The fed-cattle market average this past week was steady on the week prior, with a $115 per hundredweight average on a live basis and $181 per hundredweight dressed.
Throughput in the packing sector was exceptional again with a 657,000 head total federally inspected harvest. One should briefly pause to realize that is the 10th-largest weekly head count this year – and the fourth week meeting or exceeding that level since the Tyson-Finney County plant fire in August. Beef processors have been able to post larger production than expected for the period but this week will bring a holiday-shortened harvest schedule.
Tyson Fresh Meats released a newswire bulletin Nov. 18 indicating their Finney County, Kansas, plant will begin to process cattle again at the beginning of December, with a goal to be fully operational by the first of the year. That matches relatively well with the company’s initial projections.
Beef demand has increased and prices are reflective. From a piece-count perspective we know that Certified Angus Beef-licensed retailers are hungry for product during a period when seasonal demand has inventory already spoken for.
Carcass-quality grades and marbling achievement in packing-plant coolers continue to underperform compared to a year ago. Regarding the best-two quality-grade tiers it’s the Choice grade creating the most concern. The past eight weeks of data reveal a 69.1 percent Choice grade average versus 70.9 percent a year ago. U.S. Department of Agriculture data suggests a 3.5 percent smaller Choice production tonnage versus the same period a year ago.
Certified Angus Beef-brand supplies are challenging. The latest 12-week period shows carcasses eligible for Certified Angus Beef consideration have decreased 1.2 percent. The disappointing marbling trend of late, coupled with smaller Angus-type eligible head counts, has seen the Certified Angus Beef carcass count decrease by 3.6 percent for the period.
Weekly boxed-beef cutout prices reached for new bests this past week, with the Certified Angus Beef cutout posting a $253-per-hundredweight average. It’s approaching the $261-per-hundredweight value seen the same week in 2014. The glaring difference is that recent weekly Certified Angus Beef carcass supply is about 44 percent larger than in fall 2014. Product demand is ruling the day.
Cow-heifer harvest remains aggressive
According to recent data the number of breeding beef females will most likely be less than anticipated heading into the new year. In a previous edition we mentioned the larger cull-cow rate – and the pace has heightened in the interim. The week after Labor Day normally sees cow harvest spike in the range of 15 percent to 20 percent more than the holiday-shortened Labor Day week head counts. A 15 percent increase was tallied this year but we’ve since seen only further increases.
The cull-cow processing flow had been tracking slightly more than a year ago, but in a very similar pattern with 2018 since May. If the trend followed a similar pattern from early September through this point in November, the weekly total would have been about 63,000 head. Instead cattle producers have culled larger numbers, with a 66,000 head average for that period. The past three weeks have averaged close to 70,000 head weekly.
If packers who normally split their weekly harvest days between cows and fed cattle pivoted to commit more time to fed cattle in the wake of the Tyson plant fire, it doesn’t show in the cow-harvest volume. It’s evident that the proportion of fed heifers harvested this summer and fall has been aggressive as well. Reports from the country have suggested large numbers of heifers on feed. The disproportionate share of heifers in the fed-cattle harvest mix prove that to be accurate.
That divergence has been the case all year, with a year-to-date increase of 7.4 percent heifers harvested. Steers have decreased 0.4 percent on the year. That’s quite disproportionate in a year where projections have been made for yet another small increase in the cow-herd total by Jan. 1.
November and December mark the beginning of pregnancy-checked “open” heifers entering the harvest mix in earnest. Several ranchers in the Northern Plains region have reported larger than normal “open” rates on their heifers this year. Many are pointing to the cumulative effects of weather beginning in fall 2018 through spring of this year.
Bringing this back around to a Certified Angus Beef-product perspective, let’s look at the expanded heifer harvest pace and its impact on marbling rates and Certified Angus Beef acceptance. We’ve long known that heifers post better marbling scores on average than steers. Even so the reduced marbling trend in place for much of 2019 seems to show no causation between the two factors at face value. Possibly the lamented weather impacts of 2019 have been too much for cattle to achieve their genetic marbling potential. Other possible factors have yet to be revealed.
Prime sales growth sign of times
The beef industry’s decade-plus movement toward better marbling achievement across the fed-cattle supply is credited with creating the supply. As licensed end-users observed a more-reliable larger pool of carcasses in the Certified Angus Beef Prime category many have “traded up” to that most preferred quality of beef. In fact the retail sector saw a 90 percent sales increase in that category this past year.
This past week’s USDA “Premiums and Discounts” report shows a Prime premium that, when calculated in addition to the Choice premium, equates to $211 per head more than the weighted-average market value. That’s the premium to the cattle feeder, not just the carcass cutout value the packer receives. End-users are differentiating themselves by upgrading their meat cases to the finest in beef. Cattle producers who meet this demand with the proper genetic input and management are already ahead of the curve with closeouts that break the traditional break-even calculations.