THE cash live cattle and wholesale boxed beef markets continue their summer splutter and might not begin to show any strength for at least another week. That’s when retailers will be buying beef for the September 2 Labor Day holiday. The holiday though is third behind Memorial Day and July 4 for the biggest beef sales holidays of the year. Labor Day primarily sees retailers featuring hamburgers, hot dogs and chicken items. This year is likely to be no exception, especially as wholesale beef prices are up on last year. The comprehensive cutout (cuts, grinds and trim) the week before last averaged $315.37 per cwt. This was down $1.93 per cwt from the prior week but it was up 5.4% from the same week last year.
Beef buyers so far this year appear content to buy most of their beef needs through formula pricing and spot market purchases. In contrast, forward sales are the lowest during the period from 2020 to now, says Andrew Gottschalk HedgersEdge.com. Spot market sales the week before last represented 29.9% of the total volume of 7505 loads. Formula sales represented 50.1%, forward sales represented 19.4% and export sales represented 17.3% (up from only 8.6% the week before that). The daily Choice cutout advanced somewhat last Monday but stalled on Tuesday and declined $0.98 per cwt in the first four days. This was a disappointing result given recent weekly production levels, says Gottschalk. Total slaughter last week was expected to be the same as the prior week at 600,000 head, while the week before was only 589,374 head. On a positive note, last week was a pay day week for most consumers, which should have spurred additional retail sales last weekend, he says.
Live Cattle Prices Are Steady
Cash live cattle prices looked like being steady last week after putting in their highs for the year so far in the first week of July. The 5-area steer price the week before last averaged $193.13 per cwt live or $308.11 per cwt dressed. These were down $0.54 per cwt live and $1.93 per cwt dressed, respectively, from the prior week. But they were up 4.5% and 4.9%, respectively, from the same week last year. Last Tuesday saw a smattering of sales at $188 per cwt live in Iowa and Texas. The only trade Wednesday was in Iowa at $196-197 per cwt live or $308-310 per cwt dressed. Thursday saw a slightly more active trade in all regions. Prices up north were $194-196 per cwt live or $308-310 per cwt dressed. Prices down south were $188 per cwt live.
Live cattle futures prices continue to be at a deep discount to cash prices. The August contract last Thursday closed down 232 points at $184.80 per cwt while the October contract closed down 295 points at $183.72 per cwt and the December contract closed down 327 points at $184.60 per cwt. Carcass weights meanwhile remain well above last year although at lower levels than in previous weeks. Steer weights in the week ended July 20 averaged 915 lbs, the same as the prior week. Heifer weights averaged 835 lbs, up 4 lbs. Overall weights averaged 839 lbs, down 3 lbs. Quality grading remains higher than last year because cattle are being fed longer to record weights for this time of year. Cattle in the week ended July 20 graded 10.08% Prime and 71.99% Choice for a combined 82.07%. The weights though mean a lot more Yield Grade 4s and 5s.
OLYMPIC EGG ON FACE: Organizers at the 2024 Paris Olympic Games have had to bring in food reinforcements to the athletes’ village in the form of a metric ton of meat and more than 1500 lbs of eggs after reports that athletes were dissatisfied with a focus on plant-based food options. Athletes from numerous countries had already brought in their own food, with beef being a must for many of them.
ARTICLE CITES BEEF TRENDS
CONVENIENCE, value and new cuts and flavors are among beef industry trends that retailers and their suppliers are keeping a close eye on. That’s according to an article in the July issue of Supermarket Perimeter. The article cites new hamburger and ground beef chub products from Cargill Protein, which continues to see pre-made patties perform well in retail, says Hilary Gerard, Cargill’s director of retail marketing. It is launching this summer a line of premium source-grind fresh patties, as well as a few seasoned varieties, she says.
Thin-sliced steak and whole muscle cut products are other new beef products that Cargill Protein is bullish on, says the article. The first are experiencing increased demand from both consumers and customers, says Gerard. For consumers, this value offering is quick cook and allow for a lower retail ring (price). For its customers, producing this product back-of-house is difficult and requires skilled labor from the retailer. Whole muscle cuts meanwhile come in Multivac packs and give consumers versatility and value, while giving retailers more flexibility to promote and feature fresh beef, she says.
Beef-eating consumers are extremely loyal, says Rikki Ingram, director of beef and pork marketing for Tyson Foods. Demand for beef is strong across the board, whether it is for grinds, blends, premium, value or value-added. Consumers want to be creative in the kitchen, especially if they are dining out less. Grinds are popular due to their versatility and Tyson is also seeing interest in flavor-infused patties like bacon or cheddar-infused patties that introduce distinct flavors with minimal effort. When it comes to steaks, Tyson is seeing higher demand for alternative cuts like top sirloin, flat iron and ranch steaks. Among the top attributes consumers cite when they make their beef purchases are value, color, flavor and appropriate packaging size, says Ingram.
Another trend Tyson is tracking closely is the ever-increasing acceptance of case-ready beef products, says the article. Case-ready packaging is perceived as equal in quality to meat cut in-store, says Ingram, citing Power of Meat 2024 data. Younger shoppers especially prefer the flexibility and convenience that case-ready meats offer. Tyson is meeting the strong demand for case-ready beef with its new line of Chairman’s Reserve Platinum case-ready Angus products, which features the top one-third of Tyson’s Choice Angus. The line offers the three most popular premium cuts Tyson sells, ribeyes, New York strips and T-bones. The demand for case-ready packaging continues to evolve, says Ingram. Whether shopping in-store or online, consumers are looking for freezer-ready, leak-proof packaging that keeps their meat purchases fresher longer.
ANALYST EXPLORES “UNUSUAL” ENVIRONMENT
MIDDLE meats are the biggest driver of total beef value. Beef tenderloin is the highest value beef cut but its price has been quite flat and lower year-over-year for much of 2024. This weakness is a bit concerning, says analyst Derrell Peel, Oklahoma State University. But this fall may provide an important indicator of tenderloin demand going into cooler weather and the seasonal pickup in restaurant traffic. In contrast, the other steak cuts have values that are generally at or above year ago levels, including the ribeye, the strip loin and the top sirloin. Rib primals overall are priced about 3.4% higher year-over-year and loin primals are averaging 1.4% lower this year. Middle meats from the rib and loin primals are the heart of boxed beef values, says Peel.
The Choice boxed beef price has decreased by 5.4% since July 4 to $314.67 per cwt the week before last, says Peel. But this was 4% higher year-over-year. The decline in boxed beef prices is seasonal. Boxed beef prices are a composite based on about 50 wholesale beef cuts and sub-primals. There are some interesting things going on within this set of products this year that reflect the unusual environment in today’s cattle and beef markets, he says. A look at prices across the end primals paints an interesting picture. The majority of chuck products are priced either about the same as last year or lower year-over-year. This includes the top blade, arm roast, petite tender and chuck roll. One notable exception is the mock tender, which is currently priced well above year ago levels. Chuck primal values overall in July were up 6.6% year-over-year. In contrast, round cut values were mostly higher this year. Higher values were noted for knuckles, inside rounds, bottom round, outside round and eye of round. Round primal values overall were nearly 21% higher year-over-year, he says.
Fed Beef Production Is Up 0.9%
These values across the carcass contribute to the overall boxed beef value of fed beef production, says Peel. Fed beef is the result of steer and heifer slaughter. While overall beef production so far this year is down 1.6% year-over-year, the modest decrease in steer and heifer slaughter and dramatically higher steer and heifer carcass weights led to a 0.9% year-over-year increase in fed beef production through the first half of the year. Increased days on feed contributed to the heavy carcass weights and also to an average of nearly 22% Yield Grade 4/5 cattle this year. An average of 87% of fed cattle are quality grading Choice and Prime so far in 2024. Fed beef is about 84% of total beef production, he says.
Non-fed beef typically makes up the remaining 16% of total beef production and consists of cow and bull slaughter, says Peel. Non-fed beef production is down nearly 13% year-over-year thus far in 2024. Cow slaughter is down more than 15% and bull slaughter is down nearly 8%. Non-fed beef production is the source of 90% lean trimmings, a major ingredient for ground beef. The current wholesale price of 90CL is at a record level and is higher than several of the round cuts mentioned earlier, he says. The market is attempting to make up for the shortage of lean beef in the non-fed market by pulling more lean beef from fed beef supplies. This mostly comes from several round cuts but also likely from the chuck mock tender, one of the few lean cuts in the chuck. Markets always attempt to balance supply and demand and the increased arbitrage between fed and non-fed beef markets today is an indication of a very unusual market situation, says Peel.
JULY 1 CATTLE TOTAL IS DOWN 1.2%
THE July 1 U.S. cattle inventory might be down 1.2% on a year ago, according to an estimate by Jason Franken at the University of Illinois at Urbana-Champaign. With USDA canceling its regularly scheduled July cattle inventory report due to budget cuts, how big is the herd is a question that many would like to have answered, he says. Fortunately, historical relationships between changes in prior and subsequent inventories and levels of cow slaughter in between or heifers’ share of cattle on feed offer some indication. These negative relationships explain 30% and 50%, respectively, of the variation in changes in cattle totals from one July to the next.
The share of the January 1 cow inventory that is slaughtered by July has dropped from 8.75% in 2003 to 7.76% in 2004, says Franken. This suggests a slowing of cow herd liquidation. But the current level still corresponds to a reduction in the year-over-year July 1 total inventory, as does the proportion of feedlot cattle that are heifers. It is currently at 39.6% compared to 39.9% last July. A model incorporating both variables explains 61% of inventory changes and estimates the July 1 U.S. cattle inventory to be 94.2M head. Hence, it appears the U.S. cattle industry remains in a contractionary phase, even if there may be regional pockets of expansion, he says.
SYSCO-CAB CAMPAIGN MAKES PROGRESS
INCREASING consumer confidence in how beef is raised may seem like a tall task, says Certified Angus Beef (CAB). But due to ranchers investing time in Beef Quality Assurance (BQA) training, progress is being made one certification at a time, it says. Raised with Respect™, a campaign launched in 2023 by Sysco and CAB, uses BQA as the conduit to talk about cattle care efforts with chefs and consumers purchasing beef. Sysco set out to support the work being done by farmers and ranchers to care for their cattle and raise high quality beef, says Joe Don Eilers, vp of merchandising-center of plate proteins at Sysco, It is excited about the impact this campaign has had on the beef community and about extending it into another year, he says. The campaign and partnership between Sysco and CAB originated to support producers, equipping them with continuing education to stay current on best management practices and helping to increase consumer confidence in beef production, they say. During the first year, they worked collaboratively in key cattle production states to host a series of dynamic educational opportunities for thousands of cattlemen and women. Each of the ten workshops were customized and coordinated with state entities who also had a vested interest in BQA and cattle care initiatives. Through the in-person events and promotion of an online education and training opportunity, more than 1500 ranchers earned their BQA certification in the first year of the campaign, says Sysco and CAB.
NCBA DECRIES RULE EXTENSION
THE National Cattlemen’s Beef Assn decries USDA’s decision to extend the 60-day comment period for its latest Packers and Stockyards proposed rule by only 15 days. In its June announcement, USDA said if the Fair and Competitive Livestock and Poultry Markets rule was finalized, it would clarify the interpretation of “unfair” as it appears in the Packers and Stockyards Act. NCBA, the Meat Institute and other industry groups strongly disagreed with USDA’s assessment.
Cattle markets are immensely complicated and USDA is planning to make sweeping changes to those markets with only 75 days of public input, says NCBA’s Tanner Beymer. While the extension is welcome, it is not nearly enough time to properly solicit public comment and review a rule that will have such an overarching impact on the cattle industry. The proposed rule is already a direct attack on producer profitability and now USDA is running down the clock to prevent meaningful input from cattle producers, he says.
Contrary to USDA’s assertion, its proposed changes would introduce uncertainty into the market and de-couple the demand signals producers receive from beef consumers, including consumers’ willingness to pay for value-added attributes, the Meat Institute said in June. At low points in the cattle cycle, like this year’s historically small cattle herd, it puts at risk the value that producers earn from sustained beef demand and as the expansion phase of the cattle cycle begins, it would undermine the benefits earned from growing beef demand, it said.
ONTARIO STRENGTHENS ITS BEEF SECTOR
THE Ontario government is strengthening the province’s beef sector by increasing financing available through its Feeder Cattle Loan Guarantee Program to C$500M. The province is also investing in an industry-led market development program to increase domestic and international sales. Ontario is home to 12,730 beef producers that in 2022 marketed cattle and calves worth C$1.75 billion in farm cash receipts. The province is the second largest cattle producer in Canada after Alberta. The loan guarantee program was launched in 1990 and the government guarantee has not been used in the history of the program. The Ontario Beef Market Development Program was launched in 2019 by the Beef Farmers of Ontario and the Ontario Cattle Feeders’ Assn.
The province’s Grow Ontario Strategy commits to strengthening the province’s agriculture and food supply chain and increasing agri-food trade by 8% per year, says Rob Flack, Minister of Agriculture, Food and Agribusiness. The actions support both of these goals and will help Ontario’s beef sector capture new opportunities now and in the future, he says. The expansion of the loan guarantee program will see available funding for beef farmers increase by C$240M. The program provides low-interest financing to support the short-term needs and long-term growth of feeder cattle co-operatives and their members. Financing is provided by private sector lenders and the Ontario government guarantees the value of 25% of the loans.
The government is also investing C$2M over four years in the Ontario Beef Market Development Program. Funding will be used to support activities that enhance the competitiveness of Ontario products at home and beyond its borders, support the expansion of existing Ontario beef brands and aid in the development of new Ontario beef brands. Eligible activities include participating in trade shows and trade missions and welcoming potential out-of-market buyers to tour Ontario beef farms and processing facilities, says the government.
JBS EXPANDS IN JEDDAH: Global protein giant JBS SA plans to quadruple its poultry production capacity in Saudi Arabia with a new processing plant in Jeddah. Through a $50M investment, the plant will open in November, focusing on the production of chicken fingers. JBS expects to create 500 jobs. JBS already has over 30 years of history exporting poultry to Saudi Arabia. It recently opened a processing plant in Dammam that employs about 250 people and has the capacity to produce around 10,000 metric tons of product per year.