Beef demand remains strong, retail prices continue upward
Prepared and written by Jeff Swenson, DATCP Livestock and Meat Specialist. The Market Update draws information from several sources, including trade publications, radio broadcasts, agricultural news services, individuals involved in the industry as well as USDA NASS and AMS reports.
The cash cattle trade opened steady last week but was $1.00 to $2.00 higher by Wednesday. Beef demand remains strong, giving packers incentive to maintain production at current or higher levels.
Last week’s estimated harvest dropped to 650,000 head, 18,000 head below the previous week. Year-to-date cattle harvest is running 3.1 percent higher than last year. There continue to be reports of consumers shying away from higher-end beef cuts with ground beef sales increasing and some opting for pork or chicken.
Fast food restaurants are announcing plans to raise prices with many saying they are unable to absorb the higher costs of meat ingredients and labor.
Wednesday’s announcement that inflation has hit a 30-year high of six percent has been in the news, with several stories focusing on the increased price of beef. Barring any major supply chain issues, fed cattle supply is setting up to tighten during the second half of 2022.
Placements have been outpacing the 20-year average during the first nine months of this year, leaving fewer feeder cattle outside of feedlots. A higher number of heifers moving to feedlots has offset some of the lower numbers available. Feeder prices have remained fairly strong in light of higher feed costs.
Higher feed costs deter pork producers
The pork cutout value was posted at $90.57 at the close of business Wednesday, November 12, 2021 after breaking $100.00 seven days prior. Cash hog prices are weaker again this week. Current hog prices and higher feed costs will not incentivize U.S. pork producers to increase farrowing intentions or fill finishing barns.
The U.S. has announced it will take applications from pork packers to increase line speeds for one year on a trial basis. Line speed discussions between packers and worker unions have caused tension during the past 18 months.
Pork exports have slowed but are still one percent higher than 2020 year-to-date. Last week’s export sales report brought optimism, posting the highest total since May at 45,700 metric tons. Mexico has emerged as a lead buyer, purchasing 18,450 metric tons of that total. Exports to Mexico through September are up 27 percent.
Red meat exports on record pace
Red meat exports have been on a record pace the first three quarters of the year according to the U.S. Meat Export Federation (USMEF). Beef exports posted one of the best months on record in September, with value climbing nearly 60 percent above last year. Pork export volume was slightly below last September, but value still increased eight percent.
Beef in September was at 123,628 metric tons, up 20 percent from a year ago. It is the fourth largest volume of the post-BSE era. Export value jumped 59 percent to $954.1 million – the second highest month on record, trailing only August 2021. For the first three quarters of 2021, beef exports increased 18 percent from a year ago.
September beef export value equated to $447.46 per head of fed harvest, up 63 percent from a year ago. Exports accounted for 16 percent of total September beef production and 13 percent for muscle cuts. September pork export value equated to $56.53 per head harvested, up 11 percent from a year ago.
Exports accounted for 26.9 percent of total September pork production, up slightly from a year ago, while the ratio of muscle cuts exported was down about one percentage point to 23.1 percent.
Regional market news
Choice beef breed steers and heifers at Wisconsin and surrounding state auction markets were higher. High-yielding, high-grading cattle brought $114.00 to $128.00/cwt with widespread reports of some selling to the mid $130.00s/cwt.
Choice and Prime Holstein steers were mostly steady at $91.00 to $113.00/cwt. Some packages were still selling to $117.00/cwt with a few packages above. Silage fed, under finished, or heavy dairy breed steers brought $70.00 to $91.00/cwt. Dairy x beef steers were mostly $99.00 to $125.00/cwt.
Cows were continuing to be pressured at $30.00 to $50.00/cwt. Blemish free cows in fleshier condition sold into the $60.00s/cwt. Doubtful health and thin cows were bringing $32.00/cwt and down. Dairy breed bull calves were mixed at $50.00 to $100.00.00/cwt with heavier, well cared for calves up to $155.00/cwt. Beef and beef cross calves brought up to $335.00/cwt. Market lambs sold to $235.00/cwt.