Producers face higher production costs, while packers see margins tighten

Jeff Swenson

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 Wisconsin Department of Agriculture, Trade and Consumer Protection will host a “Meating” at their offices on Thurs., Oct. 27 from 1:00 pm to 2:30 pm.  The meeting will be available online via Zoom. The Meating will highlight Meat Talent Initiatives and the Meat and Poultry Resiliency Grant program. Look for an official invitation, agenda, and zoom link to be sent early next week.

Jeff Swenson

Higher production costs, tightening margins

Feedlot operators are continuing to ask for higher bids, and that is pushing a bulk of the country trade to late week. Producers are facing higher production costs while the packers are seeing their margins tighten.

Harvest volume last week was estimated at 664,000 head, level with the previous week and 7,000 more than the same week a year ago. Saturday harvests are getting smaller, and that is likely to continue as fed cattle supplies decline.

The USDA called cash cattle $1.30/cwt higher last week. Weather, world news and grain prices have pressured the feeder cattle market. The Choice beef cutout value was on firm footing, increasing 50 cents to finish the week at $246.07.

August beef exports totaled 133,832 metric tons, up 1 percent compared to last year and was the second largest volume on record, behind only May 2022. Export value was just under $1.04 billion, slightly below August 2021, which was the first time monthly exports topped the $1 billion mark.

August beef export value equated to $437.98 per head of fed cattle harvested, down 7 percent from a year ago.  Exports accounted for 15.6 percent of total July beef production.

Cash hog prices up

Cash hogs were $1.30/cwt higher last week and the pork carcass cutout rose 90 cents to $101.54 Friday. The strength in both cash and futures has spilled into this week, with a cutout value of $103.94 posted Wednesday.

Harvest numbers were also up, at an estimated 2.558 hogs. That’s 71,000 higher than the previous week and 41,000 lower than the same week last year. Weekly pork export sales have been improving, with the last five weeks seeing totals over 30,000 metric tons, compared to a 20,000 metric ton average the previous four weeks.

August exports of U.S. pork topped year-ago totals for the first time in 2022, according to data released by USDA. Pork exports reached 226,293 metric tons in August the largest since November 2021.

Export value climbed 4 percent to $659.6 million. August pork export value equated to $60.04 per head harvested, up slightly from a year ago. Exports accounted for 27.3 percent of total August pork production.

Market lamb prices vacillate 

Market lamb prices have been an up and down affair from week to week. The lamb carcass cutout price was 79 cents higher last week, finishing Friday $555.86. Estimated sheep and lamb harvest was 33,000 head, even with the previous two week and 4,000 head lower than the same week in 2021.

For the first time in 2022, exports of U.S. lamb muscle cuts were lower than a year ago at 125 metric tons, down 35 percent. Export value totaled $827,000, down just 4%. 

State livestock market roundup

Choice beef breed steers and heifers were mostly steady with last week. Demand again on exceptionally well fed cattle continues. High-yielding, high-grading cattle brought $122.00 to $146.00/cwt. Groups high Choice and Prime lots selling from $150.00 to $156.00/cwt.

Choice Holstein steers were steady at $107.00 to $135.00/cwt with high grading Holstein steers bringing $135.00 to $140.00/cwt with some packages selling higher. Silage fed, under finished or heavy dairy breed steers brought $75.00 to $107.00/cwt. Dairy x Beef steers were bringing $105.00 to $147.00/cwt.

Cows were steady to $1.00 higher. A bulk of the cows brought $55.00 to $76.00/cwt with some selling into the mid 80’s. Doubtful health and thin cows were bringing $55.00/cwt and down.

Dairy breed bull calves were steady, bringing $50.00 to $100.00/cwt with heavier, well cared for calves up to $140.00/cwt.  Beef and Beef Cross calves were mostly steady, selling to $380.00/cwt. Market lambs brought $95.00 to $110.00/cwt with some reports of tops on light lambs to $165.00/cwt.