CASH live cattle prices decline for the first time in six weeks after a big selloff in live cattle futures contracts begins the week. There are also growing concerns that beef demand might weaken as retail beef prices increase in the coming weeks. Prices are already well above year ago levels. USDA’s All Fresh beef price in February averaged $7.83 per lb, up two cents from January and up 8.3% from February last year. The Choice price averaged $8.08 per lb, the same as January’s price but up 6.5% from last year. In contrast, pork prices averaged $4.76 per lb, down 0.2% from last year, and chicken prices averaged $2.37 per lb, down 2.1%. The price divergence between beef and the competing is a red flag for beef demand, say analysts.
Given the recent advance in wholesale beef prices (see below), consumers will be confronted with rising retail beef prices in the coming weeks, says Andrew Gottschalk, HedgersEdge.com. Resistance will initially be encountered until consumers eventually become acclimated to accepting the higher price levels. His early call for cash live cattle trade this coming week is steady to lower, as wholesale beef cutout values decline amidst reduced weekly production schedules. The latter condition begs the question regarding beef demand, he says. Will beef demand recover post-Easter? Given that Easter is early this year, several weeks might pass before seasonal demand improvement can be expected, he says.
Cash Cattle Prices Fall $3-5
Cash live cattle prices put in another high for the year the week before last. Live prices averaged $189.56 per cwt, up $2.09 per cwt from the prior week and up 15.3% from the same week last year. Dressed prices averaged $302.13 per cwt, up $4.07 per cwt from the prior week and up 14.0% from the same week last year. But prices last week fell sharply after a massive selloff Monday in the futures market. The April contract lost 310 points to close at $183.10 per cwt and the June and August contracts lost 322 points and 355 points, respectively. A light cash trade Tuesday and Wednesday saw prices average $186-189 per cwt live up north and $183-185 per cwt down south. Dressed prices up north Wednesday were in a wide range from $292 per cwt to $298 per cwt but they mostly averaged $297 per cwt.
While first quarter average prices fulfilled the seasonal trend prevalent since 2010, averaging above the prior quarter with one exception in 2015, the challenge now shifts to the second quarter, says Gottschalk. Lower than expected marketings in the first quarter have increased the carryover of cattle supplies into the second quarter. The price action from the first to second quarter has been split evenly since 2010, seven years advancing and seven years declining. Given the sharp advance during the first quarter this year, will the second quarter follow suit? Since 2010, only three years have seen western Kansas prices score second quarter advances versus the first quarter that exceeded 5%. That was in 2017, 2021 and 2023. During the period from 1975-2020, no period scored more than two consecutive years of double-digit average price gains, he says.
Meanwhile, sharply reduced beef production fails to halt renewed weakness in beef cutout values. They soared the week before last, with the comprehensive (cuts, grinds and trim) averaging $315.72 per cwt. This was up $6.94 per cwt from the prior week and up 11.7% from the same week last year. Of note was that forward sales rebounded to be 24.8% of the total volume sold. This was at the expense of formula sales that represented 49.5% of the total (the first time under 50% for many weeks). Last week saw the Choice cutout the first four days decline $2.36 per cwt to $308.36 per cwt, after averaging $313.69 per cwt the week before last.
FEB PLACEMENTS WERE RECORD FOR MONTH
PLACEMENTS of cattle into feedlots in February were record high for the month. The total of 1.890M head was 9.7% above February last year and was 3.3 percentage points higher than analysts’ average forecast of 106.4%. February marketings at 1.793M head were up 3.4% but down 1.1% on the previous year after taking one extra slaughter day this February into account. The March 1 COF total of 11.838M head was up 1.3% on last year and was 0.4% higher than forecast. The total was 153,000 head higher than a year ago.
Regarding placement weights, the 700-799 lb and 800-899 lb categories accounted for 67% of total placements. The under 600 lb category saw 15,000 more cattle placed than last year (360,000 head). The 600-699 lb category saw 20,000 more cattle placed (330,000 head), the 700-799 lb category saw 50,000 more cattle placed (515,000 head), the 800-899 lb category saw 62,000 more cattle placed (485,000 head), the 900-999 lb category saw 20,000 more cattle placed (150,000 head) and the 1000 lbs plus category saw the same number of cattle placed (50,000 head).
Only two states, Arizona (down 1%) and Kansas (down 2%) had fewer cattle on feed than a year ago. Texas had the most cattle on feed with 2.820M head, with its total up 40,000 head from a year ago. Nebraska was second with 2.560M head, up 30,000 head, and Kansas was third with 2.400M head, down 60,000 head. Three states placed fewer cattle in February than last year. Texas placed 1% fewer, Arizona 4% fewer and Washington 8% fewer. Three states, Arizona (down 4%), Colorado (down 7%) and Iowa (down 2%) marketed fewer cattle in February than last year. Texas marketed 1% more cattle, Nebraska 4% more and Kansas 7% more.
Lower than required weekly harvest levels continue to add the marketable front-end fed cattle supply, says Andrew Gottschalk, HedgersEdge.com. This loading of the front-end supply projects to continue into the late summer. The number of cattle on feed 150 days or more on April 1 to September 1 will be up 17%, up 10%, up 10%, up 9%, up 19% and up 9%, respectively, on the previous year, he says.
JBS BEEF NA ENDS YEAR WITH LOSS
JBS Beef North America, as expected, reports a loss in its 2023 fourth quarter which reduced its full year profits. The unit had an adjusted EBITDA loss of $98.6M in the quarter, versus net EBITDA of $195.4M in the same quarter in 2022. Net revenue in the quarter was $6.273 billion, up 15% year-on-year. For the full year, adjusted EBITDA was $114.2M, down 94.5% from $208.2M in 2022. Net revenue for the year was $23.303 billion, up 5.6%. Beef margins in North America both for the year and the quarter suffered an impact compared to the previous year as a result of the cattle cycle, says parent company JBS SA. This reduced the availability of animals for slaughter and significantly increased costs. Cattle prices remained at high levels, growing 16% year-on-year in the quarter and 21% in the year, versus the same periods in 2022. As the price of cattle represents 85% of the cost of goods sold, and growth in costs was higher than the growth in the cutout, profitability came under pressure for the period, says JBS.
JBS USA Pork fared much better than beef in the quarter and in 2023. Net revenue in the quarter was $2.102 billion, a 4% increase compared to a year earlier. Adjusted EBITDA was $195.2M. For all of 2023, net revenue was $7.714 billion, a 5% decline from 2022. Adjusted EBITDA was $527M, versus $756M in 2022. The first half of 2023 was marked by an excess supply of animals in the domestic market, putting pressure on prices and profitability, says JBS.
JBS Australia, who business includes beef, pork and lamb operations, had adjusted EBITDA in the quarter of $178.4M and $474.7M for the year. These were up 48.6% and 2.4%, respectively, from the same periods in 2022. Revenue growth in the quarter was the result of higher volumes sold, reflecting the greater availability of cattle in the market, says JBS. But for the year, the growth in volumes sold was not enough to offset the reduction in prices in the domestic and international markets. The volume of the beef business grew 11% compared to 2022’s fourth quarter, due to the growth in sales in both the domestic and export markets, it says.
TOP 30 U.S. BEEF PACKERS 2023
| COMPANY NAME HEAD OFFICE | U.S. CAPACITY (HEAD PER DAY) | NUMBER OF U.S. PLANTS | 2022 U.S. BEEF SALES (IN MILLIONS OF $) | 2022 U.S. KILL (000 HEAD) | CATTLE TYPE (INCL. SLAUGHTER MIX) | |
| 1 | JBS Food Groups Greeley, Colo. | 29,000 | 9 | 18,200 | 6,700 | English Cross Fed 80%, Non Fed 20% |
| 2 | Tyson Foods Springdale, Ark. | 25,800 | 6 | 19,854 | 6,456 * | Grain-Fed Young Cattle Fed 100% |
| 3 | Cargill Protein Wichita, Kan. | 23,000 | 6 | Not Disclosed | 5,900 | Fed Steers and Heifers Fed 88%, Non Fed 12% |
| 4 | National Beef Packing Co. Kansas City, Mo. | 13,200 | 2 | 11,900 | 3,500 | Angus, Hereford Fed 100% |
| 5 | American Foods Group Alexandria, Minn. | 6500 | 4 | Not Disclosed | Not Disclosed | Dairy Steers, Cows & Bulls Non Fed 85%, Fed 15% |
| 6 | Caviness/CS Beef Packers Amarillo, Texas | 4700 | 2 | 1,600 | 1,200 | Cows, Bulls, Fed Non-Fed 85%, Fed 15% |
| 7 | Greater Omaha Packing Co. Omaha, Neb. | 2900 | 1 | 2,100 | 666 | Angus, Hereford, Fed 100% |
| 8 | Central Valley Meat Hanford, Calif. | 2800 | 2 | 1,500 | 670 | High Quality Angus, Fed Holstein, Cow, Bull Fed 50%, Non Fed 50% |
| 9 | Nebraska Beef Ltd. Omaha, Neb. | 2400 | 1 | 1,000 | 450 | English/English Cross Fed 100% |
| 10 | Creekstone Farms Premium Beef Arkansas City, Kan. | 2200 | 1 | 1.170 | 515 | Premium Black Angus Fed 100% |
| 11 | Agri Beef Co. Boise, Idaho | 1650 | 1 | Not Disclosed | Not Disclosed | High Quality Fed 100% |
| 12 | OWB Packers Brawley, Calif. | 1600 | 1 | Not Disclosed | 317 | Calf-fed Holsteins, Angus, Wagyu and Organic cross, Organic cow Fed 95%, Non Fed 5% |
| 13 | FPL Food Augusta, Ga. | 1500 | 1 | 600 | 285 | Black Angus Fed 7%, Non Fed 93% |
| 14 | Lone Star Beef San Angelo, Texas | 1450 | 1 | 627 | 386 | Cows, Bulls Non Fed 100% |
| 15 | DemKota Ranch Beef Aberdeen, S.D. | 1300 | 1 | Not Disclosed | 254 | English Fed 100% |
| 16 | STX Beef Company Corpus Christi, Texas Nicholas Meats Loganton, Pa. | 1200 1200 | 1 1 | Not Disclosed Not Disclosed | Not Disclosed 200 | Fed Fed 100% Cull Cows, Bulls Non Fed 99%, Fed 1% |
| 18 | Brown Packing Co. Gaffney, S.C. | 1150 | 1 | Not Disclosed | 284 | Cows, Bulls Non Fed 100% |
| 19 | Preferred Beef Group Booker, Texas | 725 | 1 | Not Disclosed | 250 | Cow, Bull Fed 10%, Non Fed 95% |
| 20 | American Beef Packers Chino, Calif. Western Reserve Protein Group Hastings, Neb. | 550 550 | 1 1 | 217 Not Disclosed | 145 Not Disclosed | Holstein Cows Non Fed 100% High Quality Angus Fed 100% |
| 22 | Aurora Packing Co. North Aurora, Ill. | 475 | 1 | 306 | 119 | Black Angus Fed 100% |
| 23 | Upper Iowa Beef Lime Springs, Iowa | 470 | 1 | Not Disclosed | Not Disclosed | Black Angus Fed 100% |
| 24 | VPP Group Norwalk, Wis. | 450 | 1 | 120 | 109 | Dairy, Beef Fed 10%, Non Fed 90% |
| 25 | Elkhorn Valley Packing Schenk Packing Stanwood, Wash. | 425 425 | 2 1 | Not Disclosed 165 | Not Disclosed. 90 | Angus, Angus cross Fed 100-% Cull Cows, Bulls Non Fed 100% |
| 27 | Randolph Packing Co. Asheboro, N.C. | 400 | 1 | Not Disclosed | 70 | Cows, Bulls Non Fed 100% |
| 28 | Ida-Beef LLC Burley, Idaho | 350 | 1 | Not Disclosed | Not Disclosed | Cows, Bulls Non Fed 100% |
| 29 | Open Range Beef Gordon, Neb. | 275 | 1 | Not Disclosed | Not Disclosed | Organic, Grass-Fed Cows Non Fed 100% |
| 30 | Dale T. Smith & Sons Draper, Utah | 240 | 1 | Not Disclosed | Not Disclosed | Cow, Bull Non Fed 100% |
NOTES
CBW’s annual ranking of the Top 30 Beef Packers is based on maximum daily slaughter capacity at U.S. plants that operate under common ownership and/or management. Plant numbers refer to slaughter plants only. Unless otherwise stated, sales are beef sales from U.S. operations only. Cattle type refers to preferred type. * refers to a CBW estimate. Upper Iowa Beef enters CBW’s Top 30 for the first time at No. 23.
MARKET SHARE OF THE TOP 5 BEEF PACKERS
This table is contained in the Subscriber Section under Top 30 Packers.
CAPACITY TOTAL REMAINS THE SAME
DAILY slaughter capacity at the nation’s 30 largest beef processors remains the same as from a year ago. The Top 30 packers currently have the capacity to process 128,885 head per day in 55 plants. That is 120 head more than the total capacity of 128,765 head a year ago in 55 plants. The top five packers have a combined capacity of 97,500 head per day in 27 plants, the same as a year ago. The top three packers had a 2022 market share of total commercial cattle slaughter of 55.5%, down from 58.1% in 2021. Their share of steer and heifer slaughter declined to 66.8% from 67.1% in 2022. The top five packers’ share of commercial slaughter in 2022 was 70.2% versus 73.6% in 2021. Their share of steer and heifer slaughter was 82.4% versus 83.8% in 2021.
CHICKEN SOLD MOST POUNDS
CHICKEN sold the most in pounds in the U.S. in 2023 and represented 38.3% of total pounds sold at retail. But beef accounted for 53.6% of all fresh meat dollars, which was more than all other fresh proteins combined, according to the latest Power of Meat study. The U.S. poultry industry is well positioned for 2024, as lower feed costs and positive consumption trends have improved the overall outlook for global poultry production. So said Christine McCracken, executive director, senior protein analyst at Rabobank, in a presentation during the 2024 Annual Meat Conference. The Power of Meat study found that 80% of U.S. consumers say “meat eater” best describes how they eat, compared with respondents who identified as flexitarian (12%), vegan/vegetarian (7%) and pescatarian (1%).
COLD STORAGE STOCKS FALL: U.S. red meat and poultry stocks fell 13% during February to 920.0M lbs, as solid demand offset larger monthly production for beef, pork and chicken. The beef and pork totals were both down 12% at 442.75M lbs and 456.5M lbs, respectively.