CASH live cattle prices soar to new record highs as cattle feeders the week before last force packers to pay sharply higher money. Prices basis a 5-area steer averaged $213.23 per cwt live or $335.15 per cwt dressed. These were up $7.93 per cwt and $10.18 per cwt, respectively, from the prior week. The previous record live price was $209.57 per cwt in the week ended February 2. The previous record dressed price was $329.72 per cwt in the week before that. The week before last also saw a sizeable reported number of sales (77,076 head). All of the price gains the week before last came on the Friday, with very little trade occurring the previous four days. This repeated the pattern of the prior week when packers were also forced to pay sharply higher prices. But the gains the week before last were easily the largest week-to-week increases for a long time.
The record prices meant that last week’s cash trade was likely to produce steady-only prices. This was the case the first three days, which saw only 4217 head reported sold. Prices up north were $213 per cwt live and prices in Kansas were at $207 per cwt live. The only trade of any note Thursday morning was in Iowa, where 813 head were reported sold at $213 per cwt live. Carcass weights increased in the latest reported week ended March 15 and remained well above year ago levels. Steer weights averaged 947 lbs, up 2 lbs on the week before and up 25 lbs on the same week last year. Heifer weights averaged 871 lbs, up 4 lbs from the week before and up 23 lbs on the same week last year. Overall weights averaged 871 lbs, up 3 lbs on the week before and up 37 lbs on the same week last year. This was the equivalent of adding 16,615 head to that week’s slaughter total of 586,280 head, says HedgersEdge.com.
Cutouts Surge On Light Kills
Meanwhile, boxed beef cutout values surged as a result of weeks of reduced kills and beef production. The latter though is down far less than slaughter levels because of much heavier carcass weights than a year ago. Total slaughter for the year to March 21 was down 6.3% on the same period last year while beef production was down 2.4%. The Choice cutout the first four days last week increased by $10.27 per cwt and the Select cutout increased by $9.82 per cwt. The surge came after the national comprehensive boxed beef cutout (cuts, grinds and trim) the week before last increased sharply from the prior week. It averaged $326.88 per cwt, up $5.21 per cwt on the prior week. The Choice cutout averaged $324.65 per cwt, up $6.59 per cwt. Spot market sales accounted for 27.8% of the total volume of 6955 loads, formula sales accounted for 53.6%, forward sales accounted for 18.6% and export sales accounted for 8.7%.
Meanwhile, U.S. agriculture and the red meat industry girds itself for the prospect that President Trump will impose tariffs on meat, food and other agricultural imports from Canada and Mexico, and that the two countries will impose tariffs on U.S exports in retaliation. Trump originally announced that he would impose 25% tariffs on February 1. He then delayed implementation until March 4 and then to April 2 (this coming Wednesday). In the meantime, Trump said last Wednesday that he would impose a 25% tariff on global automotive imports to the U.S., which would take effect April 3 (Thursday).The tariff will apply to imported passenger vehicles, light trucks and some auto parts. For imported cars protected by the United States-Mexico-Canada Agreement, only the foreign parts that make up the vehicle will be subject to the tariff. The move follows a temporary tariff exemption granted earlier this month at the behest of three large U.S. automakers. After the monthlong reprieve, auto experts say higher prices are on the horizon. You’re going to see price increases, said Ivan Drury, director of insights at automotive research site Edmunds. It’s such a shotgun approach. Virtually nothing goes unscathed, he said.
COF TOTAL IS DOWN 2.2%
THE March 1 Cattle on Feed (COF) total was down 2.2% from the same date last year, largely because February feedlot placements at 1.554M head were 82.2% of a year ago. They were 3.2% lower than analysts’ average forecast. The COF total of 11.577M head was 0.5% lower than forecast and was 115,000 head lower than a year ago. February marketings at 1.633M head were 95.4% of a year ago after taking one less slaughter day this year into account and were 0.9% lower than forecast.
Only four states, Iowa up 3%, Nebraska up 1%, Oklahoma up 3% and Washington up 2%, had more cattle on feed than a year ago. Texas had the most cattle on feed with 2.640M head, with its total down 180,000 head from a year ago. Nebraska was second with 2.590M head, up 30,000 head, and Kansas was third with 2.320M head, down 80,000 head. Only Washington (up 6%) placed more cattle than last year. Only two states, Colorado (up 7%) and Oklahoma (up 5%), marketed more cattle in February than last year.
Regarding placement weights, all categories except for the two heaviest saw substantial year-on-year declines in placements. The under 600 lb category saw 65,000 fewer cattle placed than last year (295,000 head). The 600-699 lb category saw 55,000 fewer cattle placed (275,000 head). The 700-799 lb category saw 100,000 fewer placed (415,000 head). The 800-899 lb category saw 96,000 fewer placed (389,000 head). The 900-999 lb category saw 20,000 fewer cattle placed (130,000 head) and the 1000 lbs plus category saw the same number placed (50,000 head).
The average month-to-month change from February 1 to March 1 is a decrease of 54,000 head, says Andrew Gottschalk, HedgersEdge.com. The drop this year was 139,000 head. Placement levels in February were diminished by inclement winter weather, high replacement costs and diminishing supplies. This was the fourth lowest February placement level since 2000. The February marketing level was the lowest since 2016. The marketing rate (marketings versus COF) was the second lowest level for February ever recorded, exceeding only the level seen in February 2006. The front-end fed cattle supplies and the relentlessly high carcass weights are the results of the deficiency in the marketing rate, he says.
Front End Will Be Higher Into July
Front-end supplies project to remain above year ago levels into July unless marketings increase significantly from recent levels and current projections, says Gottschalk. Front-end supplies project to increase into June. The estimated change from March 1 to June 1 is an increase of 240,000 head. This exceeds the gain seen last year of only 30,000 head. On a positive note, the gain during the March-June period for a five-year average basis is 274,000 head. If marketing projections are achieved going forward, the supply change from June to September should show significant improvement. The trend this year estimates a decline of 567,000 head versus a drop of 222,000 head last year and the previous five-year average decline of only 38,000 head. This would suggest that the supply outlook improves by August, he says.
Such a decline in supplies may necessitate pulling cattle forward, limiting late summer/fall price weakness, says Gottschalk. Increased heifer retention this spring could further limit available supplies for feedlot placements. If this trend prevails, the supply outlook could be enhanced for the fed cattle sector, as well as for feeder cattle and calves. The supply side of the equation for the cattle complex projects to remain favorable, although the same cannot be said for the demand side of the equation. Retail beef prices are expected to edge higher to reflect the higher price levels associated with an increase in the cost of cattle, he says.
Record high beef prices were recorded last month at the retail point of sales, says Gottschalk. This reflects the ongoing advance in live cattle prices and the gains expected in beef cutout values as beef supplies decline. Advances in retail prices generally lag the trend for raw commodity prices, both up and down. This has been the traditional process until recently. Retailers have now begun to raise their average retail beef prices in an anticipatory manner, he says.
MEAT SALES IN 2024 WERE RECORD HIGH
AMERICANS’ love affair with meat continued in 2024. In fact, they forked out a record $104.6 billion at the grocery store. Not only did value increase nearly 5% year-over-year but volume saw a 2.3% increase to 22.8 billion lbs compared to 2023. With consumers purchasing meat more than once per week on average, according to data from Circana, meat retained its spot as the largest fresh department in grocery. This is according to the 20th Annual Power of Meat report released March 24 at the Annual Meat Conference hosted by the Meat Institute and FMI, The Food Industry Assn. The report revealed how ground meats were a bright spot for cost-conscious consumers in 2024, with ground beef values increasing by 9.6% over 2023 values.
Anne-Marie Roerink, principal at 210 Analytics, provided for the 20th year an overview of insights into consumers’ meat and poultry purchasing habits throughout a gamut of economic ups and downs. That takes us from pre-Great Recession through some good economic years, right smack into what was a global pandemic, right into the highest meat prices that we have seen ever, she said. All of that means that we’re able to just see how consumers change their behaviors and perception as they relate to meat and poultry. The consensus of this year’s findings, based on a survey of a cross section of about 1600 consumers in January focusing on their meat and poultry buying habits, is that America’s love for meat is as strong as ever, despite headwinds of economic uncertainty, record-high prices and the preferences of consumers whose demographics and preferences are ever evolving. The bottom line is that it was a fantastic year for the meat industry, said Roerink.
The sentiment among about 20 consumers Roerink interviewed one-on-one, as part of the research, was that retail food prices are unacceptably high, using words like “astronomical” and “insane” to describe the costs, including meat and poultry products. For consumers, higher prices meant striking a balance that checks a growing number of boxes. It has led to a very home-centric environment where we’re seeing the retail departments around the store, from frozen and dry grocery to produce and meat, do tremendously well. She noted that 30% of consumers reported purchasing restaurant meals less often, with only 23% eating out more often. In 2024, people shopped for meat more often, with more trips to the store to take advantage of different promotions. But they also were focused on minimizing food waste at home, she said.
Fresh Meat Sales Far Outpaced Processed Sales
Fresh meat sales in 2024 had a stellar year over processed meat sales, topping $73 billion (a 6.7% increase over 2023), with volume at 16.4 billion lbs, up 3.2% over the previous year. Within the category, there are some emerging species worth noting, said Roerink. Fresh meat had a tremendous year led by beef but all proteins within fresh meat had gains in pounds. Look at lamb for instance. Her guess is that over the next year, we’ll see lamb become a billion dollar category. Despite the challenges facing the beef industry, it remained the fresh meats leader, she said. You look at beef, if you think about the prices of beef, I remember standing here last year when we were all a little bit worried about the prices that were coming at us and what was that going to do to volume. But beef had a tremendous year, she said.
Ground meats were a bright spot for cost-conscious consumers, with a total of 22.8 billion lbs sold in the retail meat department, higher than pounds sold in 2021, 2022 and 2023, said the report. Ground beef represented 85% of grind sales at $15 billion, with a 3.8% increase in pounds. Ground turkey was next with $2 billion in sales (up 4% and increasing by nearly 6 lbs versus a year ago), followed by chicken at $332M, an increase of 10% in sales and about 9% more pounds sold compared to the previous year. Meanwhile processed meat sales were relatively flat at $32 billion in sales, just 0.4% over 2023, with volume of 6.4 billion lbs, the same as the previous year. Bacon led processed meat sales at $6.9 billion, according to Circana, a 4.4% increase with a modest volume increase of 1.6%. Dinner sausage was the next highest seller with $5.6 billion in sales, a 3% increase and 3.5% uptick in volume. Outside the meat department, the study reported successful gains in frozen meats, with $14 billion in sales (a 6% increase over 2023) and deli-prepared meat products at $6.4 billion in sales, a 10.8% jump. The study revealed nearly that 98% of American households purchase meat. The average American shops for meat 54 times in a year, spending $16.12 on meat per trip.
JBS BEEF NA HAD SURPRISINGLY STRONG YEAR
JBS Beef North America had a surprisingly strong 2024 despite what parent JBS SA called a challenging scenario in the U.S. The unit had net revenue in the fourth quarter of $6.40 billion, a 2% increase compared to the year earlier quarter, with adjusted EBITDA of $110.7M and an EBITDA margin of 1.7%. Adjusted EBITDA in the year earlier quarter was a negative $98.6M. Net revenue in 2024 was $24.286 billion, a 4% increase compared to 2023, while adjusted EBITDA was $247.3M for a margin of 1.0%. This went against EBITDA of $114.2M in 2023.
Beef margins in North America in the year and the quarter continued to be pressured by the cattle cycle, despite strong demand, says JBS. According to USDA data, both beef cattle prices and cutout prices reached record levels throughout 2024. But the growth in cattle prices outpaced the growth in cutout prices. Therefore, as cattle represent approximately 85% of the cost of products sold, profitability was pressured during the period. However, JBS has maintained its strategic focus on excellence in operational and commercial execution to preserve its profitability. Among the ongoing initiatives, the following stand out: optimizing the product portfolio, increasing yield per carcass and maximizing plant efficiency. These measures are essential to mitigate the challenges imposed by this more challenging cycle. The improvement in profitability in 2024, despite a more challenging cycle than in 2023, was the result of the successful execution of this strategy, says JBS.
Operational highlights in 2024, says JBS, also included Pilgrim’s Pride Corporation (its poultry processing unit) recording the best year in its history, reaching 14.7% EBITDA in the fourth quarter and 15.1% in 2024. JBS USA Pork maintained consistent results throughout the year. In Brazil, Seara achieved an impressive recovery, reaching an EBITDA margin of 19.8% in the fourth quarter and 17.7% for the year, due to the operational and commercial improvements implemented throughout the year. JBS Brazil achieved a margin of 7.7% in the year, driven by the increase in beef sales, with record volumes and productivity. In Australia, where the cattle cycle is expected to remain favorable in the coming quarters, the 10% margin for the year partly reflects the increase in beef exports, especially to the U.S, says JBS.
JBS USA Pork Shows Consistency
JBS USA Pork in 2024’s fourth quarter had net revenue of $2.001 billion, a 5% decrease compared to the year earlier quarter. Adjusted EBITDA was $271M for a margin of 13.5%. In 2024, net revenue was $8.161 billion, an increase of 5% compared to 2023, while adjusted EBITDA was $1.071 billion for a margin of 13.2%. In the domestic market, net revenue fell 5% year-over-year in the fourth quarter, reflecting lower sales volume in the period as the quarter had one less fiscal week. But for the year, net revenue grew 5%, reflecting higher prices and volumes, driven by strong demand. Pork consumption is also being favored by the average price of beef, which remains at high levels. JBS USA Pork once again demonstrated consistency and strength in its results for the year and the quarter. In addition to having efficient assets, the improvement in commercial dynamics, solid operational execution and the expansion of the value-added portfolio boosted profitability, says JBS.
JBS Australia in the fourth quarter had net revenue of $1.765 billion, up 2% from a year earlier. Revenue in 2024 was $6.648 billion, an annual growth of 7%. Adjusted EBITDA was $140M in the quarter for an EBITDA margin of 7.9%. Adjusted EBITDA for the year was $664.3M for an EBITDA margin of 9.9%. The strong revenue growth in the beef business, compared to 2023, reflected higher volumes sold in exports in the quarterly comparison, in addition to the increase in average prices in both periods. This was despite the higher cost of cattle, which, according to Meat & Livestock Australia, increased 47% in the fourth quarter compared to a year earlier, putting pressure on the quarter’s profitability. In 2024, the improvement in profitability reflected the operational efficiencies achieved through cost reduction initiatives and the increase in processed volumes, driven by the greater availability of animals, says JBS.