THE U.S. total cattle inventory fell slightly in 2023 from 2023 and remains the smallest total since 1951. Analysts before last Friday’s annual inventory report forecast a January 1 total of about 86.5M head, which would be down 0.7% to 0.8% from the 2023 total of 87.175 M head. The big difference between 1951 and this year is that beef production then totaled 8.1 billion lbs. Beef production this year is estimated to be 25.9 billion lbs. Give credit to the best beef producers in the world, says Andrew Gottschalk , HedgersEdge.com.
The report likely showed that the number of beef cows on January 1 was 27.9M to 28.1M, down 0.4% to 1.0% on 2023. The number of beef cow replacements (heifers held back for herd rebuilding) was likely to be 4.82M to 4.9M head, down 0.8% to up 0.8%, respectively. The lower number means that herd rebuilding did not begin in 2024 and that the beef industry experienced its fifth year of herd liquidation. The higher number suggests that extremely modest expansion occurred in 2024 and might pick up pace this year if record or near record high prices for calves and feeder cattle continue. Estimates of this year’s calf crop varied from 33.250M head to 33.056M head. These would be down 1.0% and 1.6%, respectively, from the 2024 total of 33.593M head.
On the dairy side, the report was expected to show that the number of dairy cows on January 1 was about 9.4M head, up 0.4-0.5% from 2024’s total of 9.357M head. Dairy cow replacements likely totaled 4.070M head up 0.3% on 2024’s total of 4.059M head. Steers 500 lbs and over likely totaled 15.630M head, down 1.0% from 20024, although one estimate was for the total to be lower at 15.552M head (down 1.5%). Heifers, steers and bulls under 500 lbs likely totaled 13.150M head, down 1.0% from 2024.
COF Total Remains Just Below Year Ago
Meanwhile, the January 1 Cattle on Feed (COF) total at 11.823M head was 99.1% of a year ago. The total was 0.2% lower than analysts’ average forecast and was 107,000 head lower than a year ago. Analysts regarded the COF report as positive because December placements at 1.642M head were 96.7% of a year ago and 5.1% lower than forecast. December marketings at 1.742M head were up 1.0% from last year but were down 3.5% after taking one extra slaughter day in December into account. The inventory included 7.248M steers and steer calves, up 0.7% from the previous year. This group accounted for 61.3% of the total inventory. Heifers and heifer calves accounted for 4.575M head, down 3.4% percent from 2024.
Five states, Arizona (down 12%), Idaho (down 1%), Kansas (down 3%), Texas (down 3%) and Washington (down 6%) had fewer cattle on feed than a year ago. Texas had the most cattle on feed with 2.780M head, with its total down 80,000 head from a year ago. Nebraska was second with 2.580M head, up 20,000 head, and Kansas was third with 2.400M head, down 80,000 head. Five states placed more cattle than a year ago. Arizona placed 15% more, Iowa placed 4% more, Kansas 4% more, Nebraska 6% more and South Dakota 3% more. Four states marketed fewer cattle in December than last year. California marketed 20% fewer, Colorado 4% fewer, Texas 5% fewer and Washington 5% fewer. Regarding placement weights, the three lightest categories placed 75,000 fewer cattle than a year earlier, while the three heaviest categories placed 19,000 more cattle. The under 600 lb category saw 40,000 fewer cattle placed than last year (395,000 head). The 600-699 lb category saw 30,000 fewer cattle placed (380,000 head). The 700-799 lb category saw 5000 fewer placed (375,000 head). The 800-899 lb category saw 9000 more placed (287,000 head). The 900-999 lb category saw 5000 more placed (115,000 head) and the 1000 lbs plus category saw 5000 more placed (90,000 head).
CATTLE PRICES CONTINUE RECORD RUN
CASH live cattle prices continue to set new records week after week. Prices the first week of the year, basis a 5-area steer, averaged $198.93 per cwt live. They averaged $202.58 per cwt the following week, $203.67 per cwt the next week and $209.19 per cwt the week before last. This meant they increased by $14.38 per cwt in the four weeks, and were likely to be steady to firm again last week. Several factors caused the price surge. Packers appeared to be light on their purchases despite two holiday-shortened production weeks and were forced to pay higher prices despite negative operating margins. Extremely cold weather was also a factor, as cattle feeders chose to hold back cattle to add back weight until the weather improved.
Carcass weights however remained well above year ago levels in the latest reported week ended January 18. Steer weights averaged 954 pounds, down 8 lbs on the week before but up 36 lbs on the same week last year. Heifer weights averaged 868 lbs, down 3 lbs from the week before but up 35 lbs from the same week last year. Overall weights averaged 874 lbs, down 8 lbs but up 32 lbs, respectively. This was the equivalent of adding 22,850 head to that week’s slaughter total of 601,259 head, according to HedgersEdge.com.
The cash live cattle trade last week followed the same pattern as that of previous weeks. Little trade occurred the first three days of the week, with the number of cattle sold in the 5-area region totaling 1693 head. Prices up north were $210-212 per cwt live, while prices down south were $204-205 per cwt live. Trade turned more active Thursday morning, with prices up north at $209-211 per cwt live or $325-330 per cwt dressed. Prices down south were $206-208 per cwt live. These levels suggested that the live average for the week would set another new record.
Cutouts Have Late Week Slide
Boxed beef cutout values meanwhile advanced the first two days of the week but slid back the next two days. The Choice cutout increased by $0.50 per cwt the first four days to $327.48 per cwt, while the Select cutout increased by $0.39 per cwt to $315.90 per cwt. This weakness came despite packers maintaining reduced slaughter levels. The four-day slaughter total was an estimated 484,000 head and forecasts were for the weekly total to be as low as 580,000 head (versus an estimated 599,000 head the prior week). The reduction reflected a significant deterioration in packer margins. They were negative by $132.45 per head on Thursday, according to HedgersEdge.com.
The week before last saw the national comprehensive boxed beef cutout (cuts, grinds and trim) average $331.85 per cwt, up $1.48 per cwt from the prior week and up 12.5% from the same week last year. The Choice cutout averaged $328.58 per cwt, up $1.93 per cwt from the prior week and up 11.9% from the same week last year. Spot market sale represented 28.7% of the total volume of 7358 loads. Formula sales represented 53.1% of the total, forward sales represented 18.2% of the total and export sales at 1379 loads represented 18.7% of the total.
SMITHFIELD IPO RAISES $522M
SMITHFIELD Foods’ shares rose over their reduced initial public offering (IPO) price last Tuesday, as the world’s largest pork producer returned to the stock market 12 years after China’s WH Group took it private. Smithfield’s stock opened at $21.05 and changed hands at $20.31 per share for a gain of 1.5% over its IPO price of $20 per share. The Smithfield, Va.-based company priced 26.1M shares at $20 per share to raise $521.7M with the help of underwriters Morgan Stanley, BofA Securities and Goldman Sachs. The IPO priced below its estimated range of $23 to $27 per share, while cutting the size of the IPO from its earlier projection of 34.8M shares. Smithfield Foods, which makes Nathan’s hot dogs, Eckrich deli meat and Smithfield supermarket products, reported net income from continuing operations of $581M on revenue of $10.19 billion in the nine months ending September 29. In the year prior period, it booked a loss of $2M on revenue of $10.64 billion. The company carved out its European operations in August, transferring the business to WH Group. The group continues to own a majority stake in the company.
COMPANIES AGREE TO $200M OF SETTLEMENTS
A COLORADO judge grants preliminary approval for settlements totaling over $188M in a class-action wage-fixing lawsuit targeted at U.S red meat processing companies. The suit was first filed in 2022 against 18 processors: JBS USA, Tyson Foods, Cargill, Hormel Foods, Rochelle Foods, American Foods Group, Triumph Foods, Seaboard Foods, National Beef Packing, Smithfield Foods, Smithfield Packaged Meats Corp., Agri Beef, Washington Beef, Purdue Farms, Greater Omaha Packing, Nebraska Beef, Indiana Packers and Quality Pork Processors. Other defendants included third-party data-sharing firms Agri Stats and Webber, Meng, Sahl and Co.
The complaint accused the companies of conspiring to fix and depress the compensation of production and maintenance employees at meat processing plants. The processors allegedly exchanged competitively sensitive compensation data through the third-party firms as well as at private meetings. The class members represent anyone who worked at one of the processors’ approximately 140 facilities in the U.S. between January 1, 2000 and February 27, 2024. Judge Philip Brimmer with the U.S. District Court for the District of Colorado on January 15 approved settlement agreements involving six major companies. As part of the agreements, Tyson Foods will pay $72.5M, JBS USA will pay $55M, Cargill will pay $29.75M, National Beef will pay $14.2M, Hormel Foods will pay $13.5M and American Foods will pay $4M. Previous settlements include agreements reached with Perdue ($1.25M) and Seaboard Foods ($10M), which brings total recovery to $200.2M.
Cargill meanwhile agrees to pay $32.5M to settle a class action lawsuit accusing the company and several other processors of conspiring to fix turkey prices. The agreement, filed on January 15 with the U.S. District Court for the Northern District of Illinois, awaits court approval. Cargill’s deal with a group of direct purchaser plaintiffs is the second reached in the ongoing litigation. It comes nearly four years after the first deal was struck in 2021 when Tyson Foods agreed to pay $4.625M. Similar to Tyson’s previous settlement, Cargill has agreed to provide meaningful cooperation in addition to the monetary relief as the direct purchaser plaintiffs continue prosecution against the remaining defendants. Companies named in the suit who have yet to settle include Agri Stats, Butterball, Cooper Farms, Hormel Foods, Farbest Foods and Foster Farms.
SECURITY AGENTS FORCE USDA OFFICIAL TO LEAVE
SECURITY agents last Monday escorted USDA’s inspector general out of her office after she refused to comply with her firing by the Trump administration, sources familiar with the matter told Reuters. Phyllis Fong, a 22-year USDA veteran had earlier told colleagues that she intended to stay after the White House terminated her on January 24, saying that she didn’t believe the administration had followed proper protocols, the sources said. In an email to colleagues, Fong said the independent Council of the Inspectors General on Integrity and Efficiency has taken the position that these termination notices do not comply with the requirements set out in law and therefore are not effective at this time. Fong declined to comment after being escorted out.
The White House defended the firing of Fong and the other inspectors general, saying “these rogue, partisan bureaucrats… have been relieved of their duties in order to make room for qualified individuals who will uphold the rule of law and protect democracy.” In response, Angie Craig (D-Minn.), the House Committee on Agriculture ranking member, said the midnight purge of inspector generals, including at the USDA, is alarming and unprecedented. While the president has the right to replace inspector generals, the late-night firing of these independent watchdogs not only violates the law but also hampers the government’s ability to combat waste, fraud and abuse, and ensure programs are run as Congress intended, whether its disaster assistance for farmers or nutrition programs. These firings threaten to undermine public trust at a time when many hardworking Americans doubt whether government institutions are looking out for them and reinforce the perception that politicians get to play by a different set of rules, she said. A federal law by Congress states that a 30-day notice is needed before an inspector general is removed from their position. The Office of Inspector General (OIG) for the USDA started in 1962 to look at department programs regarding waste, fraud, abuse and misuse of taxpayer dollars.
JBS BUYS NEARLY HALF OF EGG GIANT
GLOBAL protein giant JBS SA broadens its footprint in the animal protein business, securing a large stake in one of Latin America’s largest egg producers. JBS buys a 48.5% stake and 50% of the voting shares in Brazil’s Mantiqueira Alimentos Brasil. The deal is worth about $156M. The investment is JBS’s first in the egg industry, extending the company’s current global portfolio covering beef, pork, chicken, lamb, farmed salmon, smallgoods and value-added items and plant-based foods.
Mantiqueira Alimentos Brasil is one of Latin America’s largest and most respected egg producers. Renowned for its commitment to innovation, sustainability and animal welfare, the company offers a diverse range of egg products, including cage-free, free-range and organic options, say reports. It manages 17.5M laying and rearing birds, producing four billion table eggs per year. The company has focused on free-range production since 2020. It employs more than 3000 staff, with units in six Brazilian states and services markets across Brazil plus exports across South America, Asia, Africa and the Middle East. Mantiqueira’s Happy Eggs brand is the fastest-growing egg brand in Brazil, focusing on free-range chickens, with its Fazenda da Toca brand leading the organic egg segment.
In a statement to shareholders, JBS said with the completion of the investment (subject to regulatory approval), the company would share control of Mantiqueira with its founder and largest shareholder, Leandro Pinto. This agreement will allow JBS to enter the egg sector and reinforce its global platform diversified by geography and protein, which has allowed the company to continue growing with solid results, JBS told shareholders. The investment is in line with JBS’s long-term strategy, which includes diversifying its portfolio by entering new protein segments and investing in branded businesses with added value, said JBS global CEO Gilberto Tomazoni. Egg consumption in the world has shown consistent growth. It is an affordable, versatile and healthy protein, which reinforces JBS’s purpose of feeding the world, he said.
AUSTRALIA EXPORTS RECORD OFFAL TONNAGE
AUSTRALIA in 2024 not only exported a record amount of beef muscle cuts and trimmings in 2024, it also had a huge year for edible beef offal shipments. Export trade tonnage for the year ended December 31 for beef offals reached a record 183,729 metric tons (mt), up almost 17% on the previous year and about 21,000 mt or 13% higher than the previous record set back in 2014. Offals (often called fancy meat in trading circles) are often forgotten as a valuable part of the revenue stream from a typical beef carcass, say Beef Central’s Jon Condon. Australians are not keen consumers of beef offals, meaning much of the production is destined for overseas markets. As a proportion of total volume of all beef products, offals last year represented 12% of Australia’s exports by weight.
The largest offshore markets for offal vary considerably from table beef exports and may surprise some people, says Condon. Indonesia remained easily Australia’s single largest offal export client, accounting for 42,543 mt last year. This was marginally down on trade the previous year but still represented 23% of all exports. South Korea was Australia’s second largest export market, taking 29,208 mt last year, followed by Japan at 26,197 mt. Both Japanese and Korean consumers have a fondness for offal meats like tongue, for which they pay big premiums to finely slice, marinate and barbecue, Genghis Khan style, says Condon. In the middle of last year, Australian tongues were trading in international markets at around A$16.60 per kilogram. Largely influenced by ethnic populations, the U.S. took 13,613 mt of Australian beef offals last year. The seven countries comprising the Middle East region accounted for 12,702 mt, followed by the Philippines (11,330 mt), South Africa (10,289 mt),Thailand (7804 mt) and Mexico (5074 mt). The Pacific Islands and Papua New Guinea combined took almost 3000 mt of offal meat last year. Offal exports to China are limited by Chinese regulations to certain items only, meaning trade last year reached only 2145 mt, says Condon.