundation, it said.
The first three months of the year generated an operating profit of $321M and an adjusted operating profit of $326M. Both increased more than 85% compared to the first quarter of 2024, which Smithfield credited mainly to improved hog production. Smithfield posted net sales of $3.8 billion, with an operating profit margin of 8.5%, up from 4.7% last year, while its adjusted operating margin rose from 5.1% last year to 8.6%. Smithfield reported $0.57 in diluted earnings per share from its core operations, compared to $0.41 per share in 2024. Adjusted diluted earnings per share from continuing operations attributable to Smithfield were $0.58.
Smithfield’s strong first quarter results mark a solid start to 2025, said Shane Smith, president and CEO. It has reaffirmed its outlook for the full year and it remains focused on executing its strategies to deliver higher operating profit in 2025. Smithfield’s strong financial position provides it with the financial flexibility to invest in growth and return value to its shareholders, he said.
Smith previously declared its Packaged Meats unit to be the cornerstone of the company’s business, noting that it will likely be the key driver for future growth. For the period ended March 30, the unit posted an operating profit of $266M, down 7% year-over-year, and an operating profit margin of 13.1%. It generated $2.02 billion in sales, which was a 1.2% increase over the previous year. Generating just slightly more sales than Packaged Meats with a total of $2.03 billion, its Fresh Pork segment sales increased 4.9% year-over-year. Its operating profit dropped 25.7% from last year to $82M. Its Hog Production unit generated $932M in sales, a 32% jump compared to 2024. Operating profit reached $1M, which notably rose over 100% from the previous year.
GLOBAL BEEF DEMAND REMAINS ROBUST
EXPORTS of U.S. beef, pork and lamb trended higher year-over-year in March, with beef export value the highest since last June, while Latin American markets again fueled pork export growth. March exports of lamb muscle cuts were the largest in more than five years. March beef exports totaled 109,330 metric tons (mt), up 1% from a year ago, while export value reached $922M, up 4% and the highest since June, says the U.S. Meat Export Federation (USMEF). First quarter exports were slightly below last year’s pace at 310,368 mt but increased 2% in value to $2.53 billion.
Despite a great deal of uncertainty, global demand for U.S. beef remains robust and resilient, says USMEF President and CEO Dan Halstrom. The March export results confirmed this, with demand trending higher in Taiwan and Mexico, reaching record levels in Central America and holding up well in Japan and Korea. Although USMEF anticipates that China’s retaliatory tariffs and expired plant registrations will have a more drastic impact on April and May exports, the U.S. industry’s efforts to diversify markets and broaden U.S. beef’s global footprint are definitely paying dividends, he says.
March pork exports increased 3% year-over-year to 269,344 mt, valued at $769.7M (up 4%), says USMEF. First quarter exports were slightly above last year’s record value pace at $2.11 billion but slightly lower in volume (754,488 mt). March was another spectacular month for U.S. pork demand in Mexico and Central America but exports also rebounded nicely to Colombia and Korea, says Halstrom. Duty-free access has helped fuel pork exports to these key markets, where USMEF continues to see heightened competition. Plant eligibility for China is less of an issue for U.S. pork than for U.S. beef, as China renewed most pork establishments in mid-March. But Halstrom cautioned that pork and beef exports to China have since hit a wall due to China’s duties, which now total 172% for U.S. pork and 147% for U.S. beef. More export news on page 4.
Exports Bounce Back In Taiwan
March was a bounce back month for U.S. beef exports to Taiwan, which jumped 34% from a year ago to 5086 mt, while export value climbed 33% to $60.5M, says USMEF. These results pushed first quarter exports to Taiwan 1% above last year’s pace at 12,212 mt, while export value climbed 11% to $147.6M. The U.S. is the dominant supplier of high value chilled beef in Taiwan, capturing 72% of the chilled import market.
Beef exports to Mexico also closed the first quarter on a high note, increasing 6% from a year ago in March to 17,592 mt, while export value climbed 7% to $110.9M, says USMEF. For January through March, shipments to Mexico were 3% below last year’s pace at 54,861 mt, while value was steady at $332.7M. Mexico is the leading volume destination for U.S. beef variety meat, including large volumes of tripe, lips and hearts. First quarter variety meat shipments increased 5% from a year ago in volume (30,162 mt) and 6% in value ($81.6M), says USMEF.
March beef exports to Japan were steady with last year in both volume (21,683 mt) and value ($168.5M), says USMEF. For January through March, exports were down 5% to 59,846 mt, valued at $451.8M (down 4%). This was largely due to a sharp decline in beef variety meat exports, mainly tongues and skirts, which fell 16% to 9299 mt, valued at $91.3M (down 24%). Beef exports to South Korea trended modestly lower in March, declining 6% to 20,838 mt, while value fell 2% to $206.2M. First quarter exports to Korea, which is the leading value destination for U.S. beef, were slightly below last year’s volume pace at 58,179 mt but increased 3% in value to $568.4M.
Coming off a record year in 2024, beef exports to Central America continue to gain momentum, says USMEF. Led by growth in Guatemala and Panama, March exports to the region increased 23% from a year ago to 2158 mt, valued at $19.8M (up 29%). First quarter exports were 5% above last year at 6018 mt, with exports to Costa Rica and Panama on a record pace. Value climbed an impressive 24% to $52.5M, led by a record value pace in Guatemala, Panama, Costa Rica and Honduras. March beef exports equated to $466.77 per head of fed slaughter, the seventh highest on record and topping last March’s average by 3%. The first quarter per head average was also up 3% to $421.56. Exports accounted for 14.8% of total March beef production and 12.5% for muscle cuts only, each down slightly from a year ago. First quarter ratios were 13.8% of total production and 11.6% for muscle cuts, also down slightly from last year.
THOUSANDS LEAVE USDA
AT least 15,000 employees from the U.S. Department of Agriculture (USDA) have decided to resign since the beginning of the Trump administration Numbers reported by Reuters showed that 555 employees from the Food Safety Inspection Service were among the people who decided on the deferred resignation. Other areas of USDA resignations come from 1846 people from the Marketing and Regulatory Programs, which include the Agriculture Marketing Service and the Animal and Plant Health Inspection Service. USDA will reportedly look at cutting up to 30,000 positions when it moves forward with a reduction-in-force. During February, USDA retracted termination offers from people working on the ongoing highly pathogenic avian influenza outbreak. According to USDA’s website, the agency currently has 100,000 employees at more than 4500 locations.
Meanwhile, Agriculture Secretary Brooke Rollins said the week before last that USDA had reached agreement with Mexico on heightening efforts to combat the expansion of New World screwworm (NWS). Rollins previously sent a letter calling on Mexican authorities to lift restrictions on USDA contractors conducting the precision aerial releases required to suppress and eliminate the NWS population. She also called for full import clearance and duty waivers for all equipment related to NWS eradication and demanded that Mexico designate a high-level point of contact to work directly with USDA on the issue.