THE U.S. beef industry has its fingers crossed that beef demand in June will be as good as or better than in May. Demand normally declines 2% from May to June but analysts say boxed beef cutout values are advancing later than they normally do at this time of year. Reduced production last week due to the Memorial Day holiday last Monday holiday was expected to lend additional price support to cutout values. Values the week before last increased sharply from the prior week. The comprehensive cutout (cuts, grinds and trim) averaged $308.12 per cwt, up $5.99 per cwt on the prior week. The Choice cutout averaged $306.47 per cwt, up $4.75 per cwt, while the Select cutout averaged $296.14 per cwt, up $5.95 per cwt. Both cutouts continued to increase last week.
Also of note was that the price of domestic lean manufacturing (90CL) beef the week before last averaged a record $350.21 per cwt, up $1.00 per cwt from the prior week, which had set a new record. The comprehensive report also yielded two positives. Forward sales represented 20.6% of the total volume of 7018 loads, their highest percentage for some time. In addition, export sales at 1352 loads were the largest weekly total since the week of September 23, 2023 and represented 19.3% of the total volume. They averaged 12.6% the week before that. Spot market sales represented 27.6% of the total and formula sales represented 51.9% of the total.
Prices Rose For Five Straight Weeks
Cash live cattle prices last week looked like being steady to slightly lower than the prior week, which saw a late week price increase on good volume. Prices basis a five-area steer averaged $190.09 per cwt live or $303.49 per cwt dressed. Both prices were all-time record highs. The live price advanced $1.55 per cwt from the prior week’s $188.54 per cwt, which in turn was up from $185.94 per cwt the week ended May 12. The dressed price advanced $4.10 per cwt from the prior week’s $299.39 per cwt, which in turn was up from $295.28 per cwt the week ended May 12. Prices in the week ended April 21 averaged $182.67 per cwt live or $292.35 per cwt dressed. They increased for five weeks in a row after that.
The cash trade was light through Thursday last week, even though packers had a short week in which to buy cattle. The only trade Tuesday was of 550 head in Nebraska that sold at $190 per cwt live or at $298 per cwt dressed. Wednesday saw a very light trade at $190 per cwt live or $298-300 per cwt dressed up north and at $187 per cwt live in Kansas. The day also heard that China had blocked beef exports from JBS USA’s Greeley. Colo., beef plant after saying it found the feed additive ractopamine in beef from the plant. JBS is working diligently with U.S. and Chinese authorities to resolve the situation as soon as possible, JBS SA said in a statement. Ractopamine is used by livestock producers to boost muscle growth and improve feed efficiency in pigs and beef cattle. While meat from ractopamine-fed animals is considered safe for human consumption by U.S. authorities, the substance is banned in several countries.
More cattle were reported sold Thursday morning, with prices up north averaging $190 per cwt live or $300 per cwt dressed. Prices down south averaged $186 per cwt live. Meanwhile, carcass weights in the week ended May 18 declined slightly from the week before but remained far above last year. Steer weights averaged 921 lbs, down 2 lbs but up 36 lbs from last year. Heifer weights averaged 847 lbs, down 1 lb but up 29 lbs. Overall weights averaged 851 lbs, down 3 lbs but up 36 lbs. The year-on-year increase added 26,365 head to the weekly slaughter total of 596,918 head, says HedgersEdge.com. Weights have failed to decline seasonally, which is leading to a buildup in front-end fed cattle supplies that will drag into the summer months, it says.
COF TOTAL FALLS BELOW YEAR AGO
THE monthly cattle on feed total has its first year-over-year decline since last September. The May 1 total of 11.554M was down 0.9% or 100,000 head from the previous May 1 total. Five states reported larger numbers on feed than last year. Idaho’s total was up 8%, Iowa’s was up 2%, Minnesota’s was up 10%, South Dakota’s was up 11% and Oklahoma’s was up 28%. But Kansas numbers were down 6% and it was the only state to report a drop in total numbers of more than 5%. Texas and Nebraska numbers were each down 1%. Texas had the largest number on feed, 2,770M head, which was down 90,000 head from a year earlier. Nebraska was second with 2.510M head, down 30,000 head, and Kansas was third with 2.300M head, down 140,000 head.
April placements at 1.656M head were down 5.8% from the prior year. The 102,000 head reduction from last year was nearly identical to the drop in COF numbers. Only Idaho and Nebraska placed more cattle than a year ago. The Southern Plains and Western regions saw placements down by more than 10%. Texas placements were down 11%, Kansas was down 12%, California was down 13% and Arizona was down 18%. Regarding placement weights, all categories except the two heaviest saw year-on-year declines, while the two heaviest had the same numbers placed as last year. The under 600 lb category saw 25,000 fewer cattle placed than last year (335,000 head). The 600-699 lb category saw 25,000 fewer cattle placed (220,000 head), the 700-799 lb category saw 35,000 fewer cattle placed (375,000 head), the 800-899 lb category saw 17,000 fewer cattle placed (451,000 head), the 900-999 lb category saw the same number of cattle placed (205,000 head) and the 1000 lbs plus category saw the same number of cattle placed (70,000 head).
The number of cattle marketed in April was 1.872M head up 10.1% from April last year. But two extra slaughter days in the month versus last year was the prime reason for the reported acceleration, says Andrew Gottschalk, HedgersEdge.com. All states marketed more cattle than last year except Arizona and Oklahoma. Texas marketed 1% more, Nebraska 13% more, Kansas 15% more and Colorado 21% more. A check of the weekly harvest levels shows a difference as to the trend in front-end cattle supplies, says Gottschalk. These supplies on June 1 were be the second highest on record, behind only the pandemic-influenced period of 2020.
Another point of concern is that the front-end supplies are in a contra-seasonal trend and pattern, says Gottschalk. The five-year average shows declining supplies from May through October, dropping half a million head. The decrease this year for that timeframe projects to be less than half that amount. In addition, the front-end numbers for 2024 bottom in July and then advance contra-seasonally. This abnormal advance can be seen occurring last year as well from August to October. The market impact of this was for fourth quarter live cattle prices last year to average below third quarter average prices, a rare occurrence, he says. This included a stomach-turning $15 per cwt slide in that period. Carcass weight data matches the buildup in front-end supplies, substantiating the need to accelerate marketings. The normal drop in steer carcass weights is 30 lbs from the start of the year. So far in 2024, steer weights have fallen only 14 lbs and heifer weights only 3 lbs, he says.
HOUSE PASSES FARM BILL VERSION
THE Republican-led U.S. House of Representatives Agriculture Committee passes its version of a $1.5 trillion farm spending bill with few Democratic votes. This prolonged a standoff between the parties over key nutrition, agriculture, and climate policies, says Reuters. Congress failed in 2023 to pass a new farm bill, an omnibus legislative package passed every five years. The House bill will have to be reconciled with a Senate bill led by Democrats. Without strong bipartisan support, the House version has a slim chance of becoming law.
Further delay of a new farm bill could create uncertainty for farmers and people relying on food aid, Agriculture Secretary Tom Vilsack warned on a media call before the vote. Federal hunger aid for the poor like the Supplemental Nutrition Assistance Program (SNAP) and farm programs are currently operating under a one-year extension of the 2018 farm bill passed last September. The House bill, which passed out of the committee 33-21 with four Democratic votes, expands farm commodity supports, shrinks SNAP funding and reallocates nearly $20 billion from the Inflation Reduction Act intended for climate-smart farm practices.
USMEF FOCUSES UNDER UNDER-USED CUTS
THE U.S. Meat Export Federation (USMEF) is increasingly focused on building demand in international markets for beef and pork cuts that have limited use inside the U.S. On the final day of its spring conference on May 24, Jessica Spreitzer, director of trade analysis for USMEF, moderated a panel of USMEF representatives working in Mexico, South America, Japan, South Korea and Taiwan, who highlighted marketing efforts showcasing the attributes of underutilized cuts.
Cuts that Spreitzer started with were pork loin exports, which now account for about 20% of U.S. production, up from roughly 10% five years ago. For export demand for underutilized beef cuts, she noted that export markets account for 42% of the total U.S. production of the gooseneck round, 30% of the chuck shoulder clod and 18% of the top inside round. The export side adds pricing competition, potential customers and ultimately brings added value to these underutilized cuts, she said.
Lorenzo Elizalde, USMEF’s director of trade and marketing in Mexico, updated attendees on the mobile training program by USMEF, which utilizes a variety of U.S. meat promotional vehicles to educate importers, distributors and their customers on underutilized cuts. USMEF is also utilizing these vehicles for month-long promotional campaigns for specific cuts such as U.S. pork loin, beef knuckle and outside rounds, he said. The U.S. meat trucks will park outside major supermarkets in Mexico to provide sampling and promotion of cuts displayed inside the stores, he added.
Homero Recio, director of USMEF Latin America, discussed the merchandising of underutilized cuts for Colombia, Peru and Chile. He also explained how USMEF works to promote the use of U.S. pork and beef in these markets and especially noted the research effort in Chile designed to promote rotisserie pork that uses loin rib-end. In Colombia, where beef liver is popular, USMEF is promoting new dishes such as beef liver brochettes with pineapple, he said.
For U.S. pork as an example, USMEF is working to move the trade beyond simply offering pork chops to packaging and merchandising U.S. pork ribeyes and cowboy steaks, said Recio. USMEF is also encouraging the trade and their customers to utilize pork in new products such as pulled pork in a waffle cone and Boston butt in a ground pork burger, he said.
USMEF Has New Roast Pork Initiative
Shifting over to another market, Taichi Uemura, USMEF’s marketing manager in Japan, explained that most of Japan’s chilled pork imports are loins, mostly sold thinly sliced at retail for use in popular Japanese dishes. Uemura detailed USMEF’s new roast pork initiative, in which USMEF is working to expand consumers’ usage of the U.S. loin. After that, he noted that many Japanese households do not have ovens, so Uemura’s marketing plan works to teach consumers how to create pork dishes using U.S. pork loin slices.
USMEF also examined how competitive and price sensitive the Taiwanese beef import market has been over the last decade and how USMEF continues to promote a range of alternative U.S. beef cuts. Alex Sun, USMEF’s senior marketing manager, said the strategic focus for the Taiwan foodservice sector in 2024 is on the outside round flat and the top round. Importers are not typically familiar with the versatility of these cuts, so USMEF tries to conduct educational seminars demonstrating how to fabricate them for foodservice. The importers’ foodservice customers are then presented with ideas for new dishes utilizing the cuts, he said.
Elly Sung, USMEF’s senior marketing manager in Korea, said USMEF is working to expand U.S. pork’s usage by comparing its quality and versatility alongside domestic product for importers, distributors and their customers. The U.S. continues to promote the usage of U.S. pork with home meal replacement and restaurant meal replacement companies. A recent product development success is where U.S. pork is used in a crispy, cheesy pork cutlet that is gaining popularity with Korean consumers, she said.
CARGILL WORKERS STRIKE AT GUELPH
ALMOST 1000 workers go on strike at Cargill’s beef processing plant in Guelph, Ont., after contract negotiations break down. According to information from the United Food and Commercial Workers Union (UFCW) Local 175 and 633, workers rejected the negotiated settlement by 82%, which sent employees to the picket line on May 27. The plant processes up to 1800 cattle per day and is the largest beef plant in eastern Canada. Cargill also operates a processing plant in High River, Alta, that has a 4700 head per day capacity.
UFCW members at the Cargill plant are an integral part of a vital supply chain that helps keep food on the table for people every day, said Kelly Tosato, president of UFCW Local 175. The decision to go on strike is never easy but these members aren’t satisfied with what the company brought to the table. UFCW will have their backs until their union negotiating committee can achieve a deal that reflects the nature of their hard work and commitment to creating quality food products that feed hundreds of thousands, he said. The union also brought up the importance of bargaining for an increase in pay because of higher cost of living and maintaining some pay increases that occurred during the COVID-19 pandemic.
After the union strike, Cargill expressed its disappointment with the outcome in a statement provided to MEAT+POULTRY. Its proposed agreement, which the union bargaining committee unanimously recommended as a comprehensive proposal, honors the tremendous skill and dedication of its Guelph workforce in feeding families across Canada, said Cargill. It is concerned about the hardships a labor disruption will pose to its employees and its customers. It will be working with the union on next steps once it hears more from it. Cargill said that while it navigates the labor disruption, it plans to shift production to other facilities within its supply chain to minimize disruptions to customers.
Cargill said its recommended settlement included a wage increase in each year of the four-year settlement with more than a 9.3% increase. This included back pay dating to January 1, 2024. Other items included benefit enhancements and a signing bonus. According to Cargill’s website, the Guelph plant is the only large scale halal facility in Canada and operates under a 100% halal certification.
After the strike began, UFCW Local 401, a union group representing a Cargill case-ready meat plant in Alberta, sent a note of solidarity to its fellow union members. Cargill workers in Ontario will not be alone, said Thomas Hesse, president of UFCW Local 401. The other union said it would hold a strike vote at the case-ready plant in Calgary, where workers are making similar demands on wages and compensation.
Teys USA Has New President
In other Cargill news, Teys USA, a joint venture between Cargill and Teys Australia, announced Raven Kropf as the new president of Teys USA. Kropf, whose role was made effective on March 1, succeeds Brent Wolke, who retired on June 1. Both spent long careers with Cargill in the U.S. Kropf brings more than 23 years of experience in the protein industry. She spent 20 years at Cargill before joining Teys in 2021 as senior vp. Prior to joining Teys, Kropf held roles in procurement, commercial management, category management and sales while at Cargill.
Wolke is a seasoned business leader with more than 37 years of experience in the beef industry, says Teys USA. He served as president of Teys USA for the last seven year and played a pivotal role in guiding the company’s growth and success, it said. Wolke said he is proud to have been a part of the Teys USA journey and to entrust the business to a highly engaged and experienced team. He is confident the company will continue its growth trajectory well into the future, he said. Teys USA is a producer of high quality grass- and grain-fed beef that is sold across North and South America.