Cattle markets were slow to develop last week with offers between $201-203 live. Packers were trying to buy at $197; packers will hold out as long as they can. Winter is the slowest demand season of the year and we should see a bottom develop over the next few weeks. Packers have endured a $150-a-head loss since the new year and have slaughter levels down to 560,000-570,000 head per week attempting to keep the beef cutout high, currently $314 on Choice beef.
Fed cattle were about $10 off their recent high from a couple weeks ago of $210. Feeder cattle broke about 20 bucks but have gained about half of that back. Feeder cattle futures were at $275 with good demand on a short supply.
Cow-calf producers have had a tough couple weeks with cold weather and snow, feeding hay and trying to keep fresh calves warm and alive. We still have two months of winter weather to get through, and let’s pray for those spring rains.
Bull sales have looked mighty strong. It appears that the top end at these sales is selling better but the bottom end may be less strong. Cattlemen are clearly into genetic improvement. It also appears that heifer bulls are not in high demand, which may be telling us that heifer retention may be slow to develop.
Beef demand has stayed remarkably strong. The average Choice beef price at retail was $8.53 this January and was $8.08 last January. Ground beef was $5.55 compared to $5.03 last year; ground beef represents around 60% of all beef sales.
It’s been entertaining watching the Trump administration transition into office and they appear eager to drain the swamp in the federal government. The surprising part is there are no Democrats willing to cut spending, especially with $2 trillion budget deficits every year adding to the $36 trillion deficit. It would be nice to see our elected representatives actually get along. Rational thought is in short supply in D.C. and the legacy national media.
In the past, Trump was friendly to agriculture and promoted free, but fair trade. All this tariff talk is mostly talk and I’m sure that we’re not going to have any major trade wars, or wars at all. It’s nice to know that America is open for business, unlike the with last administration.
Even though cattle markets remain strong, there are still challenges ahead. China is the U.S. beef industry’s third largest customer, and we have Trump’s last term to thank on that trade deal. However, China is letting their export inspections on beef dairy, pork and poultry plants lapse; they have about two weeks to get these plant approvals done. Several other facilities need their export approvals renewed over the next few months. Even though exports are down, the beef industry says exports add around $450 per head to the value of fed cattle. I don’t know if this is political or not.
Also, R-CALF USA is on the move and feeling pretty good. JBS decided to settle a class action suit for market manipulation in beef packing. Tyson, National and Cargill were also named in the suit. But in JBS business philosophy, they decided to pay the plaintiffs off, rather than litigate, to the tune of $83 million. JBS has a habit of avoiding long lawsuits and paying up to make the problem go away. Top management at JBS just considers these episodes a cost of doing business around the world. I can’t remember if this is the third or fourth class action suit against the Big Four beef packers over the past 50 years. Can you imagine R-CALF having a several-million-dollar war chest at their disposal? I understand JBS’ move and I’m sure it’s cheaper in the long run. But you open Pandora’s box, and those plaintiffs will certainly use this method to extort more money.
And now with Trump and Elon Musk’s Department of Government Efficiency, R-CALF is trying to point out the 40-year-old Beef Checkoff as one of those wasteful programs. Each time a bovine changes ownership, $1 is collected for research and marketing beef. The same old complaint is just a different way to get there.
Over the 40 years the Beef Checkoff has been operating, the beef industry has changed dramatically. Going from 55% Choice and better beef to 85% Choice or better is remarkable, and I give a lot of credit to the Beef Checkoff for being where we are today. — PETE CROW
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