Peel: Beef By-product Values Surge Higher
By-product values for cattle have increased dramatically the past few months. Hide and offal values, which have generally declined in recent years, bottomed during the early stages of the pandemic in 2020 to the lowest levels since 2009. In the past 13 months, steer hide and offal values have risen from $6.93/cwt. on a live fed steer basis in July 2020 to an August, 2021 value of $14.99, an increase of 116%. The current by-product value is the highest since January of 2015. Figure 1 shows the monthly average steer hide and offal values for the past decade.
The sharp jump in by-product values is due to increases in hide values along with several other products included in the by-product totals. The largest component of by-product values is the hides. The August steer hide values is up 115% year-over-year.
In recent years, hides have dropped from roughly half of total by-product values to about 30% of the total. Despite the doubling of hide values in the past year, hides still only represent 31.7% of current by-product value. This is because numerous other by-product values have likewise increased sharply in the past year.
Edible and inedible tallow values are also up sharply in recent months. Inedible tallow values are up 177% year-over-year while edible tallow values have increased 85%. Edible and inedible tallow combined represent 25.4% of August total by-product values.
Tongue prices are up 111% year-over-year in August and account for 19.5% of total by-product values. Livers (1.2% of the total value); heart (1.4%); cheeks (3.7%); tripe (4.1%) and meat scraps (4.2%) combine to account for an additional 14.6% of total August by-product value. Cheek, meat scrap and tripe values are all up 30% to 90% since last year. Finally, a number of minor items adds another 9.3% to total by-product values.
The majority of hides and offals are exported. Over the past decade, exports of hides, variety meat, and tallow have added an average of $2.42 billion to total beef industry exports. In 2020, the value of hide, variety meat and tallow exports was $1.7 billion.
