Packer
Packers came into the market last week ready to add inventory after winter storms disrupted harvest schedules the previous two weeks.
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.
The final week of 2023 found at least three bidders in the market in multiple regions.
JBS parent company J&F Investments has paid about 28% of the fine levied against the giant meatpacker in 2017 over a political bribery scandal.
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.
Another round of falling futures produced another round of lower cash bids. Cattle feeders now offer their smallest showlists of the 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.
Cattle feeding margins declined nearly $100 per head last week with lower cash bids and rising costs. Pork producer margins remain mired in red ink.
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.
Volatility contributed to a strong basis early last week and cash traders benefitted by waiting until late week to sell cattle.
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.
Price-fixing allegations were again levied against America’s largest beef packing companies, this time by a group of small distributors.
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.
As the board moved on its second leg down last week, packers motivated sellers with additional kickers on their offers.
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.
Higher cattle prices and declining wholesale beef prices pushed packer margins further underwater last week. Pork producer margins inched into the black.
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.
As the futures continued to grab new ground throughout the week, cattle feeders continued to find confidence in higher asking prices.
Market leverage remains solidly with cattle feeders, but packers continue working their options to hold prices in check.
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.
When $1 lower bids failed, packers reduced bids even more, encouraging some feeders to sacrifice ground to secure a spot for some ready cattle.
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.