THE disparity in the prices of fatty trimmings (50CL) and lean trimmings (90CL) continues to widen. This reflects adequate supplies of 50CL trim but an ongoing shortage of domestic lean manufacturing beef due to reduced cow slaughter. The price of 50CL beef the week before last averaged $98.04 per cwt. This was down $4.80 per cwt from the prior week and was down 34.9% from the same week last year. The price of 90CL beef averaged $344.81 per cwt, up $6.25 per cwt from the week before and up 25.0% from the same week last year. This meant the price hit new consecutive all-time highs for six consecutive weeks. The price was the ninth week it was above $300 per cwt and has increased every week this year. The shortage of 90CL means Australian exports to the U.S. in the first quarter were 79.4% higher than last year, as CBW reports in its last story.
The record high 90CL price however failed to prevent the weekly comprehensive cutout (cuts, grinds and trim) from falling sharply. It averaged $304.50 per cwt, down $8.81 per cwt from the prior week but up 6.3% from the same week last year. The Choice cutout averaged $301.40 per cwt, down $10.86 per cwt. Spot market sales for the week were 29.2% of the total volume while forward sales were 56.4%. Forward sales were 14.5% and export sales were 11.7%. The Choice average price was close to the Choice’s daily price last week. The first four days saw it move sharply higher on Monday then fall back. It gained $1.20 cwt in the four days on light to moderate volume to be at $298.37 per cwt Thursday.
Cattle Prices Move Lower
Cash live cattle prices last week moved lower than those of the week before. That week saw live prices average $185.73 per cwt, down $2.50 per cwt from the prior week. Dressed prices averaged $296.87 per cwt, down $2.62 per cwt. Last week’s market was a repeat of previous weeks, with only a light trade up north through Wednesday and with the north holding a $3 per cwt live premium to prices down south. The only trade of note Wednesday was the sale of 3153 head in Iowa at $184-185 per cwt live or $295 per cwt dressed. But trade turned more active Thursday morning. Prices up north averaged $185 per cwt live or $293-294 per cwt dressed. Prices were lower than expected down south at $182 per cwt live. One positive is that latest reported steer and heifer carcass weights declined slightly from the week before. Steer weights for the last week of March averaged 923 lbs, down 1 lb but up 25 lbs from the same week last year. Heifer weights averaged 848 lbs, down 2 lbs but up 19 lbs from last year. Overall weights averaged 848 lbs, up 1 lb and up 24 lbs, respectively. The 24 lb increase was the equivalent of adding 16,960 head to the week’s total slaughter, says HedgersEdge.com. That total was 582,209 head, the smallest kill of the year, including holiday-shortened weeks.
Meanwhile, the National Cattlemen’s Beef Assn (NCBA) criticizes USDA’s National Agricultural Statistics Service’s decision to cancel the July Cattle Report and discontinue the County Estimates for Crops and Livestock, among other changes. These reports provide critical data and the decision to end them is completely misguided, says NCBA. It is disingenuous for the same agency which touts its commitment to transparency in livestock markets to arbitrarily cease publication of reports which provide just that, says NCBA’s Ethan Lane. While it may be politically expedient to blame appropriators in Congress for the decision, cattle producers know better than to believe that discontinuing a handful of reports will result in substantive cost savings for the department. NCBA calls on USDA-NASS to immediately reverse this decision and continue delivering on its stated mission of providing timely, accurate and useful statistics in service to U.S. agriculture, says Lane.
CATTLE ON FEED FORECASTS
David Anderson, Texas A&M University: COF 101.7%, placed 90.0%, marketed 87.7%; Andrew Gottschalk, HedgersEdge.com: COF 101.6%, placed 93.3%, marketed 91.1%; Katelyn McCullock, Livestock Marketing Information Center: COF 101.9%, placed 91.8%, marketed 88.0%; Rich Nelson, Allendale Inc: COF 102.5%, placed 94.7%, marketed 89.8%; Lori Porter, Allegiant Commodity Group: COF 102.2%, placed 93.2%, marketed 87.1%: Mike Sands, MBS Research: COF 103%, placed 95%, marketed 86%
TWO LESS DAYS SKEW COF DATA
TWO less slaughter days in March than last year skew the number of cattle placed in feedlots and marketed in March. Placements were likely down 7-8% on last year and marketings were likely down more than 11%. Daily average marketings were estimated at over 82,000 head per slaughter day and were expected to be the smallest since October 2023, says Katelyn McCullock, Livestock Marketing Information Center. Placements were likely much smaller as auction data showed 25% declines. Feeder cattle imports into the U.S. were slightly larger than last year from both Mexico and Canada. Lower marketings imply less incentive to place animals and heavier weights point to longer days on feed as well, she says. She estimates that cattle placed in March have an expected breakeven of close to $180 per cwt, $8-9 per cwt above the August live cattle futures last Thursday.
The number of cattle on feed on April 1 is estimated to be 11.832M head, says Andrew Gottschalk, HedgersEdge.com. This would be 44,000 head above the previous five-year average but 313,000 head below the April peak made in 2022 following the disruptions from the COVID-19 pandemic. The decrease in the COF total from January 1 to April 1 is 98,000 head, versus a decrease of 87,000 head for the previous five-year average. But front-end supplies (COF 150 days or more) on April 1 are estimated to be 3.044M, 597,000 head or 19.5% above the prior year’s total. While some marketings were delayed due to the January winter storms, the economic gains seen from adding additional pounds outweighed the adverse weather impact, he says.
The latter economic signal has led to a contra-seasonal gain in carcass weights, culminating in record high actual carcass weights for this time period, says Gottschalk. Average carcass weights for the latest weekly reporting period were 24 pounds above the prior year. This gain added approximately 3% to beef production for that reporting week. Reduced March marketings and smaller placement levels from the prior year were victims of two less marketing days versus a year ago. These lost days will be recaptured this month. Nonetheless, contra-seasonal gains and record high carcass weights confirm a building backlog of fed cattle, he says.
KING RANCH BUYS HALF OF COBALT CATTLE
THE historic King Ranch in Texas acquires a 50% stake in Cobalt Cattle, the nation’s fourth largest cattle feeding operation. It has six feedyards in Colorado, Kansas and Texas with a combined feeding capacity of 355,000 head. King Ranch is excited about this opportunity and what it means for its long-term commitment to the beef industry, says CEO Robert Hodgen. Cobalt Cattle is a clear leader in the cattle feeding sector with a highly seasoned and experienced management team. King Ranch looks forward to leveraging its combined industry expertise while upholding its shared commitment to the highest standards of excellence, he says. The acquisition represents the next step in King Ranch’s long-term strategic vision to participate throughout various sectors of the beef industry, fortifying the entire value chain. King Ranch’s goal is to align with partners like Cobalt Cattle to consistently bring nutritious and delicious beef to the American consumer, he says.
Cobalt Cattle was formerly part of Green Plains Cattle Co, which was founded in 2014. Cobalt became a stand-alone offshoot of Green Plains in November 2019. King Ranch has a long and storied history in the cattle business, including participation in some of the first cattle drives in the U.S. It helped found industry associations such as the Texas and Southwest Cattle Raisers Assn and developed the Santa Gertrudis breed of cattle. Santa Gertrudis genetics, crossed with Red Angus for over three decades, are uniquely bred to thrive in the harsh South Texas climate while delivering a high quality, consistent eating experience, it says.
BEEF EXPORT VALUES WERE UP IN FEB
BEEF exports are having a much improved start to the year in value terms. Beef exports reached 103,883 metric tons (mt) in February. This was down 1% from a year ago but export value increased 10% to $830.4M. January-February exports were also down 1% to 203,647 mt but export value climbed 9% year-over-year to $1.59 billion, says the U.S. Meat Export Federation (USMEF). Tight beef supplies are definitely a challenge for exporters and that situation isn’t going to change anytime soon, says President and CEO Dan Halstrom. But on a positive note, USMEF is seeing more opportunities for underutilized beef cuts, including the round, shoulder clod and variety meat, in the global marketplace. Demand is strong throughout the Western Hemisphere and the foodservice and hospitality sectors are finally gaining some momentum in key Asian markets such as South Korea, where the post-COVID recovery has been slower than anticipated, he says.
U.S. pork exports posted another excellent performance in February, fueled by growth in the Western Hemisphere, South Korea and Australia, says USMEF. Exports increased 14% from a year ago to 250,930 mt, while value jumped 15% to $685.1M. Through the first two months of 2024, exports increased 10% in both volume (502,354 mt) and value ($1.37 billion). Coming off a record value year, it is great to see broad-based momentum for pork exports continue globally into 2024, says Halstrom. While Mexico is certainly at the forefront, USMEF is seeing excellent growth in markets like Colombia, Chile, El Salvador and the Caribbean, and demand has rebounded impressively in Korea and Australia, he says.
Pork exports to leading market Mexico remained on a remarkable roll in February, increasing 21% from a year ago to 94,272 mt, the eighth highest on record, says USMEF. Value jumped 22% to $189.5M. Through February, shipments to Mexico totaled 196,453 mt, 12% above last year’s record pace, while value increased 15% to $396.8M. Demand for U.S. pork continues to rebound in Korea, where shipments have accelerated significantly since late 2023. February exports reached 21,217 mt, soaring 71% above last year, while export value increased 74% to $69.3M. Through February, exports to Korea increased 61% in volume (41,944 mt) and 62% in value ($137M).
Beef Export Value Climbs In Key Regions
Mexico continues to be the bright spot for U.S. beef exports, with February shipments climbing 27% from a year ago to 19,760 mt, says USMEF. Export value soared 32% to $120.5 million, the seventh highest on record. Through February, exports to Mexico increased 21% in volume (39,871 mt) and 25% in value ($233.3M), including impressive growth for both muscle cuts and variety meat. Bolstered by the strong peso, Mexico’s demand for U.S. beef has strengthened at both foodservice and retail, says USMEF.
While February beef export volume to Korea was lower than a year ago (down 7% to 18,074 mt), export value climbed 12% to $172.3M. January-February exports followed a similar trend, falling 4% to 36,863 mt while value increased 12% to $342.8M. The Korean government recently announced measures aimed at easing food price increases, which have been especially sharp for fruits and vegetables. Rising prices have made Korea’s post-COVID foodservice recovery even more challenging but U.S. beef continues to find success in the home meal replacement and restaurant meat replacement segments, says USMEF.
February beef exports to the Caribbean were the largest on record at 2955 mt, up 25% from a year ago, while value was fourth highest at $24.5M (up 24%), says USMEF. Exports to the Dominican Republic were the fifth highest on record in both volume (993 mt, up 22%) and value ($10.8M, up 40%). Through February, shipments to the Caribbean increased 20% from a year ago in volume (5639 mt) and 15% in value ($45.3M), led by muscle cut growth in the Netherlands Antilles and the Leeward-Windward Islands. After a slow January, beef exports to Taiwan improved significantly in February, climbing 15% from a year ago (and 58% from January) to 5091 mt. Export value was $56.3M, up 36% from a year ago and 56% higher than in January. The U.S. is Taiwan’s dominant supplier of chilled beef, and USMEF continues to familiarize importers, distributors and consumers with alternative cuts that offer a high-quality dining experience at affordable prices. More on p.4.
Middle East Exports Surge 48%
Beef exports to the Middle East increased 48% from a year ago through February, reaching 9220 mt, while export value climbed 52% to $39.3M, says USMEF. They were led by a rebound in Egypt’s demand for beef livers and strong muscle cut growth in the United Arab Emirates, Kuwait, Qatar and Bahrain. While safety concerns in the Red Sea and Gulf of Aden have not dramatically impacted U.S. beef volumes entering the region, the situation has increased shipping costs and transit times and heightened buyers’ concerns about product availability, says USMEF.
Beef exports to South America climbed 23% from a year ago through February, reaching 3734 mt, while value increased 8% to $18.9M, says USMEF. Muscle cut exports to Colombia had slowed the previous month but rebounded in February, while beef variety meat demand strengthened in both Peru and Chile. Fueled by growth in Guatemala and Panama, January-February beef exports to Central America increased 16% from a year ago to 3957 mt. Export value climbed 15% to $27.2M.
February beef exports to China were slightly below last year in volume (15,219 mt, down 2%) but still trended higher in value at $133.8M (up 2%), says USMEF. Through February, exports to China were down 7% to just under 27,000 mt, with value down 2% to $235.9M. After a 2023 rebound, beef exports to Hong Kong continue to strengthen this year, with January-February exports up 13% in volume (5655 mt) and up 35% in value ($65.9M). While Japan is the leading volume destination for U.S. beef in 2024, exports through February were down 11% year-over-year to 41,280 mt. Export value was down 2% to $301.2M.
Beef variety meats, mostly tongues and skirts, are a bright spot in Japan, says USMEF. February export volume was up 4% to 7284 mt and value climbed 22% to just under $10M. Overall January-February exports of beef variety meat totaled 46,381 mt, up 8% from a year ago, while value climbed 10% to $177.4M. In addition to growth in Mexico, Japan, Egypt, Peru, Chile and Trinidad and Tobago, volumes also trended higher to China, Korea, Canada, Gabon, Cote d’Ivoire, Morocco, Guatemala and El Salvador, says USMEF.
February beef export value equated to $412.79 per head of fed slaughter, up 5% from a year ago, says USMEF. The January-February average was $385.78 per head, up 7%. Exports accounted for 14% of total February beef production and 11.6% for muscle cuts, down from 14.6% and 12.4%, respectively, in February 2023. The January-February ratios were 13.3% of total production (down from 13.6% a year ago) and 11.1% for muscle cuts (down from 11.6%).
Australian Exports Surge Again
Australian beef exports continue to surge as its cattle slaughter increases. March exports totaled 106,573 mt, more than 14% higher than the previous month and 7% higher than March last year. Last month recorded the highest figure for March exports since Australia’s 2015 drought year when an all-time March record of 123,464 mt was reached, says Beef Central’s Jon Condon. For the first quarter, exports to all markets reached 275,992 mt, up 25% on the same period in 2023. The first quarter exports were also the highest recorded by Australia since 2015, which is also the last year that the U.S. topped Japan as Australia’s largest export beef customer, says Condon.
Solid volume growth was seen in virtually all markets last month, with the U.S. again being the standout, says Condon. The U.S. took 26,484 mt of Australian beef, up 5100 mt or 24% on the previous month. It was the biggest monthly volume seen since December’s extraordinary finish to the year when volume hit 35,782 mt. For the first quarter, exports to the U.S. surged to 68,095 mt, 79.4% or 30,000 mt higher than the same period a year earlier when the U.S. was still heavily entrenched in herd liquidation due to drought, says Condon.