CATTLE feeders continue to hold sway over fed beef processors and have been rewarded with record high cash live cattle prices as a result. With one week of the first quarter to go, the average weekly price for a 5-area steer was $203.34 per cwt live, with a high of $209.57 per cwt and a low of $197.65 per cwt. Average weekly prices have dipped below $200 per cwt only three times. The number of cattle on feed 150 days or more has remained above a year ago during the quarter. But this has not fazed cattle feeders. They have been content to market only a certain number of cattle each week and continue to add weight to the cattle. That’s because the cost of gain remains well below the current selling price of cattle.
Packers in turn have been prepared to absorb large operating losses each week and pay up for cattle to be able to run their plants as efficiently as possible. One result is that Saturday kills have all been below 10,000 head every week. Packer margins in the first 11 weeks of the quarter averaged a loss of $109.58 per head, according to HedgersEdge.com. The biggest weekly loss was $203.80 per head and the smallest was $16.99 per head. The first quarter loss looks set to be the biggest ever for any quarter. Analysts now wonder when and if packers will take a different tack and reduce fed steer and heifer slaughter even more or even idle some plants.
The week before revealed again feeders’ leverage over packers. Virtually no cash trade occurred through Thursday as cattle feeders priced cattle higher than the week before and packers resisted paying higher prices. But the dam broke Friday and packers were forced to pay sharply higher prices in an active trade (the weekly total sold was 64,569 head). Prices averaged $205.30 per cwt live or $324.97 per cwt dressed. These were up $5.02 per cwt live and $8.54 per cwt dressed from the prior week. The trade pattern was repeated last week, as the only cash sale was of 64 head in Iowa on Wednesday at $202 per cwt live. Wednesday saw significant weather disruptions in Nebraska and Iowa, which forced the day’s slaughter down to an estimated 89,000 head.
Packers Finally Push Cutout Higher
Cattle continue to grade 72-73% Choice each week, one reason why packers have struggled this quarter to push the Choice cutout high enough to reduce their losses significantly. The only spurt came in January when the cutout the week ended January 24 averaged $328.l58 per cwt. It declined after that to a low of $313.66 per cwt the week ended February 21. It recovered somewhat after that but averaged only $318.06 per cwt the week before last. The comprehensive cutout (cuts, grinds and trim) averaged $321.67 per cwt, up $4.33 per cwt from the prior week. Spot market sales represented 29.4% of the total volume, while formula represented 55.5%, forward sales 15.2% and exports only 8.2%. However, the Choice cutout the first four days of last week increased $9.79 per cwt to $324.32 per cwt. A bright spot for cow processors is that the weekly price of domestic lean manufacturing beef (90CL) set a new record high of $381.43 per cwt the first week of March.
The April live cattle futures market undertone is robust, says analyst Kevin Grier. The fed cattle basis is much stronger than normal but it is unlikely to have much impact on cattle feeder marketing decisions. Calf and yearling prices have jumped, likely aided by the weaker corn futures. The cutout firmed in the past two weeks after taking a breather for several weeks. Consumer demand was very strong in January, he says. The total slaughter four-week average ending March 15 was down 3% versus last year. The fed cattle kill four-week average ending March 1 versus 2024 was down 2%. The non-fed kill four-week average week ending March 1 was down 18%. April and May should see fed kills steady with last year, he says.
BEEF FACILITIES AWAIT CHINA RENEWAL
THE 390 beef U.S. facilities that export beef products to China are waiting anxiously for that country to renew their registration. Their licenses expired March 16, along with those of more than 300 U.S. pork harvesting and cold storage facilities. Some licenses expired in late February. However, all pork facilities had their licenses renewed by last Monday and were approved by China for another five years. U.S. pork producers have maintained access and now have increased certainty to export their products to the 1.4 billion person Chinese market, says Bryan Humphreys, CEO of the National Pork Producers Council (NPPC). NPPC’s leadership and focus on market access for U.S. pork is paying off and NPPC is not stopping there, he says.
As the world’s largest meat market, China remains an important destination for U.S. pork products, especially for offals, which return more value in China than in other markets, says NPPC. In 2024, more than 367,000 metric tons of U.S. pork were exported to China, worth more than $1.1 billion. Approximately 55% of pork variety meat exports, including offals, were shipped to China. USDA and the Office of the U.S. Trade Representative have worked with China’s General Administration of Customs over the past few months to renew the registration of U.S. pork and beef facilities that were set to expire or had recently expired.
While pork producers are celebrating a win, the beef facilities are still waiting. The U.S. Meat Export Federation (USMEF) says it is hoping for similar news soon on the beef side, says USMEF’s Joe Schuele, For the time being, USMEF has advised exporters that beef produced prior to March 16 should clear customs, provided that importers had secured import quarantine permits prior to March 16. USMEF estimates that the beef industry could experience a $4.13 billion full year impact if access to China is lost. This takes into consideration the loss of direct exports to China and also the impact of the improved prices that U.S. beef cuts currently command in Japan, Korea and Taiwan when exporters also have access to Chinese buyers who e active in the market, says Schuele. The registrations in question were first issued in 2020 when hundreds of U.S. meat plants were granted access to China in a Phase One trade deal made with President Donald Trump.
Beef And Pork Exports Support Crop Producers
An updated study meanwhile shows how exports of pork and beef support the bottom lines of U.S. corn and soybean producers. U.S. pork and beef exports in 2024 of $19.1 billion, a $1 billion increase over 2023 and down just 2% from the 2022 record, had a significant impact on the corn and soybean industries, according to an independent study conducted by the Juday Group and released by USMEF The study quantified the returns that beef and pork exports brought to U.S. corn and soybean producers. Nationally, U.S. pork and beef exports accounted for $2.24 billion in market value to corn, $525M to distillers’ dried grains with solubles (DDGS) and $1.12 billion to soybeans in 2024.
Domestic feed usage is critical to the corn and soybean industries and the continued growth in red meat exports is encouraging says USMEF Vice Chair Dave Bruntz, who raises corn, soybeans and fed cattle in south-central Nebraska. A significant share of the corn and soybeans that producers grow locally is ultimately exported through pork and beef. The study demonstrates how beef and pork exports drive value directly back to producers. Corn and soybean growers support the promotion of U.S. pork, beef and lamb by investing a portion of their checkoff dollars in market development efforts conducted by USMEF, he says.
Key findings from the study, which utilized 2024 statistics provided by USDA’s National Agricultural Statistics Service and calculations by the Juday Group, include: Beef and pork exports in 2024 accounted for 525.1M bushels of U.S. corn usage. This equated to a market value of $2.24 billion (at an average 2024 corn price of $4.27 per bushel). Beef and pork exports accounted for 3.04M mt of DDGS usage, equating to $525M (at an average 2024 price of $172.56 per mt). Beef and pork exports contributed an estimated total economic impact of 14% or $0.59 of bushel value (at an average price of $4.27 per bushel) in 2024. Pork exports accounted for 100.7M bushels of U.S. soybean usage, which equated to a market value of $1.12 billion. Pork exports contributed an estimated total economic impact of 13.2% of bushel value or $1.46 in 2024, says the study.
TRADE GROUP WANTS MORE ACCESS
THE Meat Institute, the major trade group for the U.S. meat and poultry industry, wants access to new markets for meat and poultry products and removal of non-tariff barriers. The Meat Institute made its request in a response to U.S. Trade Representative (USTR) Jameison Greer after her office requested information on unfair trade practices and non-reciprocal trade arrangements. Areas that the Meat Institute highlighted in its comments included China’s stance on the existing terms of the U.S.-China Phase One Agreement and China’s retaliatory tariffs on meat exports that look to constrain growth in that market. China has announced that there will be 15% tariffs on U.S. chicken, wheat and corn, and 10% on soybeans, pork, beef and fruit following President Trump’s decision for an additional 10% tariff on all Chinese goods entering the U.S.
The Meat Institute welcomes the opportunity to work with the Trump administration to reassert U.S. leadership to advance U.S. meat, poultry, food and agriculture trade in a manner that revitalizes farm communities and supports broad-based economic growth, said Institute CEO Julie Anna Potts in written remarks. The Trump administration has a unique opportunity to once again demonstrate American leadership in the global trade environment for the benefit of American workers and the U.S. economy. Policies like those put forth in the America First Trade Policy Agenda that seek to open markets and reduce trade barriers enable domestic companies, especially small- and medium-sized U.S. meat and poultry packers and processors, to more effectively plan production, make sourcing decisions and establish export processes, she said.
The Meat Institute noted that there were still regulations impeding U.S. beef and pork exports to Taiwan. Despite this and other progress made, U.S. beef exporters must continue to participate in a USDA AMS Export Verification Program to send product to Taiwan, which limits the commercial potential for U.S. beef exports destined for the Taiwanese market, said the Meat Institute. Bringing more trade options to the table in the Southeast Asian market, including Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, remain important for market diversification. In other regions of the world, the Meat Institute continues to look at removing restrictions on beef and address emerging concerns to fully implement the U.S.-Korea Free Trade Agreement (KORUS). Another continued project for U.S. meat exporters is breaking through its limited access to the markets of the European Union and United Kingdom, said the Meat Institute. Regulatory impediments imposed by the EU and continued by the UK following its departure from the EU show little sign of abating. Prioritizing agricultural concerns through decisive actions in those markets is vital for the meat and poultry industry’s export potential to both the UK and the EU, it said.
EU Food Exports Are Worth 38 Billion Euros
The EU’s food and agriculture exports to the U.S. amount to 38 billion euros, while imports are only 14 billion euros. This is because the EU is largely self-sufficient in food and agriculture products, except for soybeans that are used as animal feed and tropical products, says Rabobank in a recent report. European production surpluses find their way to various global markets, with a significant portion heading to the U.S. Hence, from a trade perspective, the U.S. appears to be more important for the EU than vice versa. The EU exports a diverse array of processed food products to the U.S. including wine, distilled spirits, dairy products and processed fruits, while importing commodities and intermediary products such as soybeans and forest products from the U.S.
If the U.S. imposes tariffs on food and agriculture products from the EU, U.S. importers will bear the cost, says Rabobank. This would make EU products more expensive and put pressure on the competitive position of EU exporters to the U.S. An assessment of the impact of these potential tariffs shows that agricultural machinery would be most impacted. Medium impact is expected for beverages, fruit and vegetables, dairy products and seafood. Facing tariffs, EU companies have five key responses to choose from: stick to their prices and shift the burden to U.S. importers when demand is price inelastic; lower prices to stay competitive; withdraw from the U.S. market; redesign their supply chain to serve the U.S. market from a country that is not subject to tariffs; invest in domestic production within the U.S. A global trade war would have effects far beyond the original trade flows due to interactions between regions and sectors, says Rabobank.
EXPORTS WILL TOTAL $39.7 BILLION
U.S. livestock, poultry, and dairy exports in fiscal 2025 are forecast $400M higher to $39.7 billion on increases to beef and dairy products. That is according to latest USDA forecasts. Beef exports are raised $300M to $9.1 billion on higher volumes and increased unit values. Dairy is forecast up $100M to $8.5 billion on increased price competitiveness for U.S. exports of cheese and butter, with especially strong demand for those products in North America, South America and the Middle East/North Africa. Pork exports are raised $100M to $7.6 billion as continued strong demand in Mexico and Central America supports U.S. exports. Poultry and products are unchanged at $6.8 billion. Although broiler meat exports are raised $100M as higher prices more than offset lower volumes, this increase is counterbalanced by declines in turkey meat, other poultry meat and egg and egg products. Beef and pork variety meats are unchanged at $2.2 billion as higher pork variety meat exports help to offset lower beef variety meat exports. Hides and skins are forecast virtually unchanged, says USDA.
Overall agricultural exports in 2025 are forecast at $170.5 billion, up $500M from USDA’s November forecast, as higher grain and feed exports offset reductions to the oilseed outlook. Grain and feed exports are projected at $37.7 billion, up $1.2 billion, led by higher corn exports, which increased $1.4 billion on higher volumes and unit values. Along with higher feed and fodder exports, these increases more than offset moderately lower wheat, sorghum and rice exports. Oilseed and other product exports are forecast at $32.4 billion, a $1.1 billion reduction from the previous quarter, primarily due to lower soybean unit values resulting from strong South American competition. Cotton exports are forecast down $200M to $4.1 billion on lower volumes. Mexico is forecast to remain the largest market for U.S. agricultural exports at a record $30.2 billion, a $300M increase from the previous forecast, based on strong sales of dairy, wheat and other products during the first quarter. Exports to Canada are forecast down $800M to $28.4 billion due to weaker than expected shipments to date. Exports to China are cut by $1.3 billion to $22.0 billion, largely due to reduced prospects for U.S. soybeans, grains and cotton. U.S. agricultural imports in 2025 are forecast at $219.5 billion, an increase of $4.0 billion from the November projection, that is largely driven by higher values of horticultural products, says USDA.
AFG CLOSES YANKTON PLANT
AMERICAN Foods Group (AFG) ceased harvest operations March 15 at its Cimpl’s beef processing plant in Yankton, S.D. The company cited the current unprecedented cattle cycle and long-term industry changes for its decision. The plant began operation in 1949 and was purchased by the Rosen Meat Group in 1988. AFG acquired the plant in 2005. The plant had a slaughter capacity of 700 head per day and processed cows and bulls. Green Bay, Wis.-based AFG is due to begin operations at its new beef processing plant in Missouri sometime next month. America’s Heartland Packing LLC is in the final stages of construction, says AFG. The $800M state-of-the-art mixed facility based in Wright City will have the capacity to process 2400 head per day once fully operational. It is reportedly doing some killing already and is going to process mostly cows. Its opening likely factored into AFG’s decision to cease operations in Yankton.
AFG made the tough decision to idle harvest operations at its Cimpl’s facility, affecting over 250 employees, says Louie Kohlbeck, president of AFG’s Fresh Meats Division. It recognizes the profound impact this has on its team members, their families and the community. AFG’s top priority is supporting those affected during this transition. Team members from its other locations are on-site to provide guidance and discuss relocation opportunities. AFG will offer other opportunities at other facilities and plans continue paying and providing benefits during the transition. Other facilities run by AFG will remain operational and it expects supply chains not to be interrupted. Cattle procurement will also continue without disruption, as the AFG team will accept and divert cattle to other locations, says Kohlbeck. AFG is the nation’s fourth largest beef processor, with a slaughter capacity now of 5800 head per day in three plants. It processes 85% non-fed cattle and 15% fed cattle. These include cows, bulls, dairy steers and dairy crossbred steers.