THE live cattle and boxed beef markets are starting to enjoy the first strengthening of pre-holiday beef demand. Christmas and New Year are still just over eight weeks away but now is the time when many beef buyers begin to put in their holiday orders. Year-to-date beef production is down 0.7% on the same period last year. Some buyers will be keen to have their orders fulfilled before any possible tightening in supplies, which would lead to higher asking prices by packers. The two holidays however both fall on a Wednesday, so beef production might be slightly larger than in some previous Christmas-New Year holiday periods.
Choice beef cutout values continued to surge last week after increasing $8.64 per cwt on the spot market the week before last. The Choice the first four days last week increased $8.04 per cwt to $319.26 per cwt. But the overall Choice cutout the week before last advanced far less. The national comprehensive boxed beef report (cuts, grinds and trim) revealed that the Choice cutout averaged $302.07 per cwt, up $3.59 per cwt from the prior week. The Select cutout increased by $1.11 per cwt on the spot market the week before last and by $1.03 per cwt in the comprehensive report. But it increased by $4.80 per cwt the first four days last week.
Positive Margins Mean Bigger Kills
The cutouts’ surge meant packer margins were negative by $30.06 per head the week before last, versus a negative $83.70 per head the prior week, according to HedgersEdge.com. They turned black last week and were positive by $59.25 per head last Thursday. This encouraged packers to raise their slaughter levels, notably in steer and heifer slaughter, after the week before last saw a much lower than expected total of an estimated 586,000 head. Last week’s kill was expected to total at least 605,000 head. The four-day total of an estimated 488,000 head was 14,000 head larger than the four-day total of the prior week
The surge in boxed beef prices also helped cash live cattle prices increase slightly last week. The 5-area steer price the week before last averaged $187.21 per cwt live or $295.92 per cwt dressed. These were up $0.32 per cwt and down eight cents, respectively, from the prior week. A light trade in Iowa-Minnesota last Tuesday and Wednesday saw prices average $185-186 per cwt live or $295 per cwt dressed. Trade turned active in all regions Thursday, with prices up north averaging $187-189 per cwt live or $296-304 per cwt dressed. Prices down south averaged $186-188 per cwt live. Feeder cattle and calf prices will need fed cattle prices to advance to be able to post additional gains amidst the fall movement off grass, says Andrew Gottschalk, HedgersEdge.com. Dry conditions over much of the country are likely to force accelerated movement off grass. The longer term outlook remains price positive for feeder cattle and calf prices as the total available supply for placement into feedyards continues to decline, he says.
Carcass weights meanwhile in the latest reporting week set or equaled new all-record highs in the latest reporting week (ended October 5). Steer weights averaged 950 lbs, up 9 lbs from the prior week and up 28 lbs from the same week last year. They broke the previous record of 948 lbs set the week before. Heifer weights averaged 857 lbs, the same as the week before but up 20 lbs on the same week last year. They equaled their record set the week before. Overall weights averaged 866 lbs, up 6 lbs from the prior week and up 35 lbs from the same week last year. They broke their previous record of 863 lbs set the week ended September 14 this year. The added overall weight was the equivalent of adding 25,760 head to that week’s slaughter total of 611,571 head, says HedersEdge.com.
CATTLE ON FEED FORECASTS
David Anderson, Texas A&M University: COF 99.7%, placed 97.0%, marketed 102.5%; Kevin Coburn, S&P Global Commodity Insights: COF 99.5%, placed 94.5%, marketed 102.5%; Tyler Cozzens, Livestock Marketing Information Center: COF 100.1%, placed 99.0%, marketed 102.4%; Andrew Gottschalk, HedgersEdge.com: COF 99.9%, placed 94.6%, marketed 98.1%; Rich Nelson, Allendale Inc: COF 100.1%, placed 97.2%, marketed 102.0%; Lori Porter, Allegiant Commodity Group: COF 99.5%, placed 95.7%, marketed 102.2%; Mike Sands, MBS Research: COF 100%, placed 96%, marketed 102%
COF TOTAL IS DOWN A FRACTION
THE October 1 Cattle on Feed (COF) total was down fractionally from the total a year ago. This Friday’s COF report is expected to reveal that the total was nearly 11.6M head. This would make it down only 10,000 head from the prior year and down 30,000 head on the previous five-year average, says Andrew Gottschalk, HedgersEdge.com. The report is also expected to show that September placements were down nearly 4% from September last year and that September marketings were up nearly 2% on last year.
The increase in the COF total from July 1 to October 1 is 290,000 head, versus the prior five-year average gain of 162,000 head, says Gottschalk. Front-end fed cattle supplies on October 1 (COF 150-plus days) were estimated to be 2.508M head, 1.4% above the previous year and 8.5% above the previous five-year average. Carcass weight data confirms that this category of cattle remains front-end loaded, says Gottschalk. Carcass weights have advanced faster than normal during the past three weeks. Seasonally, carcass weights tend to peak during the late Nov-Dec period. Placements going forward are likely to register year-on-year monthly declines, as the available feeder cattle and calf supplies outside feedyards continue to shrink. Additional shrinkage in the supply outside feedyards will accelerate as heifer retention begins, he says.
September placements determine part of the March-July fed cattle supply, says Rich Nelson, Allendale, Inc. Total placements January through September this year were likely down 2.1% on the same period last year. This grouping of placements helps determine fed cattle supplies in the fourth quarter through a part of the second quarter next year. Kansas State University estimates that finishing cattle from March through May will require a $183 per cwt live breakeven. September’s marketing total was the second smallest September total in nine years. The October 1 COF total was the largest October 1 total in four years, he says.
MEAT INSTITUTE WANTS AMBITIOUS TRADE AGENDA
THE Meat Institute calls for an ambitious and comprehensive trade policy agenda that would be paired with removing tariff and non-tariff barriers to promote the growth and stability of the meat and poultry industry. The Institute, which represents the U.S. meat and poultry processing industry, makes its call in comments to the U.S. Trade Representative (USTR) for the 2025 National Trade Estimate Report. The resilience of the U.S. meat and poultry industry is inextricably linked to U.S. trade policy and attendant initiatives that foster U.S. meat and poultry export growth, says Julie Anna Potts, president and CEO of the Institute. However, the industry’s export potential remains limited by unjustified sanitary barriers, prohibitive tariffs and tariff rate quotas, and onerous registration and approval requirements for exporting facilities, among other impediments, she says.
The essential point that the Institute wants the federal government to highlight would be China’s continuing to renege on commitments made during the U.S.-China Phase One Agreement, says Potts. Retaliatory tariffs remain on U.S. meat exports to China and must be discontinued. The Institute recognizes the diversity of industries and sectors that are impacted by China’s specious policies and understands the U.S. government’s interest in addressing those legitimate concerns. However, the Institute continues to respectfully encourage USTR to work to remove these tariffs, the brunt of which has been borne disproportionately by the U.S. agricultural sector and meat and poultry industry. The Institute also wants USTR to remain proactive in addressing foreign animal diseases, which is integral to preserving trade and business continuity, says Potts.
GLOBAL PRODUCTION WILL FALL BY 1%
GLOBAL beef production in 2025 is forecast to be down 1% on 2024 production to 60.9M metric tons (mt) as declines in Brazil, the European Union and the U.S. more than offset increases in Argentina, Australia, India and Mexico. Australia production is expected to rise 2% to a record 2.6M mt as increased global demand, particularly from the U.S., supports higher slaughter. Carcass weights are expected to decline as female cattle slaughter increases to meet export demand. These forecasts come from USDA in its latest quarterly Livestock and Poultry: World Markets and Trade Report. India in 2025 will have the largest cattle herd (307.49M head), followed by Brazil (186.175M head), China (104.000M head) and the U.S. (86.000M head), says USDA.
Increased Argentine production will be driven by higher international demand and newly implemented domestic policies, which seek to incentivize shipments by reducing export taxes on certain beef products, says USDA. Production in Brazil is forecast to decline 1% to 11.8M mt as herd contraction continues for a second consecutive year. EU production is expected to decline 2% as the combination of economic headwinds and an uncertain regulatory environment continues to disincentivize investment in an already constrained cattle sector.
Global exports in 2025 are forecast virtually unchanged at 12.9M mt as lower exports from Canada, the EU and the U.S. offset greater shipments from Argentina, Australia and India, says USDA. Excluding the U.S., global exports are anticipated to increase 1%. Brazil and Australia, the world’s two leading exporters, will capture increased market share at the expense of the U.S. and the EU, where beef production is expected to decline. Australian exports are expected to rise 2% to a record 1.9M mt as tight U.S. supplies and lower production will increase the demand for beef imports, of which Australia is a significant supplier. Global demand in 2025 is also supported by a 1% increase in Chinese imports as well as small gains by South Korea, Taiwan and the UK. U.S. beef production is forecast down 4% to 11.811M mt on tighter cattle inventories. This decline, especially in lean processing beef, coupled with ample exportable supplies in key markets such as Argentina, Australia and Brazil, will spur import growth. Imports are forecast to rise 1% to a record of 2.007M mt. Exports are forecast 12% lower to 1.179M mt on tight domestic supplies and competition from Australia, particularly in East Asia.
Pork Will Also Fall 1%
Global pork production in 2025 is also forecast to be down 1% to 115.130M mt as lower production in China and the EU more than offsets production growth in the U.S., Vietnam and Brazil, says USDA. Vietnam pork production is forecast 3% higher to 3.8M mt tons on expected herd expansion as the swine sector consolidates and improves management of African swine fever (ASF). Brazilian production is forecast 1% higher to 4.6M mt on strong export demand and easing input costs. Despite improved sector profitability in 2024, Chinese pork production is forecast 2% lower in 2025 to 55.5M mt. Reduced sow inventories in 2024 are expected to yield fewer animals available for slaughter in 2025. Additionally, China’s consumer demand for pork is expected to remain weak given continued economic uncertainty and the growing consumer preference for poultry. EU production is forecast to be 2% lower to 20.9M mt due to expected lower hog prices, says USDA.
Global pork exports are forecast to increase 1% to 10.4M mt in 2025 as export growth from the U.S. and Canada offsets lower exports from the EU, says USDA. Canadian exports are forecast to be 1% higher to 1.5M mt, with stable demand from the U.S. and continued growth to several Asian markets, including Japan and South Korea. EU exports are forecast to be 2% lower at 2.95M mt given expected lower available supplies for export and ongoing ASF-related trade restrictions, says USDA.
In regards to U.S. pork production and exports, USDA forecasts that production will be 2% higher in 2025 than in 2024 at 12.941M mt based on growth in slaughter and pigs per litter. Improved sector profitability in 2024 and reduced feed costs are expected to continue to support heavier hog weights. U.S. exports are forecast to increase 3% in 2025 to 3.354M mt given ample domestic supplies and strong export price competitiveness. Despite increased competition from Brazil, Mexico will remain a core market for U.S. exports. U.S. exports are also expected to gain market share from the EU in South Korea and Australia, says USDA.
NATIONS PROVIDE SUSTAINABILITY UPDATES
SEVERAL major cattle producing nations provide updates on their work to measure and assess beef sustainability for the 2024 Global Roundtable for Sustainable Beef (GRSB) progress report. The GRSB brings together organizations, roundtables and individuals in 24 countries, including 12 national roundtables across five continents which actively participate as members. The GRSB in 2021 committed to three primary goals, says Beef Central in a special report. The goals were: globally reduce the net warming footprint of each unit of beef by 30% by 2030 on a pathway to climate neutrality; be able to report measured progress by 2025; by 2030, GRSB and its members will ensure the beef value chain is a net-positive contributor to nature; provide cattle with a good quality of life and an environment where they can thrive. It is also developing a fourth goal around Social Well-being.
The just-released 2024 report is the first full sustainability report released by the GRSB, says Beef Central. The report says national and regional roundtables have multiple approaches for sustainability assessment and are at various levels of development. But all have reported on their levels of commitment in the 2024 report. The report details sustainability targets that a range of member nations have set and progress they have reported towards achieving their various goals, says Beef Central. The report offers several examples, as noted below.
The U.S. Roundtable for Sustainable Beef (USRSB) has set a goal for the U.S. beef industry to achieve climate neutrality by 2040. The USRSB has a Recognition Program in which members across the U.S. beef value chain can have their sustainability programs assessed by an independent third party for alignment with the U.S. Beef Industry Sustainability Framework. This is not a certification program. Rather, the recognition process provides a means for companies in the U.S. to demonstrate their commitment to sustainability of their operations and the US beef industry in alignment with the USRSB Framework.
USRSB Has Developed Goals
Under nature positive production, the USRSB has developed goals to maintain and improve grazing lands under the care of U.S. beef producers as well as improve water resources. These goals include achieving 385M acres covered by a written grazing management plan by 2050. The USRSB is also working to support programs that expand producer capacity to deploy well-managed grazing strategies to ensure lasting legacies founded on conservation and economic success. Finally, USRSB member retail and foodservice companies have set a target to assess and set science-based targets to reduce conversion risk in their U.S. supply chains and will implement a strategy to reduce conversion by 2025.
The Canadian beef industry set a target of reducing primary production GHG emission intensity by 33% by 2030. The target was determined through environmental life cycle modelling and scenario testing using a 2014 baseline. The industry’s efforts have included funding research and extension on feed efficiency and utilization, promoting environmental sustainability, and supporting improvements of forage and grassland productivity. The National Beef Sustainability Assessment results showed a 15% decrease in GHG emissions to produce 1 kilogram of beef (boneless, consumed) from birth through farmgate to the plate from 2014 to 2021.
The Australian beef industry targets net zero greenhouse gas emissions across its production and processing sectors by 2030. A baseline was set in 2005 through the Australian National Greenhouse Accounts representing the Australian Government’s submission to the United Nations Framework Convention on Climate Change. The Australian Red Meat Industry’s Carbon Neutral by 2030 Roadmap outlines specific practices to prepare the red meat industry to meet their target. Meat & Livestock Australia undertook a life cycle assessment to determine environmental impacts, including GHG emissions, water, energy and land use across the industry for the five years from 2016 to 2020 to update the ongoing trends analysis, says Beef Central.