The margin spread between packer losses and feedyard profits expands as wholesale beef prices continue their retreat. Pork producer profits continue increasing.
Under pressure from negative margins, packers will continue to play their games but their activity last week led to the biggest harvest rate in seven weeks.
Last week’s rally to new record prices pushed packer and feeder margins in opposite directions. Pork producer margins continue higher with prices now above year ago.
Cash fed cattle prices reached new record highs in all feeding regions last week, but the trade was a bracket-buster for packers who were forced to pay up as wholesale beef prices declined.
The economic environment of both the beef and pork industries has changed. Capacity utilization for both beef and pork has a significant impact on margins and the market impact goes beyond supply and demand.
Improving prices for live cattle and wholesale beef lifted margins for both feeders and packers. Pork producers also found improved margins but remain in the red.
Calves born in extreme cold quickly utilize all body fat reserves and exposure to wind can exacerbate temperatures. Preparing in advance of inclement weather can lead to improved calf survival.
Negotiated cash trade finished the week in a standoff with few sales and little price movement. Feeders and packers both look to benefit from improving winter weather and pen conditions this week.
A mid-January deep-freeze failed to deliver any bounce to cattle markets as packers appear flush with formula and contracted inventories. Friday's Cattle on Feed report fell within expectations.
Severe winter weather across cattle feeding country reduced weekly harvest and damaged feeding performance. Cattle feeders will seek higher prices this week.
A year ago feeders were concerned about weathered cattle and tough pen conditions and how at times it would be the motivation for sellers to take the market. It’s eerie how not much has changed in that sense.
Cattle feeding margins fell deeper into the red while packer losses doubled from the prior week. Pork producer margins have now printed red every week for the past year.
Declining cattle futures prices continue to pressure cash prices. The cheaper inventories are working to pad the packer's pocket as evidenced by a few plants operating on Saturdays.
Friday’s COF placement numbers provided a friendly lean to a market that has suffered consecutive weeks of falling futures and lower cash bids. Sellers hope to leverage the short week ahead with higher asking prices.
A large contract foodservice company claims the nation's largest beef packers conspired to fix prices and drive up profit margins from 2015 through 2021.
Packers were forced to add to their inventory and pushed prices $2 higher last week. The surprises in the Cattle on Feed report may offer a reason to push prices lower, yet feedyards maintain the upper hand.
Cattle feeders saw $1 to $2 gains in all regions during the week, but a struggling futures market and an unfriendly placement number in Friday's Cattle on Feed report may drag on cash prices in the short-term.
Fed cattle trade posted gains last week, but the rally was not incentivized by wholesale beef prices, but rather pushed by limited supplies of ready cattle.
The North American Meat Institute releases its 2023 Continuous Improvement Report with data submitted for this year’s report covering an estimated 90% of all meat sold in the United States.
Working off a big trade the previous week and slowed production, packers were reluctant to purchase cattle but the futures market took a dip and buyers stepped in at steady money and gathered inventory.
Higher cattle prices and declining wholesale beef prices pushed packer margins further underwater last week. Pork producer margins inched into the black.
Eight beef packing projects are in various stages of completion that could add 10% to total industry capacity; is it needed? What potential headwinds might these ventures face?
Higher slaughter cow prices are the result of strong lean beef markets and the related growth in breeding demand for cows. The current price of 90 percent lean beef is 17.3 percent higher year over year.
Tyson Foods is deploying autonomous refrigerated box trucks to bolster Tyson routes in Northwest Arkansas. Operating 18 hours a day, these driverless trucks will deliver products to distribution and storage facilities.
Packers narrowed the North-South spread last week and through a series of factors including the weather, have seen the marketing leverage swing in their favor.
Environmental groups are pushing U.S. securities regulators to thwart JBS SA's New York share listing over concerns about the world's largest meatpacker's impact on deforestation, climate change and other issues.
Cattle inventories simply are not large enough for the packer to build any market leverage. Reluctantly, packers bought cattle at steady to higher money and cowboys will seek more this week.
Cattle feeders were rewarded in last week's standoff with higher prices in all regions. Packers will continue to slow harvest rates in an effort to hold the market in check.
Packers are picking around the edges and dragging their feet when looking at higher asking prices, but the bull market remains in place with the cattle feeder gaining leverage each week.
With estimates of 82% capacity utilization of fed beef plants next year and 65% for cow slaughter plants, Nalivka says, “Rest assured - there will be decisions made.”
The spread between cattle feeding margins and beef packer margins has now reached $500 per head as packing losses increase. Pork producer margins are the highest of the year.
There’s a $400 spread between cattle feeding margins and packer margins – now in the cowboy’s favor. Cattle harvest is lower as packers reduce hours, a signal their margins are in the red.
