THE imposition by the U.S. of tariffs on Canadian and Mexican imports remain likely, although it is unknown whether the tariffs will be at 25% across the board on all imports or at lesser or no levels on some imports. President Donald Trump last Monday said that tariffs are “on time and on schedule” despite efforts by the countries to beef up border security and halt the flow of fentanyl into the U.S. ahead of a March 4 deadline. “The tariffs are going forward on time, on schedule,” Trump told a joint news conference with French President Emmanuel Macron. He had been asked whether Canada and Mexico had done enough to avoid the punishing 25% U.S. duties. But on Wednesday, Trump said implementation would be delayed until April 2. However, he reversed his position the next day, saying tariffs would be implemented on March 4 (Tuesday).
Many had hoped the top two U.S. trading partners could persuade the Trump administration to further delay tariffs that would apply to more than $918 billion worth of U.S. imports from the two countries, from autos to energy, said Reuters. This could wreak havoc on the integrated North American economy, with the automotive sector hit particularly hard. As CBW has previously reported, tariffs and counter-tariffs of any size would significantly impact the highly integrated nature of the agricultural trade between the three countries. Their beef industries would be especially impacted as trade in cattle and beef is vital for each country. Canada exported 1 billion lbs of its beef to the U.S. in 2024 while Mexico exported 600M lbs of beef. In turn, the U.S. exported 103.5M metric tons (mt) of beef to Canada in 2024 worth $877M. It exported 232.5 mt of beef worth $1.35 billion to Mexico. In 2024, Canada exported 780,000 cattle to the U.S. and Mexico exported 1.24M head.
Consumer Confidence Plummets
The potential for a trade war with Canada, Mexico and the EU caused U.S. consumer confidence in the economy to plummet in February, with the biggest monthly decline in more than four years. The Conference Board reported that its consumer confidence index sank to 98.3 from 105.3 in January. This was far below the expectations of economists, who projected a reading of 103, according to a survey by FactSet. The seven-point drop was the biggest month-to-month decline since August 2021. Markets on Wall Street immediately dropped. The S&P 500 fell 0.6% in midday trading, while the Dow Jones Industrial Average was flat. The Nasdaq declined 1.1%. The board cited inflation that is seemingly stuck and a trade war that a growing number of Americans see as inevitable. The loss of confidence could have negative implications for domestic beef sales.
Respondents to the board’s survey expressed concern over inflation, with a significant increase in mentions of trade and tariffs, said the board. Its report last Tuesday said the measure of Americans’ short-term expectations for income, business and the job market fell 9.3 points to 72.9. A reading under 80 can signal a potential recession in the near future. The proportion of consumers expecting a recession over the next year jumped to a nine-month high, said the board.
Consumers’ view of current conditions tumbled 3.4 points to a reading of 136.5 in February and views on current labor market conditions fell again. Views of current labor market conditions weakened, said the board. Consumers became pessimistic about future business conditions and less optimistic about future income. Pessimism about future employment prospects worsened and reached a ten-month high. Consumers had appeared increasingly confident heading into the end of 2024 and spent generously during the holiday season. However, U.S. retail sales dropped sharply in January, partly because of cold weather, said the board.
COF TOTAL REMAINS FLAT
THE number of cattle on feed on February 1 was down only slightly from January 1 and was close to the levels of the past two years. The COF total of 11.716M head was 99.3% of a year ago and was 81,000 head lower than a year ago. January placements at 1.822M head were up 1.7% on a year ago This total however was 120,000 head below the previous five-year average, says Andrew Gottschalk, HedgersEdge.com. A trend such as this should lead to an improved summer price outlook provided marketings are sufficient to prevent a backlog of front-end fed cattle supplies from growing, he says.
Feedlots marketed 1.869M head in January, which was up 1.4% on last year. This represented the largest January marketing total since 2020, says Gottschalk. More importantly, the marketing rate (marketings versus COF) at 15.8% exceeded the prior year’s 15.4% and the previous five-year average of 15.4%. Front-end fed cattle supplies project to exceed prior year levels throughout the summer, unless fed cattle marketings begin to increase, he says. On a positive note, the month-to-month change from April through August generally exceeds the year ago totals by less than 75,000 head. But front-end supplies project to exceed the previous five-year average during the March-August time period by significant percentages, he says.
Six states, Arizona (down 12%), Idaho (down 3%), Kansas (down 1%), South Dakota (down 4%), Texas (down 4%) and Washington (down 2%) had fewer cattle on feed than a year ago. Texas had the most cattle on feed with 2.700M head, with its total down 120,000 head from a year ago. Nebraska was second with 2.590M head, up 40,000 head, and Kansas was third with 2.370M head, down 20,000 head. Three states placed more cattle than a year ago. Kansas placed 15% more, Nebraska 6% more and Washington 13% more. Four states marketed more cattle in January than last year. Colorado marketed 7% more, Nebraska marketed 4% more, Oklahoma marketed 23% more and Soth Dakota marketed 13% more.
Regarding placement weights, the bulk of the increase came in the two middle categories The under 600 lb category saw 10,000 fewer cattle placed than last year (365,000 head). The 600-699 lb category saw 5000 more cattle placed (395,000 head). The 700-799 lb category saw 30,000 more placed (505,000 head). The 800-899 lb category saw 6000 more placed (382,000 head). The 900-999 lb category saw the same number placed (105,000 head) and the 1000 lbs plus category saw the same number placed (70,000 head).
Larger Feedlots Held 83% Of The COF Total
USDA’s COF report also revealed that cattle and calves on feed for slaughter market in the U.S. for feedlots with capacity of 1000 or more head represented 82.7% of all cattle and calves on feed in the U.S on January 1. This is comparable to the 82.7% on January 1, 2024. Marketings of fed cattle for feedlots with capacity of 1000 or more head during 2024 represented 87.2% of total cattle marketed from all feedlots in the U.S., down slightly from 87.3% during 2023.
The report also revealed that the U.S. had 26,105 feedlots on January 1 this year, versus 25,103 a year earlier. These feedlots had an inventory of 14.297M head on January 1, versus 14.426M head on January 1 last year. These feedlots marketed 24.820M head in 2024, versus 24.836M head in 2023. Feedlots with less than 1000 head of capacity totaled 24,000, versus 23,000 in 2023. Feedlots with 50,000 head or more of capacity totaled 80, versus 76 on January l last year.
Meanwhile, the feeder cattle and calf inventory outside feedyards on January 1 was estimated by USDA at 24.557M head, down 117,000 head from the prior year. This total is below the previous cycle low seen in 2015 and is also likely the lowest total since the rapid expansion of the cattle feeding sector that began in the 1960s, says Gottschalk. The calf crop last year was below the level of the 1950 calf crop. As such, with near record high COF totals, the available supply of feeder cattle and calves outside feedyards is reduced. He also notes that the cow harvest during January was the lowest percentage in the slaughter mix since 2006. In sharp contrast, the heifer percentage in the slaughter mix during January was the highest since 2004.
2024 CALF CROP WAS LARGER THAN EXPECTED
THE January cattle inventory report confirmed historically tight supplies of cattle heading into 2025. However, some relief was provided in the form of a larger calf crop in 2024 than previously expected and the reintroduction of Mexican feeder cattle into the supply chain beginning in February. So says USDA’s Economic Research Service (ERS) in its latest monthly Livestock, Dairy and Poultry Outlook report. ERS raised its projected beef production in 2025 to 26.565 billion lbs, up 775M lbs from last month. This is based on increased cattle supplies available for placement and heavy cattle slaughter weights early in the year being carried forward, says ERS.
ERS raised its slaughter cattle prices in 2025 on firm demand and the fact that cattle available for placement in feedlots will still be less than last year despite more feeder calves being available than previously expected. The January average price for slaughter steers in the 5-area marketing region was $204.49 per cwt, $11.05 per cwt higher than December and more than $30 per cwt above January 2024. In the first week of February, prices averaged $207.05 per cwt, nearly $26 per cwt above the same week last year. Based on recent price data and the fact that wholesale beef prices are at record levels for this time of year, ERS adjusted its 2025 price forecast higher from last month, with the annual price projected at $200.75 per cwt, over 7% higher than 2024.
This year’s beef import forecast is unchanged from last month at 4.770 billion lbs, says ERS. However, export projections are raised from last month to 2.795 billion lbs on increased beef production available for export. The resumption of cattle imports from Mexico boosts the domestic beef production forecast. With greater expected supplies, the export forecast is similarly raised. This increase also reflects strong global beef demand. Despite higher prices in 2024, exports remained relatively strong. Its beef export forecast for 2025 is raised 200M lbs from last month to 2.795 billion lbs. This would be a year-over-year decrease of about 7% and puts exports at 10.5% of production, compared to 11.1% in 2024, says ERS.
ERS Touts Strong Global Demand
The strength of demand globally for U.S. beef is evidenced by these sustained strong exports, despite higher beef prices and a strong U.S. dollar, says ERS. The total value of U.S. beef exports in 2024 was over $9 billion, a year-over-year increase of about 6%. The average unit value of exports increased by about 7%. Additionally, the Nominal Broad Dollar Index, an indicator of the exchange rates of the U.S. dollar against selected foreign currencies, trended higher throughout 2024, especially in the latter months. A stronger U.S. dollar makes U.S. exports more expensive in the global market, says ERS.
However, U.S. beef exports remained relatively strong throughout the year, largely aided by broad growth in some of the mid-sized markets, says ERS. Beef demand in many of these markets is supported by tourism and the hotel, restaurant and institution sector, as well as growth in middle class incomes. These markets are perhaps becoming less price-sensitive, supporting demand for high quality U.S. beef even at the stronger prices seen throughout 2024. Exports to the Philippines represented the largest increase in exports to these smaller markets, up over 14M lbs or 44%, year-over-year, says ERS.
The ERS report also noted that per capita consumption of pork and broilers is projected to increase in 2025, with beef, turkey and egg consumption projected to fall from 2024 Projected per capita beef consumption for 2025 was adjusted up from last month’s report to 60 lbs but is still expected to be lower than the 2024 estimate. Pork consumption per capita for 2025 is projected at 51.4 lbs, up slightly from the 2024 estimate. Broiler meat is the most consumed animal product, and per capita consumption has been growing for many years. It is projected to be 103.1 lbs in 2025. Consumption of turkey by comparison has been falling in recent years and is projected at 13.4 lbs in 2025. As table egg production has faced disease pressure from Highly Pathogenic Avian Influenza (HPAI), per capita consumption has also fallen. Per capita egg consumption for 2025 is projected at 270.7 eggs, or 22.6 dozen. Per capita availability is calculated by subtracting exports and ending stocks from total supply (beginning stocks, imports and production) and dividing by population, says ERS.
CATTLE PRICES SLIDE AGAIN
CASH live cattle prices decline for the fourth week in a row after setting a new record high of $209.57 per cwt live in the last week of January. As with the week before, very little trade occurred last week until Thursday. Wednesday saw the only sales (587 head) in Kansas and Texas at $197 per cwt live. The only trade Thursday morning was up north, where 2675 head sold at $198 per cwt live in Iowa and at $311-313 per cwt dressed in Nebraska. Prices the week before last averaged $199.64 per cwt live or $315.12 per cwt dressed. These were down $3.27 per cwt and $5.40 per cwt, respectively, from the prior week. The live price though was up 9.1% on the same week last year, while the dressed price was up 8.1%.
Carcass weights increased in the latest reported week ended February 15 and remained far above year ago levels. Steer weights averaged 954 lbs, up 3 lbs on the week before and up 40 lbs on the same week last year. Heifer weights averaged 867 lbs, up 5 lbs from the week before and up 45 lbs on the same week last year. Overall weights averaged 877 lbs, up 2 lbs on the week before and up 43 lbs on the same week last year. This was the equivalent of adding 28,990 head to that week’s slaughter total of 562,260 head, according to HedgersEdge.com. The slaughter total was the smallest in many years for a non-holiday week. Actual weekly slaughter totals in the seven weeks this year have exceeded 600,000 head only twice.
Meanwhile, the national comprehensive boxed beef cutout (cuts, grinds and trim) the week before last declined sharply from the prior week. It averaged $317.56 per cwt, down $6.84 per cwt. It thus declined $14.29 per cwt from the high so far this year of $331.85 per cwt set the week ended January 24. Spot market sales accounted for 29.1% of the total volume. Formula sales accounted for 51.7%, forward sales 19.2% and export sales 14.6% The daily Choice and Select cutouts stabilized the first four days of last week, with the Choice cutout increasing by $0.41 per cwt and the Select cutout declining by $0.43 per cwt.
PRODUCER GROUPS RECOUNT ISSUES TO CONGRESS
SEVERAL producer groups, including the National Cattlemen’s Beef Assn (NCBA), testified before the Senate Agriculture committee last week on the pressing issues facing animal agriculture. NCBA president Buck Wehrbein detailed issues like animal health, regulatory burdens and the upcoming national dietary guidelines as areas affecting the sector. The cattle industry is seeing better market conditions, strong consumer demand for beef and optimism for the future of the industry. Yet challenges still remain, he said. Congress must always remember that food security is national security and the policy decisions they make will impact the hardworking cattlemen and women who produce the nation’s food, he told the committee.
Passing a farm bill, axing the Death Tax, protecting beef in the dietary guidelines, rolling back excessive regulations, holding trade partners accountable, combatting the New World screwworm and protecting the Beef Checkoff are all tangible steps Congress can take to support American farmers and ranchers and protect food security, said Wehrbein. Earlier this month, Congress introduced a bill known as the Death Tax Repeal Act that would end the federal estate tax affecting family farmers. NCBA was a named proponent of the legislation, and the group has continued to advocate for its passage as evident in the hearing. Also of high concern for the group is the new threat of New World screwworm, he said.
TYSON PROMOTIONS: Tyson Foods promotes two senior executives as part of what it calls its robust development and succession planning process. Devin Cole was named Group President of Poultry, succeeding Wes Morris. In addition to Devin’s new role, he will continue to oversee Tyson Foods’ Global Business Unit. Morris will remain with the company to assist in the transition and plans to retire early next year. Brady Stewart will expand his role to oversee the company’s Prepared Foods segment, in addition to his current role as Group President, Beef, Pork and Chief Supply Chain Officer.