Over the past couple weeks, the cattle markets were in an out-and-out free fall. The futures markets were all short, everywhere, and giving the cash market no opportunity to expand. Then suddenly, the market leveled off. Feeder cattle have gone up about $6 this past week. I had a few guys from California ask me about the market and what to do. Two months ago, my standard answer was sell them sooner than later. Last week my answer was hold off a week or two, but keep a close eye on the market. Where the feds go, the feeders follow.
Many analysts were telling us that we could see a brief reprieve to the market on feeder cattle and I think it’s just about here. The April and May feeder contracts were trading at $137.50 last Wednesday. The West Coast just received a good rain and could delay marketings a bit, but I would be ready to pull the trigger soon for West Coast cattle. Ellington Peak reported that a set of 700-lb. yearlings sold for $160 at last Wednesday’s video sale.
The fed cattle markets also leveled off from their free fall. Fed cattle traded anywhere between $116 and $118 with asking prices getting stronger later in the week. Slaughter levels are just now starting to creep up to 116,000 per day; last week’s slaughter was estimated to be 615,000 head for the week—certainly not enough to start clearing the volume of market-ready cattle that exists. When these walls of cattle are advertised for as long as this one was, they usually have a way of dissipating.
Packers are still earning handsome profits on their beef sales. The cutout is down to $213.51 for Choice. And packers are marking $80-per-head profits right now. Slaughter needs to pick up fast to keep the pipelines clear of ready cattle.
The boys at Hedgers Edge pointed out that “beef demand during the month of May generally increases by approximately 6.2 percent vs. April. Current support exists at $205, followed by $198-200. Resistance is $225 for Choice beef. Slaughter this week is estimated at 615,000 head, as seasonal increases in weekly slaughter are upon us. Given the expected gain in beef demand, any weekly production level above 636,000 will exert downward selling pressure on the beef cutout. We are projecting peak weekly slaughter to occur during the month of July, reaching 655,000... The ‘dog-days’ of summer do not treat the cattle industry well, even during periods of tight front-end fed cattle supplies. This year, to compound this seasonal weakness, this industry is headed for a record front-end buildup by Aug. 1.”
We need to see outstanding demand for beef while competing with the other meat proteins. Now we have a new kid on the block attempting to take a bit of market share away from the meat industry, but more specifically the beef industry.
White Castle restaurants announced last week that they will start offering a plant-based protein burger on their menu. White Castle is the home of the famous “slider,” which is about two bites per burger. The vegetable protein patty maker “Beyond Beef” is available in about 1,200 restaurants these days. We don’t know what their sales performance is yet.
The U.S. Cattlemen’s Association (USCA) filed Petition Number 18-01 with USDA’s Food Safety Inspection Service in February to establish clear definitions for beef and meat labels, which would exclude products not derived directly from animals raised and slaughtered from the definitions of “beef” and “meat.”
The NCBA has also responded to USCA’s petition for additional labeling features. NCBA believes the labeling responsibility should lie with USDA’s FSIS and not the Food and Drug Administration because FSIS is already responsible for the Federal Meat Inspection Act and the Poultry Products Inspection Act. NCBA claims that FDA has a record of haphazard enforcement and long-standing history of turning a blind eye to the law. FDA has been unwilling to take action against egregiously-labeled imitation products.
The dairy industry has been fighting this for years and is experiencing low milk prices. We all know that milk is unique to the mammary glands of mammals and not manufactured from plants or trees.
The food world is changing fast and these government agencies need to do a better job protecting consumers from misleading advertising claims and perceived benefits. Remember when margarine was promoted as a low-fat alternative to butter? Fifty years later we find out it’s worse for you than the butter it tried to replace. We really should keep food products whole and simple and, above all, honest. — PETE CROW