CONSUMER confidence in the economy is key as to Americans’ willingness to spend money on beef. That confidence dipped sharply over the past two or three years, as consumers faced price inflation in several key areas, including food. But Americans’ economic mood is brightening a bit, the Wall Street Journal reported last week. New data shows a small but real uptick in consumer sentiment. It comes as mortgage rates and gas prices are down and inflation continues to cool, says the WSJ. CBW reports more on this on page 4. The improved sentiment is welcome news for the beef industry, as beef as the highest priced meat remains under buying pressure in grocery stores and in restaurants. An example of this was that Labor Day holiday beef sales were mixed, with ground beef having the best sales of all the beef offerings.
However, recent consumer surveys indicate that 35% of families are struggling to meet their monthly bills, says Andrew Gottschalk, HedgersEdge.com. Credit card and auto payments are in delinquency by 9% and 8%, respectively. Beef demand may remain sluggish during September as back-to-school bills come due. The latest manufacturing report also trended lower, following the general trend seen during the previous 21 months. Gottschalk also notes that packers started unloading beef ahead of the Labor Day holiday. That inventory flush allowed boxed beef prices to advance last week, he says.
Comprehensive Declines Sharply
The flush meant that the national comprehensive boxed beef cutout (cuts, grinds and trim) the week before last declined by $4.06 per cwt from the prior week to $313.57 per cwt. The Choice cutout declined by $3.24 per cwt to $311.65 per cwt. Spot market sales accounted for 29.8% of the total volume of 6972 loads. Formula sales accounted for 52.2%, forward sales accounted for 18.0% and export sales accounted for 12.8%. Meanwhile, the price of domestic lean manufacturing beef (90CL) averaged $375.92 per cwt, the second highest on record and just under the $376.17 per cwt record set the week of August 3. The Choice cutout the first three days of last week increased by $2.17 per cwt to $311.51 per cwt.
Carcass weights meanwhile remain well above last year’s levels. Steer weights in the week ended August 24 averaged 931 lbs, flat with the prior week and up 25 lbs from the same week last year. Heifer weights averaged 840 lbs, also flat with the week before and up 21 lbs from last year. Overall weights averaged 853 lbs, up 1 lb and up 29 lbs, respectively, from last year. This was the equivalent of adding 21,435 head to that week’s slaughter total of 608,984 head, says HedgersEdge.com. The weights, which are record high for this time of year, continue to show that cattle feeders are not current in their marketings. Another measurement is that quality grading remains higher than this time last year. Cattle in the week ended August 25 graded 10.12% Prime and 73.14% Choice for a total of 83.26%, versus 80.29% in the same week last year.
Cash live cattle prices looked like being lower last week than the week before. That week saw the 5-area steer price decline somewhat from the prior week. Prices averaged $183.81 per cwt live or $290.29 per cwt dressed. These were down $1.73 per cwt and $3.64 per cwt, respectively, from the prior week. The only cash trade through Wednesday last week was in Kansas, where 1333 head sold at $180 per cwt. Trade on Thursday developed at slightly higher prices, with live prices at $181 per cwt down south and $180-183 up north. Nebraska reported dressed prices at $288 per cwt. Meanwhile, the slaughter total for the year to August 31 was down 910,500 head on last year. At this rate, the annual harvest will decline by 1.352M head, says Gottschalk.
USDA UPDATES LABEL GUIDELINES
USDA updates its guidelines on how it supports documentation for animal-raising or environment-related claims on labels for meat and poultry products. Animal-raising claims like “Raised Without Antibiotics,” “Grass-Fed” and “Free-Range,” and environment-related claims such as “Raised using Regenerative Agriculture Practices” and “Climate-Friendly,” are voluntary marketing claims that highlight certain aspects of how the source animals for meat and poultry products are raised. The claims might also highlight how to improve the land or otherwise implement environmentally sustainable practices, says USDA.
USDA continues to deliver on its commitment to fairness and choice for both farmers and consumers, and that means supporting transparency and high quality standards, says Agriculture Secretary Tom Vilsack. These updates will help to level the playing field for businesses who are truthfully using these claims and ensure that people can trust the labels when they purchase meat and poultry products, he says. Documentation for any of these claims is reviewed by USDA’s Food Safety and Inspection Service (FSIS). The claims can only be made on labels for products sold to consumers after FSIS approval. FSIS last updated its guidelines on these claims in 2019.
In this latest guidance, FSIS says it strongly encourages the use of third-party certification to confirm animal-raising or environment-related claims. Third-party certification helps ensure that such claims are truthful and not misleading by having an independent organization verify that their standards are being met on the farm for the raising of animals and for environmental stewardship. Establishments that use claims like “Raised Without Antibiotics” or “No Antibiotics Ever” are recommended to implement routine sampling and testing programs to detect antibiotic use in animals before slaughter or obtain third-party certification that includes testing, says FSIS.
In response, the Meat Institute’s Sarah Little says its members support truthful labeling that is not misleading so that consumers can make informed choices in the marketplace. Third-party verification is a common practice in the meat and poultry industry and one of many tools that can be utilized to support label claims. The Meat Institute will review the updated guidance and support members in building robust programs to maintain consumer trust, she says. Parts of this story appeared on Meat+Poultry’s website.
NEBRASKA ACTS OVER LAB MEAT
NEBRASKA becomes the fourth state to ban or put restrictions on the use of lab-grown meat. An executive order by Nebraska Governor Jim Pillen on August 30 put strict guidelines in place on what state agencies and contractors can do to obtain the lab-grown product. Pillen has also directed the Nebraska Department of Agriculture (NDA) to initiate a rulemaking process to make sure that any lab-grown meat products sold in stores would be properly labeled and are not marketed next to natural meat on the same shelves.
Nebraska farmers and ranchers are committed to producing the best food products anywhere, Pillen told a group of producers from Oak Barn Beef in West Point, Neb. We feed the world and we save the planet more effectively and more efficiently than anybody else and he will defend those practices with his last breath, he said. Pillen also announced that during the upcoming legislative session, senators would work with him to draft legislation banning lab-grown meat in Nebraska. Sherry Vinton, director of the NDA, said a public hearing would be scheduled for October 8 on draft regulations. Nebraska consumers want to know and deserve to know that what they are purchasing is safe, wholesome meat and not a lab grown product, she said.
Florida Governor Ron DeSantis in May signed a bill to ban the sale of cultivated meat in Florida. Alabama Governor Kay Ivey signed a similar law on May 7. Iowa also signed a law during May restricting cultivated meat products in state agencies. Republican lawmakers in June co-sponsored the REAL Meat Act of 2024 which would ban the use of federal funds in various areas related to cultured meat. In August, Upside Foods, a cultivated meat company, and the Institute for Justice (IJ) filed a lawsuit challenging the Florida law.
AUSTRALIA CONTINUES RECORD EXPORTS
THE record surge in Australian beef exports continued in August, with a monthly total of 121,797 metric tons (mt) shipped to all markets. This represented the third highest monthly volume on record, says Beef Central. The tonnage was exceeded only by July this year, when a record just short of 130,000 mt was shipped to export customers, and by March 2015 during the middle of a raging drought when the herd was being liquidated with a frenzy. Monthly exports that month reached 123,468 mt. On top of the July all-time record for volume, it means Australia’s beef and veal exports exceeded 250,000 mt in just two months. August export volume was almost 20,000 mt or 19% above August last year, says Beef Central.
As large as the July record figure was, it was partly impacted by carry-over stocks held in cold storage from late June, says Beef Central. This pushed numbers even higher than anticipated in July. Declining availability of export meat out of the U.S. was also a contributing factor. There is clearly some displacement of U.S. exports taking place from Australia into North Asia and elsewhere as the U.S. beef system starts to struggle under the weight of a beef herd now at its lowest level since 1951. The past three months saw weekly beef slaughter at or above 140,000 head across Australia. The added impact of long-term increased carcass weights in Australian slaughter cattle has served to underpin the recent export trade surge, says Beef Central.
Australian export beef shipments for the year to date are now at 853,204 mt, more than 175,000 mt or 26% higher than the same eight months last year, says Beef Central. The eight-month year-to-date record was set back in the 2015 drought year, when January-August exports reached 874,262 mt. This indicates how recent the latest trade surge has been. During the 2015 drought, slaughter and export volumes remained consistently high throughout the year. While this year’s June monthly volumes were reasonably strong at 106,000b mt, there was no clear forewarning that tonnage would explode the way it has during July and August, says Beef Central.
U.S. Continues To Shine
While the record July shipments are hard to top, most Australian beef export customers continued to purchase strongly during August, especially when compared with August last year, says Beef Central. The U.S. continues to shine as Australia’s standout export customer in volume terms, taking 41,006 mt in August. This was up another 2466 mt or 6.4% from an already high July shipment volume, and was 15,200 mt or 59% higher than in August last year. Calendar year to date, the U.S. has now taken almost 235,000 mt of Australian beef, up 96,000 mt or 69% on the same period last year. The trend clearly reflects the point that when the U.S. needs beef, it has the ability and determination to bid imported product away from all of Australia’s other export customers, says Beef Central.
While these numbers are impressive, history shows the all-time peak in Australia’s monthly exports to the U.S. came in September 2014 when drought in Australia combined with a beef shortage in the U.S. Australia sent 47,238 mt of beef to the U.S. in just 30 days. The previous time when monthly exports were as high as last month was September 2015. This was well before the dawn of the China export market era, meaning there were less competitors in play for Australian product. Exports to Japan last month came off near-record July volume to 19,676 mt, down 25%, but were up 2800 mt or 17% on August last year. Year-to-date, Australia’s exports to Japan have reached 179,882 mt, up 42,000 mt or 31% on the same period last year. A big part of that trend is the gradual decline in exports to Japan out of the U.S., now being displaced more by Australian product.
Meanwhile, New Zealand will export 3.1% less beef in 2024-2025 (starting October 1). Exports will total 651,000 metric tons bone-in, estimates Beef+Lamb New Zealand. Its cattle slaughter for export will total 2.540M head, down 3.3% and the lowest total since 2017-2018. Global demand for red meat is expected to improve slightly but NZ farm profitability will remain challenging, says Beef+Lamb New Zealand. Demand for beef is expected to remain solid, driven by a low American domestic supply, and prices will remain strong as a result. Beef+Lamb New Zealand forecasts an All Beef price of NZ$5.35 per kilogram carcass weight equivalent. As for cattle numbers, beef cows will be down 2.7% and dairy cows will be down 1.3%.
AMERICANS’ ECONOMIC MOOD IMPROVES
THE American consumer is starting to shake out of a lingering bad mood, according to The Wall Street Journal (WSJ). When it asked 1500 voters in late August for their feelings about the economy, 34% said it is improving, up from 26% in early July. The share who thought the economy was worsening fell to 48% from 54%. Sentiment is drifting up, says Joanne Hsu, who oversees the University of Michigan’s consumer sentiment gauge. This closely-watched measure rose 2.3% since July, the university said, driven by an uptick in people’s expectations of how the economy will fare in coming months.
The Conference Board, a business research organization based in New York, similarly said that its consumer confidence index rose in August from July, matching its highest level since February. Gallup also said that its index of economic confidence rose in August, hitting its best level since March. Consumers are still much less buoyant on the economy than they were before the pandemic, says the WSJ. But a variety of factors seems to be driving an improvement in American moods, including lower gasoline prices, a decline in mortgage rates ahead of an expected Federal Reserve interest rate cut in September, and a buoyant stock market.
Rising prices have soured the American consumer psyche for the past few years, says the WSJ. The latest data suggests that while consumers are still unhappy about how much everyday goods and services cost, they seem to be aware that inflation has slowed. The Commerce Department recently reported that its measure of consumer prices, the Federal Reserve’s preferred inflation gauge, was up 2.5% in July from a year earlier, well off the 7.1% it registered in July 2022. Prices at the pump have fallen. A gallon of regular gas fetched $3.31 on average as of September 2, compared with $3.81 a year earlier.
TYSON NAMES NEW CFO
TYSON Foods names Curt Calaway as the company’s new chief financial officer (CFO) after serving as the interim CFO since June. The news comes after John R. Tyson, the previous CFO, was arrested and charged with driving while intoxicated (DWI) in Fayetteville, Ark., on June 13. The company confirmed that Tyson remains with the company but is currently on health-related leave. Tyson is a great-grandson of the company’s founder and son of its current chairman.
Curt Calaway is a proven leader with deep industry knowledge and a wealth of experience in financial strategy and reporting, said Donnie King, Tyson’s president and CEO. He is confident that Curt will continue to help drive Tyson’s operational excellence and shareholder value. Before taking the position as CFO, Calaway served as CFO for Tyson’s prepared foods business segment and was responsible for the company’s mergers and acquisitions and corporate development efforts. He joined Tyson in April 2021.
Tyson meanwhile sells its 49% stake in the Indian joint venture Godrej Tyson Foods. Tyson first entered the joint venture in 2008 when it formed the business alongside Indian company Godrej Agrovet to manufacture and market processed poultry and vegetarian products in India. Together, they sought to combine Tyson’s capabilities in vertically-integrated poultry processing and product development with Godrej Agrovet’s expertise in India’s supply chain. Previously holding a 51% stake in the joint venture, Godrej Agrovet is now the full owner of Godrej Tyson Foods. Through the transaction, it gained a total of 97,461 shares.
The intent of the transaction was originally announced on August 1, when Godrej Agrovet released its financial results for the quarter ended June 30. In that report, Godrej Tyson Foods posted lower revenues primarily due to lower volumes in the live bird business. Godrej Tyson Foods has plants in Bangalore and Mumbai, complete with integrated breeding and hatchery operation. A separate production facility for the company’s vegetarian products sits on six acres of land in Ludhiana, India.