LIVE cattle futures prices for much of the year have struggled to keep pace with cash prices. But in just two days last week, they surged to a premium by adding 445 points to the December contract. It closed Wednesday at $192.25 per cwt, ahead of the 4792 head that sold Tuesday on the cash market at $190-191 per cwt live. But the premium was short-lived. The December contract eased slightly Thursday to close at $192.12 per cwt, while cash prices Wednesday advanced to $192-195 per cwt live up north, to an average $194.71 per cwt in Kansas and to $192.00 per cwt in Texas. Thursday morning saw prices up north at $194-196 per cwt live and at $192.00 per cwt down south. Trade was moderate up north and light down south.
Carcass weights meanwhile remain well above year ago levels. Steer weights for the week ended November 30 averaged 954 lbs, up 2 lbs on the week before and up 29 lbs on the same week last year. Heifer weights averaged 865 lbs, up 4 lbs and 11 lbs, respectively. Overall weights averaged 870 lbs, up 3 lbs and 24 lbs, respectively. This equaled their record and was the equivalent of adding 15,120 cattle to the weekly harvest of 532,898 head, says HedgersEdge.com. One positive is that weekly steer and heifer slaughter is at a higher rate than for many weeks, even though fed beef processing margins have been negative since early November. Steer and heifer slaughter three weeks ago achieved its highest weekly level in over two years.
Beef Cutouts Continue To Rebound
Retailers appear to have left some of their beef buying for the holidays to the last minute if the latest weekly comprehensive cutout and last week’s spot market cutouts are any indication. The Choice cutout the first four days last week increased by $3.20 per cwt while the Select cutout increased by $3.85 per cwt. The comprehensive the week before last averaged $308.71 per cwt, up $6.71 per cwt from the week before. It was up 7.9% from the same week last year. Of note was an increase in forward sales from 16.8% three weeks ago to 21.6%. Exports also increased from 11.1% to 15.0%. Spot market sales represented 27.5% of the total volume of 7575 loads of cuts, grinds and trim, while formula sales represented 50.9%. The comprehensive likely continued its rally last week, as the weekly slaughter total was likely to be less than 620,000 head.
The average price of lean domestic manufacturing beef (90CL) two weeks ago averaged $319.42 per cwt, up 22.5% from the same week last year. This in part led imported frozen lean beef trimmings from Australia last Monday to set an all-time record price, just a whisker away from A$10 per kilogram (kg). The market was quoted at A$999.75 per kg, exceeding the previous high set in early August of A$987.9 per kg and the short-lived COVID-related spike back in 2019, when U.S. beef processing plants closed briefly due to sickness and absenteeism. Since last Monday’s quote, the Australian dollar slipped further in currency value, suggesting the market is now squarely in ‘four digits’ for the first time, says Beef Central’s Jon Condon.
When measured in U.S. currency terms, current prices for imported lean trimmings have occasionally been this high before but when the currency conversion is overlaid, new records have been set, says Condon. Prices back around mid-year were around US$3.00 per lb, where they currently sit, but the Australian dollar back then was worth closer to US67 cents than US63 cents, where it sits today. There are a lot of elements to the story behind the latest surge in price for Australian lean trimmings but the fundamental driver is the big decline being seen in U.S. non-fed slaughter as a result of the impact of drought and herd decline, says Condon. Australia exported 352,440 metric tons of beef to the U.S. January through November, as CBW reports in its next story.
OCT EXPORTS WERE UP ON 2023
EXPORTS of U.S. beef and pork posted year-over-year increases in October, with pork exports well-positioned to set annual volume and value records in 2024. Meanwhile, beef exports saw an important uptick in demand from China and South Korea. October beef exports totaled 105,269 metric tons (mt), up 1% from a year ago, while value increased 3% to $860.4M, says the U.S. Meat Export Federation (USMEF). Shipments to Mexico maintained their impressive 2024 performance in October, while exports rebounded to South Korea and China/Hong Kong. For January through October, beef export value was 4% above last year at $8.68 billion, despite a 2% decline in volume (1.066M mt), says USMEF.
It is encouraging to see an uptick in demand for U.S. beef in China and Korea, where the economic headwinds have been formidable this year, says USMEF President and CEO Dan Halstrom. The U.S.’s Western Hemisphere markets have been outstanding and exports have also expanded to the ASEAN region. If U.S. beef can regain momentum in these larger Asian destinations, this bodes well for 2025, he says.
Pork exports reached 252,411 mt in October, up 3% from a year ago, while value also climbed 3% to $710.4M, says USMEF. Although shipments to leading market Mexico declined slightly, this was more than offset by growth in Japan, Central America, the Caribbean, Oceania and the ASEAN region. Through the first ten months of 2024, pork exports increased 5% from a year ago to 2.49M mt, valued at $7.07 billion (up 6%). For the year, exports are projected to surpass 3M mt for the first time, exceeding the 2020 volume record of 2.98M mt and topping last year’s value record of $8.16 billion. Pork exports to leading market Mexico have reached new heights in 2024 but trended modestly lower in October, falling 2% from a year ago in both volume (98,728 mt) and value ($216.5M). Through the first ten months of the year, exports to Mexico were still 6% above last year’s record pace at 948,932 mt, valued at $2.1 billion (up 11%), says USMEF.
While shipments to Mexico eased just a bit in October, $217M in exports is still a tremendous number, says Halstrom. This highlights the remarkable growth that U.S. pork has achieved in the Mexican market, which is enabled by the duty-free access delivered through the U.S.-Mexico-Canada Agreement. This access is critical and something the U.S. can never take for granted. At the same time, the fact that global exports still achieved an increase in October really underscores the importance of market diversification, he says.
China/Hong Kong and Korea Fuel Beef Exports
Beef exports to China/Hong Kong totaled 20,493 mt in October, up 16% from a year ago and the largest since June 2023, says USMEF. Export value climbed 17% to $190.6M, also the highest since June 2023. January-October exports to the region were 8% below last year in volume (177,542 mt) and 3% lower in value ($1.64 billion). October beef exports to Korea, which is the leading value destination for U.S. beef, were the largest since April at 19,638 mt, up 5% from a year ago, while value climbed 10% to $191.7M, the highest since March. For January through October, exports to Korea were 9% below last year’s pace at 188,783 mt but up 3% in value to $1.8 billion, says USMEF.
U.S. beef continued to post impressive gains in Mexico in October, with exports up 7% from a year ago to 19,723 mt, says USMEF. Export value increased 5% to $108.4M. These results pushed January-October shipments to Mexico 13% above last year at 193,006 mt, while value climbed 15% to $1.12 billion. While exports benefited from a very strong peso in the first half of 2024, demand has held up well in recent months even with the peso weakening versus the U.S. dollar, losing 20% of its value since late May, says USMEF. Beef exports to Japan trended lower in October at 16,852 mt, down 9% from a year ago, while value fell 6% to $129.2M. January-October shipments to Japan were still steady with last year at 205,737 mt, while export value was up 4% to $1.57 billion. After gaining momentum in the second and third quarters, beef exports to Taiwan took a step back in October, falling 21% from a year ago to 3892 mt. Export value was down 11% to $48.6M. For January through October, exports to Taiwan still achieved a 6% increase in value ($573.8M) despite a 3% decline in volume (51,263 mt), says USMEF.
Caribbean Exports Increase 18%
October beef exports to the Caribbean reached 2479 mt, up 18% from a year ago, while export value climbed 19% to $22.5M, says USMEF. They were led by growth in the Dominican Republic, Cuba and Jamaica. January-October exports were 21% above last year’s pace at 26,953 mt, while value increased 10% to $228.8M. Larger shipments to Guatemala and Panama fueled a 7% increase in October beef exports to Central America, while value climbed 14% to $17M. Through the first ten months of the year, exports to the region increased 5% in volume (to 17,901 mt) and 10% in value (to $131.9M). Exports to Guatemala are expected to be record large for the second consecutive year, says USMEF.
Led by growth in the Philippines and Singapore, October beef exports to the ASEAN region totaled 5010 mt, up 5% from a year ago, while value jumped 19% to $38.3M, says USMEF. While January-October exports to the region were up just 2% from a year ago at 35,961 mt, value climbed an impressive 37% to $295.6M. U.S. beef regained full access to Colombia in late September after being severely limited by H5N1-related restrictions that began in April. The timing of the full reopening limited the impact on October exports but shipments were the largest since March at 246 mt, valued at $2.2M. November data may better reflect the increase in eligible supplies, says USMEF.
Beef export volume to the Middle East continued to trend higher in October, as exports increased 8% from a year ago to 4155 mt, says USMEF. They were led by larger shipments to Egypt and Kuwait. But export value declined, due in large part to an impasse over halal certification for the region’s leading value market, the United Arab Emirates. Exports to the UAE fell sharply to just 94 mt valued at $1.4M, after reaching 433 mt a year ago, valued at $5.4M. Through the first ten months of the year, exports to the Middle East increased 24% from a year ago to 44,241 mt, valued at just under $200M (up 21%). However, for the region to continue to perform at a high level, regaining access to the UAE is essential, says USMEF.
Beef export value equated to $380.98 per head of fed slaughter in October, down 2% from a year ago, says USMEF. The January-October average was $411.03, up 4%. Exports accounted for 12.5% of total October beef production and 10.3% of muscle cuts, each down about half a percentage point from a year ago. January-October exports accounted for 13.8% of total production and 11.5% of muscle cuts, compared to 14.1% and 11.8%, respectively, during the same period last year, says USMEF.
Australia Will Have Record Export Year
Australia is set for a record beef export volume this year somewhere close to 1.29M mt, although there was a moderate easing in export activity in November. Monthly export shipment data released last week showed November exports to all markets at 118,878 mt, down 9% on the monthly all-time record set in October at above 130,000 mt but still 16% higher than November last year, says Beef Central. For the year to date, exports hit 1.216M mt, up 240,000 mt or 25% on the same 11-month period last year. Australia’s two previous record high export volumes were set in 2015 and 2016 when tonnage hit 1.22M mt and 1.23M mt in each year, driven by drought-fueled cattle turnoffs on an epic scale. Largest export customer the U.S. in November took 35,026 mt of chilled and frozen Australian beef, delivering an accumulated 352,440 mt for the year to date, says Beef Central.
SHAREHOLDERS APPROVE SMITHFIELD PLAN
WH Group Ltd., the parent company of giant U.S. pork processor Smithfield Foods, says its shareholders have approved a spin-off plan that would list Smithfield on the New York Stock Exchange or Nasdaq Stock Market. According to an investor relations statement from WH Group, 99.4% of shareholders voted in favor of the spin-off. The company first confirmed the idea of such a move in a filing last month, when it said it intended to list up to 20% of Smithfield’s shares. In its document, WH Group said the unaudited net asset value for Smithfield was $5.38 billion as of September 30, 2024.
CATTLE ON FEED FORECASTS
David Anderson, Texas A&M University: COF 99.8%, placed 96.0%, marketed 98.6%; Kevin Coburn, S&P Global Commodity Insights: COF 99.1%, placed 91.3%, marketed 98.5%; Tyler Cozzens, Livestock Marketing Information Center: COF 100.0%, placed 96.4%, marketed 98.0%; Andrew Gottschalk, HedgersEdge.com: COF 100.3%, placed 98.9%, marketed 98.2%; Rich Nelson, Allendale Inc: COF 99.5%, placed 93.4%, marketed 98.7%; Lori Porter, Allegiant Commodity Group: COF 99.4%, placed 92.6%, marketed 97.9%; Mike Sands, MBS Research: COF 100%, placed 96%, marketed 98%
COF TOTAL IS UP ON LAST YEAR
THE cattle on feed (COF) total on December 1 was flat with or up slightly from a year ago and up significantly from the five-year average, as this Friday’s COF report is likely to show. One factor was that the COF totals for the last five months have been much higher than their five-year average. Feedlots likely placed fewer cattle in November than last year and perhaps the smallest November number in nine years. Analysts’ placement forecasts however varied from 91.3% of a year ago to 98.9%. Feedlots also marketed about 2% fewer cattle in November than last year because November had one less slaughter day than last year.
The December 1 COF total is estimated to be 12.056M head, up 0.3% from a year ago and 227,000 head above the previous five-year average, says Andrew Gottschalk, HedgersEdge.com. The increase in COF totals from July 1 to December 1 was 752,000 head versus the prior five-year average gain of 580,000 head during that timeframe. Front-end fed cattle supplies on December 1 (COF 150 plus days) were estimated to be 2.367M head, 3.7% below the previous year but 10.6% above the previous five-year average. Carcass weight data continues to confirm that this category of cattle remains front-end loaded, he says.
November feedlot placements near 96% of last year’s already small number led to a larger than usual decline from a month earlier and the smallest November total since 2015, says Mike Sands, MBS Research. It’s not unusual for November placements to decline significantly from the typical seasonal peak in October. But this year’s seasonal decline might have been more than 500,000 head from an October number that was already slightly below the 2015-19 average. This larger than usual seasonal decline, coupled with prospects for a further seasonal decline in December, might reinforce the notion of eroding seasonal fed cattle supplies by mid and late spring of next year, he says.
Part of the November decline was attributed to the closure of the Mexican border on November 22, says Sands. (New World screwworm was detected in southern Mexico). But most Mexican imports, particularly late in the fall, are too light to interest most cattle feeders, even with lower feed costs. Most imports are candidates for backgrounding programs such as wheat or other small grains pastures or grow yards. Lack of availability likely contributed to sharply higher calf and light feeder cattle prices in recent weeks. The sharply higher feeder prices, which boosted the index from the lower $240s per cwt to record highs in the lower $260s, and the resulting surge in projected breakeven fed prices next spring likely rationed some interest from buyers, he says.
The projected decline in November marketings was mostly the result of one less business day during the month, says Sands. Adjusted for that difference, the marketing rate was about 3% higher than the slow marketing pace of a year earlier. Still, November marketings were about the smallest November total since 2015 but about the same as the 2015-2019 average. Strong basis levels during the month likely provided some incentive for cattle feeders to move cattle, few price concessions were made and prices rebounded during the last half of the month, he says. The smaller marketings more than offset the decline in placements during the month, boosting the feedlot inventory slightly higher than a month earlier but little changed from a year earlier at nearly 12M head. This was likely the seasonal peak in feedlot inventories, which are expected to erode steadily during 2025 and may be 4% to 5% smaller than a year earlier by next fall, he says.