The Western Livestock Journal family wants to extend its heartfelt concerns to the ranching community across this great nation. Throughout this year, ranchers have continually dealt with natural disasters. The frequency of these occurrences is somewhat mind-boggling from the wildfires across the Plains and the western U.S. to the hurricanes striking the Southeast. This year, it seems, no one has been able to escape some kind of hardships. We love seeing our communities rally around its own with fundraisers and support, and we hope and pray that all those who have been affected this year are able to recover, respond and rally. Currently, we pray for those in the paths of hurricanes and wildfires.
The famous quote that fits perfect for this year is, “Nobody said this was going to be easy, but nobody said it was going to be this hard.”
A 10,000-foot view would make us think that with these cattle prices, everyone would be overjoyed and life should be easy. Hay crops for much of the nation have been plentiful and the fundamentals of cow-calf production have been favorable. The national cow herd hasn’t started to show trends of rebuilding, and this data continues to extend favorable market conditions.
This data has driven packers to be more creative, even though the tactics they implored over the past decade are now becoming more and more exposed, including a major lawsuit filed recently by the McDonald’s Corporation targeting the Big Four in a decade-long price fixing scheme surrounding beef prices.
This obviously isn’t the first suit as the Big Four have already paid hundreds of millions of dollars in settlements over the past several years for the same exact reason. It seems the only goal they carry is to not admit to wrongdoing even as obvious as it is. Now, McDonalds says it’s their turn to hop in and take part. They claim data from as far back as January of 2015 shows collusion between these companies and how McDonalds was forced to pay whatever price they demanded. The corporation is seeking a trial by jury. With so many settlements already closed for the same time period, it looks like an easy win for McDonalds is headed their way, just with more attention.
In today’s market with such a short supply and strong price for cattle, packers are in an interesting spot, and most of us don’t feel bad for them. By paying out fines and settlements for their business tactics over the last decade and now dealing with high prices again, it’s an interesting time and one producers will want to pay attention to.
We’ve already begun to see packers adjust to domestic supplies in today’s market. Imports of Mexican cattle for the last 18 months have been steady due to drought conditions our southern neighbor is facing. This has also helped prop up Cattle on Feed heifer data, but simply put, there are ranchers who are still looking to disperse even in this strong market. Packers are increasing their orders for imported beef to keep up with domestic demand. The top two countries we import from are obvious: Canada, who accounts for one-third of imports, and Mexico, who accounts for a quarter of our imports. The next country in line is Brazil. In 2022, Brazil was the third largest source of beef shipped to the U.S. and accounted for 14% of U.S. beef imports. In 2023, an atypical case of bovine spongiform encephalopathy (BSE) was detected, sending shockwaves through their infrastructure, but was quickly a thing of the past as Brazilian slaughter finished the year up 11.4% and shipments continued across the world.
According to a EuroMeat News report, Brazilian beef exports broke a new record in May of this year, with the U.S. to blame for the largest increase. An increase of 64.6% fueled largely by imports of fresh meats doubled the numbers from the prior month. In an interesting shaping of the market, U.S. beef exports also increased this summer, which was up 7% according to the U.S. Meat Export Federation. This was mostly fueled with increases in Japan and Taiwan, which both see strong double-digit growth for U.S. beef products by 14% and 16%, respectively. A side note for U.S. beef exports: Mexico has also seen a large uptick in its imports of U.S. beef by a 19% year-over-year increase.
Over the remaining months of this year, including a pivotal election, the U.S. beef industry has a lot to navigate. With the seasons changing, heading cooler temperatures, calves and yearlings are headed to feedlots to continue our cattle cycle. The beef industry domestically is still favorable in the fundamentals. Getting through the next few months will be telling as indicators for the 2025 marketing season start to take shape. I’m very optimistic for our position, but we have to monitor how end-product marketers adapt because that carries more weight than any freightliner fleet. — LOGAN IPSEN
