THE cash live cattle and wholesale boxed beef cutouts look for support after tumbling into October. The cutouts suffered the bigger decline, with the national comprehensive cutout falling by $36.72 per cwt in the four weeks to the week before last. USDA’s 5-area steer price declined by $13.49 per cwt live in the six weeks after it set a new record of $244.25 per cwt live the week ended August 24. The dressed price declined by $26.53 per cwt in the same period after setting a new record high of $386.17 per cwt. Prices the week before last averaged $230.76 per cwt live or $359.64 per cwt dressed. These were down $1.89 per cwt and $5.33 per cwt, respectively, from the prior week. The October live cattle contract is at a big sizeable to these cash prices. Latest carcass weights were again not available last week due to the federal government shutdown.
The live cattle cash trade last week was very slow to develop. The only trade through Wednesday was in Iowa-Minnesota where 490 head sold at $230-231 per cwt live. The call last week was for prices to be steady at best compared to the week before, said Andrew Gottschalk, HedgersEdge.com, last Tuesday. Tighter supplies in the Southern Plains are insufficient to offset the increase in market-ready cattle in the Corn Belt. Feeder cattle prices are likely to maintain a weak-steady trend as fall movement off of grass and out of pastures increases, he said. Peak fall movement should be encountered in the near future, which could result in temporary price weakness. The reduction in third quarter placements versus the levels seen in the prior year only serves to close the gap in the supply shortage of feeder cattle outside feedyards versus year ago levels, he says.
Forward Sales Top 20% Of Total
Boxed beef cutout values fell again sharply the week before last. The national weekly cutout averaged $372.48 per cwt, down $10.12 per cwt from the week before. The Choice cutout averaged $368.25, down $11.67 per cwt, while the Select cutout averaged $350.88, down $9.73 per cwt. Formula-priced sales accounted for 48.9% of the total volume of 7233 loads, the first time they have fallen below 50% for some time. Spot market sales accounted for 29.8%, forward sales accounted for 21.4%, which was higher than in recent weeks, and export sales accounted for 13.9%. The Choice cutout the first four days of last week increased by $2.95 per cwt to $365.22 per cwt while the Select cutout declined by $1.05 per cwt to $344.33. The four-day spot market volume was moderate to good at 475 loads of cuts.
Some seasonal improvement in beef consumption and demand should begin no later than the second half of this month, says Gottschalk. This is generally based upon pre-holiday buying for both the domestic and foreign markets. The total weekly exports for the latest reported week were recorded at 1005 loads. This was the second consecutive week with the total above 1000 loads. The last time that back-to-back weeks with totals over 1000 loads occurred was in the middle of February, he says.
The decline in live cattle prices amounted to about 6% since the week ending August 23, says analyst Kevin Grier. Normally prices are steady to higher over that period of time. The fed cattle basis is right around zero which is normal for this time of year. The return to normalcy is interesting given that the basis the past five months was stronger than normal. Both calf and yearling prices are showing staying firm. Packers’ negotiated cash and dressed inventories are very tight compared to normal. Packers are more comfortable with October contracts than last year. That said, contracts are not a major part of U.S. packer inventories, says Grier.
TYSON AND CARGILL WILL PAY $87.5M
TYSON Foods and Cargill have agreed to pay a combined $87.5M to settle a federal lawsuit brought by consumers who accused the two companies of conspiring to inflate U.S. beef prices by restricting supply. The preliminary class action settlements were filed last Monday in federal court in Minnesota and require a judge’s approval. Tyson, the largest U.S. meat company, will pay $55M, while Cargill agreed to pay $32.5M. The proposed accords are the first for consumers in the price-fixing litigation, which began in 2019, says Reuters. Attorneys for the plaintiffs have estimated there are about 36M potential class members in 26 states and the District of Columbia.
Tyson, based in Springdale, Ark., and Minnesota-based Cargill agreed to cooperate with the consumers as they pursue price-fixing claims against the remaining defendants, JBS USA and National Beef Packing. Tyson and Cargill did not immediately respond to requests for comment, and neither did JBS and National Beef. The defendants have all denied any wrongdoing. Lead attorneys for the consumers last Monday declined to comment. Eligible class members are individuals who purchased beef products such as chucks, loins and ribs between August 2014 and December 2019 from stores such as Walmart and Costco. The retailers are not named as defendants.
An expert for the plaintiffs said he estimates total damages to the consumer class at $1.9 billion. The plaintiffs’ lawyers said they have spent tens of thousands of hours pursuing the lawsuit. They said they will ask the court to award them up to 33.3% of the settlement, or $29M in legal fees. Tyson the week before last agreed to pay $85M to settle a lawsuit by consumers who accused it of conspiring with rivals to inflate pork prices. Tyson denied wrongdoing in that case. Earlier this year, JBS reached a $83.5M settlement resolving price-fixing claims from ranchers and other plaintiffs but not consumers. JBS has denied any wrongdoing.
NEW DEAL WILL SPEED UP EXPORTS
USDA’S Food Safety and Inspection Service (FSIS) is supporting a new arrangement between the U.S. and Mexico that will expedite the rail export to Mexico of U.S. meat and poultry products. Through the partnership, personnel from Mexico’s National Service of Agri-Food, Health, Safety and Quality (SENASICA) will conduct re-inspections at participating federally-inspected establishments to clear for export eligible U.S. meat and poultry shipments at their point of origin.
This new process provides efficiency by eliminating the need for routine border inspections by Mexican officials, says FSIS. The arrangement is the first of its kind for the U.S. meat and poultry industry. The program is voluntary for FSIS-inspected facilities and does not impose any new regulatory requirements on U.S. exporters, says FSIS. Mexico is currently the largest destination for U.S. meat and poultry exports, with trade values exceeding $5.5 billion in 2024.
PROP 12 BATTLE CONTINUES
A COALITION of meat companies, retailers and hog farmers from around the U.S. met in Washington last Wednesday to oppose the Save Our Bacon Act and Food Security and Farm Protection Act (formerly the Ending Agricultural Trade Suppression [EATS] Act). The coalition says this legislation would put family farmers out of business and end responsible farming practices. More than 200 farmers from 30 states gathered to back California’s Proposition 12 and Massachusetts’s Question 3 and to oppose congressional efforts to overturn the laws. Throughout their time in the nation’s capital, farmers and meat businesses also met with members of Congress on these matters. Thousands of family farmers view Prop 12 and Question 3 as a lifeline, said the coalition. If Congress were to wipe out humane farming standards, it would devastate family farmers who have invested in crate-free systems, while stripping states’ ability to pass their own agricultural laws. Voters made their voices heard and the coalition agrees with them that animals deserve space to move, said Russ Kremer, a Missouri hog farmer and head of Farm Partnerships for True Story Foods.
DAIRY-BEEF GAINS MOMENTUM
THE practice of crossing dairy cows with beef bulls is gaining momentum as an integral component of the global beef supply chain. So says a new report from RaboResearch Food and Agribusiness. In “Beefing up global dairy with dairy-beef”, Emma Higgins, senior agriculture analyst, and Jen Corkran, senior animal protein analyst, provide a global overview of the factors giving traction to beef-dairy and the ways that different regions approach the practice. Dairy-beef is emerging as a timely solution to global protein demand, ethical scrutiny and climate pressures, making strategic integration of beef production into dairy systems not just beneficial but essential, says the report.
Dairy-beef, or beef-on-dairy, is the practice of integrating beef genetics into dairy production systems, says Rabobank. It’s not new, as cull dairy cows and surplus dairy calves have always been part of global beef supply chains. The difference currently is the strategic use of high-value beef bulls to produce surplus or non-replacement calves that eventually can be sent to feedlots.
The RaboResearch analysts point to several drivers behind the rising use of dairy-beef, including rising beef prices and what the analysts call “social license pressures.” The pressures regarding underutilized dairy calves are intensifying, says the report. Integrated dairy-beef systems offer a pathway to reduce underutilized calves and improve life cycle efficiency, strengthening the sector’s optics and long-term viability. According to data from Rabobank, dairy-beef cattle accounted for 3M to 3.3M head of the fed steers and heifers from feedlots in the U.S. throughout the 2000s. But shifts in breeding strategies and calf supply dynamics have pushed this number by more than 30% to approximately 4.4M head since 2020, they say.
The RaboResearch analysts say the United States is setting the pricing benchmark for dairy-beef as production is approaching business-as-usual status. In Ireland and other regions, beef-dairy is an emerging opportunity. To fully realize the potential of dairy-beef, strategic investment and collaboration across the value chain are essential. The report points to Ireland as an example of a country that is leading a strategic movement for dairy-beef. Growth of Ireland’s national dairy herd has led a deliberate, well-funded strategy to integrate beef production into dairy systems. As dairy-beef volumes grow, regions like New Zealand and Australia may face pressure on finishing and processing capacity, making investment in feedlot infrastructure, finishing systems and meat processing facilities critical to avoid bottlenecks and ensure consistent carcass quality, says Higgins.
Dairy-Beef Strategy Has Risks
The dairy-beef strategy isn’t without risks, says the report. A rapid transition could disrupt traditional beef systems, particularly suckler herds, says Higgins. Seasonal, pasture-based models face greater challenges but tailored strategies and region-specific investment can overcome these hurdles, says the report. Additionally, meeting the challenges inherent in dairy-beef production will require on-farm investment that provides producers with the support, knowledge and resources to implement breeding strategies.
Access to sexed and high genetic merit beef semen, decision-making tools like Ireland’s Dairy Beef Index and infrastructure for calf rearing and weaning are crucial foundations for success, says the report. Industry-wide coordination will also be crucial for a successful dairy-beef strategy. Building trust and value in dairy-beef products will require market access, consumer education and traceability systems. All stakeholders, including farmers, processors, retailers, industry bodies and policymakers, play a role in developing markets, promoting dairy-beef and benchmarking performance, says the report.
Market signals and funding vary by region, says the report. The U.S. benefits from a responsive domestic market, while export-oriented regions like New Zealand and Australia face slower market signals due to longer supply chains. Clearer market signals and stronger coordination are needed to unlock momentum in these regions, says the report. Dairy-beef has the potential to reshape regional beef supply chains, particularly in New Zealand and Australia. The opportunity is clear. The challenge now is execution, says Higgins.
SHUTDOWN CAUSES FEW DISRUPTIONS
THE federal government shutdown appears to be causing few disruptions so far to the U.S. beef industry and cattle producers. USDA’s Thursday report, which contains various slaughter data, weekly meat production and weekly cattle carcass weights, is one report that is not available, as is weekly carcass weight data. That is because lessons learned from previous shutdowns have helped shape better contingency planning, says Ethan Lane of the National Cattlemen’s Beef Assn (NCBA), speaking to the Southeast Ag Net Radio Network.
Because the industry has been through shutdowns before, it knows those areas to highlight leading up to a shutdown, says Lane. It knows to make sure that the agencies are getting really good feedback from the industry on those areas that need to be deemed essential, that need to continue operating, whether that be meat inspection or quality grading programs. This is to ensure that the industry has access to all of those USDA services like market news to make sure that producers are getting quality information on the supply chain every week so they can make good business decisions, he says.
The continued operation of these essential services is helping to lessen the burden on cattle producers, says Lane. All those things continuing to operate lessens the impact on producers and NCBA is pretty comfortable right now with the vast majority of those and how they’ve shaken out in this shutdown. Still, Lane warns that some disruptions are unavoidable. Certainly there will be problems that come up somewhere. There will be something that gets missed or some service that ends up impacting some folks. NCBA knows that anybody that is trying to close loans right now is going to have problems or get loans funded right now is going to have problems with that, he says.
The Trump administration meanwhile has pushed back its plans to roll out economic aid for farmers due to the shutdown, according to four people familiar with the talks (as reported by Politico). The Office of Management and Budget has readied between $12 billion and $13 billion to be allocated from an internal USDA account, Some of this could be used to fund the bailouts for farmers hurt by President Trump’s tariffs and other economic headwinds, according to the four people (all granted anonymity to share private details). No final decision has been made on just how much of the money will go toward farm aid, the people said, and the package won’t be coming out any time soon. The timeline has been further delayed because some USDA political appointees have been furloughed during the shutdown, says Politico.
Ag Groups Press For Shutdown’s End
Meanwhile, industry groups continue to press for a speedy end to the shutdown. The National Pork Producers Council (NPPC) noted that without funding, many federal programs ceased on October 1. Staff were temporarily laid off, including personnel who publish the Livestock Mandatory Reporting (LMR) Market News, the twice-daily reports on livestock transactions and data. But even during the shutdown, federal meat inspectors have continued to work. USDA warned that states handling their own meat and poultry inspections could run out of federal funds, according to NPPC. It joined 21 other agricultural organizations in urging the Senate and House, along with both political parties, to work together to end the shutdown. The American Farm Bureau Federation, the Meat Institute and American Feed Industry Assn were among the groups to sign a letter sent to Senate Majority Leader John Thune (R-SD), Minority Leader Chuck Schumer (D-NY), House Speaker Mike Johnson (R-LA) and Minority Leader Hakeem Jeffries (D-NY). The groups pointed out that U.S. agriculture is experiencing tough economic times, with many farmers facing commodity prices near record lows.
PUBLISHING BREAK: Cattle Buyers Weekly will not be published on October 20 and October 27 due to travel. These are two of four breaks that CBW takes each year. The next issue will be on November 3. This also means there will be no Friday email alert and Market Update on October 17 or October 24.