THE so-called dog days of summer usually mean a decline in beef sales because high temperatures force more Americans to stay indoors and eat cold cuts rather than grilling outside. The days normally do not start until July. But they came early this year as a blistering heatwave last week extended from the Midwest to New England. This left tens of millions of people sweltering through the Juneteenth holiday on June 19, including in places like northern Maine where people rarely experience such conditions this early in the year. The city of Caribou, just ten miles from the Canadian border, saw a record 103 degrees on the heat index, which combines heat and humidity. Temperatures alone there were hotter than Miami, 94 degrees compared with 89, reported the Associated Press.
It is too early to know how the heatwave affected beef sales last week and over the weekend. But the week came after reports from retailers indicated very good beef demand and movement for the Father’s Day week and weekend ended June 16. Beef demand however is expected to experience some decline as the dog days of summer arrive, says Andrew Gottschalk, HedgersEdge.com. The six- to ten-day temperature outlook, mired in above normal heat, will reinforce that slowdown, he wrote early last week. On the plus side, packer margins are positive, which should have them chasing live cattle offerings, he wrote. HedgersEdge.com calculated that margins the week before last were positive by $28.83 per head, which was only the fourth week this year of positive margins and the most positive of the four weeks.
All Fresh Price Hits New High
USDA’s latest monthly retail beef prices showed both a positive and a negative for consumers. Its All Fresh retail beef price reached a new all-time high of $7.96 per lb in May. It was up one cent from the April price and was up 6.1% from May last year. Conversely, the May Choice price averaged $8.11 per lb, down four cents from April and up only 0.5% from May last year. The record high All Fresh price in part reflects the high price of various types of ground beef and beef patties.
The national weekly comprehensive boxed beef cutout meanwhile declined the week before last, while cash live cattle prices put in a new all-time high. The comprehensive averaged $310.19 per cwt versus $312.08 per cwt the prior week. The Choice cutout averaged $308.04 per cwt versus $311.96 per cwt. Of note was that forward sales increased sharply to represent 20.3% of the total volume of 7396 loads of cuts, grinds and trim. This was the largest weekly volume of the year. Spot sales represented 26.4% of the volume and formula sales represented 53.3%. Export sales accounted for 11.2% Also notable was that the average price of domestic lean manufacturing beef (90CL) that week was $360.52 per cwt, an all-time high for the fifth week in a row. This was up 27.3% on the same week last year. The Choice cutout the first four days last week increased by $2.98 per cwt to $322.87 per cwt.
Cash live cattle prices basis a 5-area steer the week before last averaged a new all-time high of $192.55 per cwt live or $305.47 per cwt dressed. These were up $3.65 per cwt and $4.76 per cwt, respectively, from the prior week and came on reported sales volume of 80,890 head. The cash trade was again very slow to develop last week. The only sales through Wednesday were 415 head reported sold up north, mostly at $196.50 per cwt live or $304-305 per cwt dressed in Iowa and at $310 per cwt dressed in Nebraska. Thursday morning saw a light trade in Iowa at $192-197 per cwt live. Virtually no sales had occurred down south.
RETAILERS LAUNCH ONLINE ADS
GROCERY stores have long used weekly sales circulars to entice cost-conscious consumers into stores. More recently, retailers have launched online ads to further boost shopping. Most advertised products are popular items that would appear on grocery lists anyway. Some promotional discounts are store managers’ efforts to pass on savings from big orders from suppliers. This is according to a story by Lee Schulz of Farm Progress.
USDA’s Agricultural Marketing Service’s Livestock, Poultry and Grain Market News each week collects and summarizes advertised retail pricing information for several hundred products at major retail supermarket outlets, says Schultz. USDA gathers information from publicly-available sources, including store circulars, newspaper ads and retailer websites. Its National Retail Report-Beef provides data on 49 beef cuts. The cuts range from filet mignon to brisket to ground beef of various lean percentages. No processed products are listed. Most advertisements in retail circulars feature specific items at specific sale prices. The retail feature rate is defined as the number of sampled stores advertising any reported beef item during the current week, expressed as a percentage of the total sample, says Schultz.
During the period of June 7 through June 13, 72% of stores nationally featured beef, which was up from 66.1% the prior week and up from 64.1% the same week in 2023, says Schultz. This relatively high feature rate is not unexpected, given that retailers traditionally feature beef prominently in retail circulars. The feature rate ranged from an average of 79.8% of weekly circulars in the Northeast to 64.3% in the South Central region, with the Midwest at 74.1%. Retailers also use no-price promotions, such as “buy one, get one free.” USDA data for the second week in June showed that 15.8% of retailers nationally used this special rate promotion for some beef items, says Schultz.
Branding of beef retail products has gained momentum in recent years, says Schultz. A particular brand may enjoy a price premium in the market due to demand and supply of that brand. In the National Retail Report-Beef, the branded category includes any advertised beef cuts marketed under a corporate trademark or under one of USDA’s Certified Beef Programs. Certified Beef Programs, also known as branded beef programs, are much like other brands that have specifications for their products. Brands strive to differentiate themselves from others in the marketplace. Currently, 73 Certified Beef Programs are active. Certified Angus Beef, which was established in 1978, is the oldest, says Schultz.
UZBEKISTAN OPENS TO U.S. MEAT
UZBEKISTAN opens its market to meat and poultry products from the U.S. The two governments authorized U.S. meat establishments to export products to Uzbekistan as of June 1. A joint announcement from the Office of the United States Trade Representative (USTR) and Uzbekistan confirmed the opening. USTR Ambassador Katherine Tai recently held bilateral meetings with Shavkat Mirziyoyev, president of Uzbekistan. The United States and Uzbekistan were pleased with the significant progress made this year in bilateral market access negotiations and extended mutual interest in their completion in the near future, the two countries said in a joint statement. Uzbekistan is also looking to become a member of the World Trade Organization.
Since Uzbekistan implemented a facility registration measure in 2021, only 29 U.S. meat and poultry facilities were approved by Uzbekistan to be eligible for export to the country, Erin Borror of the U.S. Meat Export Federation (USMEF) told MEAT+POULTRY. USTR and USDA have been engaging with Uzbekistan to remove these restrictions and USMEF appreciates the recently announced positive outcome. The restrictions were lifted starting on June 1 but USDA’s Export Library has not yet been updated, she said.
According to numbers from USMEF, reported exports of beef and beef variety meats destined for Uzbekistan from January through April totaled roughly 8100 metric tons, led by India (4750 mt), Kazakhstan (3260 mt), Brazil (83 mt) and the U.S. (3 mt). Reported January-April pork shipments to Uzbekistan included 96 mt from the European Union (down 18% year-over-year) and 20 mt from Brazil (up from zero).
BRAZIL SENDS MORE TALLOW TO U.S.
BRAZIL began exporting fresh beef to the U.S. only a few years ago. Those exports now average tens of millions of pounds per month. But they are partly restricted by a small tariff-free quota shared with other countries. In contrast, exports of Brazilian cattle tallow to the U.S. have shown explosive growth because they do not face the same restrictions. In fact, larger U.S. tax credits for making biofuels has further encouraged Brazilian exports.
U.S. purchases of Brazilian tallow increased by 377% in the first four months of 2024 from a year earlier, says Bloomberg News. Total U.S. tallow imports rose fourfold since 2019 to a record 779,300 metric tons in 2023, according to U.S. government trade data. Brazil, which accounted for roughly 23% of shipments last year, saw its share jump to 40% in the first four months of this year. Brazil rarely exported tallow until 2022, when Irving, Texas-based Darling Ingredients agreed to buy FASA Group, Brazil’s largest independent rendering company. FASA has since become a supplier of waste fat to Diamond Green Diesel, a biofuel venture between Darling and Valero Energy Corp. Brazilian tallow has been folded into the U.S. biofuel feedstock mix, in part due to Darling’s integration of FASA, says Bloomberg analyst Brett Gibbs.
U.S. fuel makers are turning to Brazil and other countries for cheaper raw materials that will help boost their margins, says Bloomberg. Renewable diesel made from waste fat or used cooking oil has a lower carbon score than soy oil and therefore gets higher tax credits in California, where a large part of U.S. green diesel currently is consumed. As long as the rules are the way they are, these biofuel companies are going to use whatever is cheapest, says John Baize, an independent analyst who also advises the U.S. Soybean Export Council.
A bigger federal tax credit will also start next year, with tallow and used cooking oil generally more lucrative feedstocks than vegetable oil made with U.S. soy, says Bloomberg. Brazil is capitalizing on the rules to emerge as the largest U.S. supplier of tallow today from almost zero exports a few years ago. The booming imports exacerbate a challenging situation for farmers and agriculture companies. Bunge Global SA, Archer-Daniels-Midland Co. and others have been counting on soaring demand for crop-based green diesel feedstocks but competition from foreign imports is eating into profits and jeopardizing expansion plans. Tallow is abundant in Brazil, which slaughters more cattle than any other country except China, says Bloomberg.
Paraguay meanwhile ships its first ever beef to Canada. The milestone comes less than a month after the country obtained health authorization to export meat to Canada. The authorization for export to the Canadian market occurred in the second week of May and meat processing plants had time to negotiate the first contracts. The symbolic shipment of the first container was made on June 14, said José Carlos Martin, president of the National Quality and Animal Health (Senacsa). The Canadian market is one of the leading importers of meat in the world. It will depend a lot on Paraguayan exporters, based on the quality and competitiveness of their product, to send more significant volumes to Canada, he said. The first shipment was what Paraguay called industrial (manufacturing) meat. It included cuts that will be processed in Canada mainly in hamburger plants, which is a product that is widely consumed there, said Randy Ross Wiebe, president of the Paraguayan Meat Chamber. Canada has a little over 70,000 metric tons of meat quota that is normally not filled, so the chamber thinks Paraguay can send quite a bit to the Canadian market, he said.
JAPANESE EAT MORE MEAT: Japan’s seafood consumption has fallen to its lowest level on record, with annual per capita consumption dropping from 40.2 kilograms (kgs) in fiscal 2001 to 22 kgs in fiscal 2022, says the country’s Agriculture, Forestry and Fisheries Ministry. People have been consuming less seafood since the peak in 2001. Meat consumption however has been on the rise and in fiscal 2022 reached 34 kgs per person. The agriculture ministry has indicated a need to promote the benefits of eating fish and shellfish, it says. Purchases of fresh seafood are also on a downward trend, falling to 6368 grams in 2023, about half the 12,920 grams purchased in 2004. According to a ministry survey, the most common reason for buying more meat and less seafood, with multiple answers allowed, was “family members want meat” at 45.9%, followed by “seafood is more expensive” at 42.1%, and “fish is difficult to cook” at 38%.
AUSTRALIA “FINDS” 14% MORE CATTLE
THE Australian beef industry has increasingly suspected that its beef herd has been significantly under-counted because of inadequate producer surveys of herd numbers. The federal government body responsible for the surveys, the Australian Bureau of Statistics (ABS), has finally admitted this. It has radically altered its assessment of beef herd size in Australia, following changes in data collection and methodology, says Beef Central. ABS’s revised estimate for herd size at the end of June last year is 27.8M head, whereas ABS’s previous estimate was 24.4M. This is a massive difference of 3.4M head or 14% more cattle, says Beef Central.
The adjustment comes after widespread and sustained criticism over the past two years about the accuracy and reliability of industry and government beef herd estimates, says Beef Central. The adjustments to official herd size numbers as released by ABS has significant implications for the beef industry, not the least of which is calculations of carbon and methane production by beef animals over time. The new estimate, based on cattle inflows and outflows, is now within 4% of Meat & Livestock Australia’s own national 2023 herd estimates. MLA is a producer organization. There was recognition that the industry could not be processing 7M to 8M head each year based on the earlier more moderate herd sizes being reported, says Beef Central .
The reason for the change in measurement is the abandonment of beef producer surveys carried out previously, partly due to poor stakeholder responses, in favor of newer modelling techniques and data sources, says Beef Central. In addition, ABS surveys previously did not take into account cattle held by smaller producers whose ‘value of agricultural operations’ (i.e., turnover) did not reach A$40,000 a year. ABS started modernizing the way official agricultural statistics are produced to better support Australian agriculture in early 2023.
A key part of that process has been the development of partnerships with industry and government to identify new data sources and develop new statistical methods, says ABS. This has reduced respondent burden on farmers and created greater consistency between existing data sources, which helps to build trust in the statistics. The new estimates are still labelled as experimental but only because ABS intends to further refine the approach utilizing additional data sources and further input from industry experts, it says.
ABS’s revised estimates of a herd of 27.8M beef cattle represents a 4.6% increase from an adjusted figure for the previous 2022 year, following favorable seasonal conditions in most cattle regions, says Beef Central. Herd rebuilding occurred in Queensland, the largest contributing state to the Australian cattle population, where cattle numbers increased by 4.2% for the year ending June 30, 2023 to 13.2M head. Beef cattle numbers also increased in New South Wales by 6.2% to 5.9M head and in Victoria by 5% to 2.9M, says Beef Central.
CATTLE PRICES WILL STAY FIRM
CATTLE prices are expected to maintain their current levels, while beef production is projected to contract, says Rabobank’s global beef quarterly beef report for the second quarter. Rabobank forecasts a downturn in beef production volumes from major producers in the second half of 2024. Europe and the U.S. are set to experience contractions that will overshadow production increases anticipated in Australia and Brazil. China is also expected to improve production in the second quarter, followed by a reduction later in the year. North American cattle market prices are hovering at record highs, says Rabobank. USDA’s All Fresh retail beef price reached a new all-time high of $7.96 per lb in May. But other regions are experiencing less extreme pricing. As the global cattle market moves at two distinct paces, Europe finds itself in the middle despite a recent uptick in production, says Rabobank. The regional disparities are beginning to influence international trade flows, with the U.S. ramping up its import volumes and major Asian markets maintaining steady import levels. Growing demand for climate disclosures is expected to creep into beef supply chains, presenting both opportunities and risks, says Rabobank in its report.