Markets turned higher ahead of Thanksgiving week as packers worked at filling holiday orders. Holiday demand is hanging tough, and cattle numbers are starting to get smaller as we work through the current calf supply. Fed cattle traded $2-3 higher as packers are pushing through more cattle. Slaughter totaled 631,000 for the week ending Nov. 22 to fill orders for ribs, which was the largest slaughter level for the year. Packers had a short week for Thanksgiving but should remain aggressive buying fed cattle until the new year.
Cassie Fish at The Beef pointed out on Monday, “Pushing to extremes was the Choice/Select carcass spread, averaging $35/cwt for the week and posting last Monday morning at over $36/cwt thanks to an extremely strong Choice rib. With more cattle grading Choice in 2024 than any other year in history, this feat is all the more impressive and makes a clear statement that Choice beef demand has arguably never been better. This year’s beef production of course will fall short of the record production year of 2022, but the industry has never sold this much beef for this much money at any other time in history. The Choice cutout averaged $264 in 2022 and will average $307 this year, the highest ever.”
Calf markets are moving higher as well. Wheat country received good rains a couple weeks ago and got things moving in the light-calf market. USDA’s Animal and Plant Health Inspection Service (APHIS) reported that a cow carrying New World screwworm entered Mexico from Central America. “This resulted in an explosive rally in futures this Monday especially in feeder cattle futures,” Fish said. “CME cattle futures are technically overbought and have sold off sharply from their early highs.”
APHIS restricted imports as a result. Lots of Mexican feeder cattle are traditionally fed in the U.S. Through August, cattle imports to the U.S. from Mexico have exceeded a year ago and the five-year average all but one month. But for now, the Mexican border is shut down for feeder calf imports, which usually sees about 100,000 calves cross each month. Southern grass guys will be scrambling to get those light calves.
The political landscape has changed and will go from the Biden extreme policies to the Trump pro-business policies very soon. I expect a very busy first week for the Trump administration. The pendulum will swing far and wide, which is perhaps too dramatic that it happened in the first place, but that’s what you get with polarizing views of what America should be. I kind of like America the way it’s always been: pro-growth for every citizen.
There has been a lot of discussion on immigration and Trump’s plan to deport a couple million illegal aliens. Opponents are saying that it will be highly inflationary and hurt the economy and agriculture, pointing out that a large portion of farm labor is foreign born. This is true, but most farm labor is here legally. H2A labor programs and labor permit holders harvest and process our food supply, and much of it is imported.
The folks Trump are going after are the “evil doers,” the bad guys who have never been vetted and have committed crimes. Visiting with my packer friends, they agree—they do not want those kinds of employees and they will work with the government to get rid of those folks. Also, labor at large packing plants is unionized. Legal foreign labor has been a part of the U.S. farm economy for 100 years or more. It’s always been there.
Also, President-elect Trump announced the nomination of Brooke Rollins as USDA secretary. Rollins grew up on a small Texas farm and graduated from Texas A&M University, continuing on to get her law degree from the University of Texas. She was a policy adviser in the first Trump administration and more recently president of the America First Policy Institute—a conservative think tank in Washington D.C. It appears that most industry leaders are supporting her.
We will have some interesting times ahead and I’m confident we will see policies that will be kind to agriculture and consumers. There is a lot of damage to fix, and we really have only two years to get much of it accomplished. Cattle markets will improve, but don’t expect cattle prices to be a whole lot higher. Our big supply side equalizer is imports; we will bring in more beef to satisfy ground beef demand. — PETE CROW
