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Beef

Higher prices for steak cuts lead the push upward for the Choice beef cutout, which sat at eight dollars higher than year-ago levels in early December, and the Daily Livestock Report (DLR) says year-over-year increases are present across the beef carcass. 

“Looking at the performance of the various primals, the rib primal was $404.46 per hundredweight on Nov. 5, up $27.50 per hundredweight from a year ago and one of the biggest year-over-year increases in terms of total dollars,” says DLR. “The brisket primal was also up around $27 compared to last year, but the value of the brisket primal was $182.99, so it has increased more in percentage terms, jumping by 17 percent, than the rib primal, which is up seven percent.” 

With the brisket providing five percent of the overall carcass value and the rib primal 11 percent, DLR notes that rib primal improvement signals a better impact on the overall product. 

They also note that loin primals are up $10 per hundredweight from 2017, which brings an additional two dollars to the overall cutout price. 

“Of the eight-dollar gain in the value of the choice cutout, a little over five dollars came from the gain in the rib and loin, and another $1.40 came from the brisket,” DLR reports.

End cuts, including chucks and rounds, however, haven’t made much contribution to increasing prices, since strong competition at the retail level, seasonally weaker pricing and demand for ground beef negatively impacted the cuts. 

“Since Sept. 1, the Choice beef cutout has averaged $207.40 per hundredweight, about $10, or five percent, higher than a year ago,” DLR explains.

Seasonality

However, seasonality strongly affects the pricing of beef ribs, which see a boost around a handful of key holidays, including Memorial Day, Father’s Day and Christmas. 

“In the last three years, the rib primal has increased sharply going into Christmas,” says DLR, “and this year, price increases have been more significant and happened earlier than in the previous two years.”

They continue, “While it is fair to expect the rib primal to decline once Christmas orders have been filled, the timing and the magnitude of the decline has tends to vary.”

As they analyze data about the number of days between Thanksgiving and Christmas compared to peak prices for rib primals, DLR says a wider gap provides more time for retailers to accumulate product,

“Normally, we would expect the peak in the price of ribs to be later than when there are fewer days between Thanksgiving and Christmas,” DLR comments. “However, more recently this has not been the case.”

With more end users putting product in cold storage to anticipate their needs during the holiday season, DLR says a shift has been seen since 2013.

“Indeed, since 2013, the peak in the rib market has been around 11 to 12 days after Thanksgiving,” they explain. “If that holds again this year, it would put the peak of the rib market sometime around Dec. 3 or Dec. 4.”

And while seasonal quality in loin primal is not as pronounced as in ribs, DLR cautions, “It is a critical component considering that it accounts for over 20 percent of the overall carcass.”

Saige Albert is managing editor of the Wyoming Livestock Roundup. Send comments on this article to This email address is being protected from spambots. You need JavaScript enabled to view it..

Rapid City, S.D. – U.S. producers may see some big opportunities over the next couple years exporting beef, according to Greg Doud, president of the Commodity Markets Council. 

Doud spoke to cattle ranchers about beef trade during the Range Beef Cow Symposium in Rapid City, S.D. 

“The grain cycle has peaked, but I think there may be a few years left in the beef cycle,” Doud told producers. “There are some big opportunities there.”

Current markets

Currently, export markets account for almost $300 a head. Doud said about 17 percent of the value of a finished steer now comes from the international marketplace. 

“Another way to look at it is that 17 percent of the money used as payment for the product we are producing comes in the form of Pesos, Yen, Won, Yuan, Euros, Rubles, Canadian or Taiwan dollars,” Doud stated. “The heifers producers retain will produce calves that will be finished out and go to 70 to 80 countries around the world.”

Doud told producers not to become too caught up in the fact that per capita domestic beef consumption is declining, because the beef marketplace is now a world supermarket. 

“One of the biggest economic changes of the past decade is the increased buying power of consumers in all corners of the world for U.S. beef,” he said. “There has been incredible growth in some of these countries.”

Japanese customers

Doud said it looks like the U.S. may this year finally meet or exceed the $1.4 billion of beef products exported to Japan in 2003. 

“This year’s strong resurgence in exports clearly demonstrates that the relationship between Japanese consumers and U.S. beef is still very strong,” he explained. 

However, the relationship isn’t without its challenges. 

Currently, Japanese consumers have to pay 38.5 percent more to put beef on their table, thanks to a Japanese tariff applied to all U.S. beef imported into the country. This tariff is one of the highest that U.S. beef faces in the world, Doud said. 

Japan is currently looking to do away with its nuclear power plants and move toward natural gas, which could be supplied by the U.S. 

“I’m optimistic that we can get something done through the Trans-Pacific Partnership (TPP) trade negotiations. Maybe we can trade natural gas for beef,” he said. 

South Korea

In 2014, the U.S. will be in its third year of a trade agreement with South Korea, which will mean the tariff on beef imports will be at 32 percent, or eight percent less than any other country exporting beef to the country. 

Doud said because of this eight percent reduction, the Meat and Livestock Australia office in South Korea plans to close in 2014. 

Australia has worked for several years to form their own trade agreement with South Korea but has been unable to do so. 

“The expectation is that U.S. beef will soak up somewhere in the neighborhood of 70 percent of South Korea’s beef imports. In the future, U.S. beef exports to South Korea will swing up and down due to domestic beef production changes and prices in competing meats, but the leverage of continued tariff reductions via the U.S.-Korea Free Trade Agreement gives us the drop on the competition,” he said. 

Chinese challenge

Another major player in the future of U.S. beef exports will be China, Doud continued. 

A decade ago, China couldn’t afford U.S. beef, but now they can, Doud said. 

“One and a half billion pounds more beef is going to China and Hong Kong this year versus last year,” Doud said. “To put this into perspective, Wal-Mart’s beef sales domestically are a little over 2 billion pounds, and total U.S. beef imports are about 2.2 billion pounds.”

During the last two years, beef prices in China have increased 83 percent, he continued. The retail price of beef in China is now $4.80 a pound, compared to $4.95 a pound in the U.S. 

China has taken over from the U.S. as the world’s largest beef importer. To date, 80 percent of those imports have come from Australia, Brazil, Argentina and Uruguay. China bought 100,000 metric tons of beef per month this summer, compared to 40,000 metric tons per month a year ago, Doud said. 

He added, “In comparison, total U.S. beef exports to all countries are currently running about 70,000 metric tons per month.”

“Ten years ago, per-capita incomes in China relegated Chinese consumers to importing products like tendons, backstrap and ligaments, omasum, rectum, aorta and whatever else they could import at a price point of about two dollars per pound,” Doud said. “U.S short ribs and chuck rolls, the staple in South Korea and Japan, were mostly out of reach for middle-class Chinese consumers who were dining out.”

“The fact that this appears to no longer be the case has to be one of the biggest things to happen to ranchers all over the world,” he stated.

Gayle Smith is a correspondent for the Wyoming Livestock Roundup. Send comments on this article to This email address is being protected from spambots. You need JavaScript enabled to view it..

Laramie – As the world population begins to move away from poverty into the middle class, people are beginning to seek more protein in their diets, and the result, said Greg Hanes of the U.S. Meat Export Federation (USMEF), is increased opportunity for the beef industry.

“As economies develop, they move toward more protein and different types of protein,” Hanes explained in his presentation at the 2013 AgriFuture Conference in Laramie on Oct. 8-10.

While beef is still the least-consumed protein in the world, the industry is seeing steady growth.

Beef supply

Though beef supply in the U.S. will likely be down for 2013, Hanes noted that world supplies are consistent, even increasing slightly.

“Globally, we are expecting beef production to be about level, and even a little up,” he explained. “North America will be down, mainly because of the drought. Our other competitors, such as Australia, South America and are all up.”

An additional advantage for U.S. beef producers is that the product is grain fed. Most beef in the world is grass fed, allowing less competition. 

“Our production is down, so our prices will be higher and less will be available,” said Hanes. “Despite that, I think we will still be competitive.”

Worldwide, Hanes said that the U.S. has always been a leading beef exporter.

“The four big exporters are the U.S., Australia, India and Brazil,” noted Hanes.

However, India exports water buffalo as “beef.”

“The product is very, very cheap and goes into the Middle East, southeast Asia, Russia and China,” he explained. “Even though it isn’t beef, it is a good gateway product.”

As a gateway product, Hanes said the product from India gives consumers an introduction to beef at a more affordable price and will eventually lead consumers to higher quality products, like U.S. beef.

“India helps to set the stage and gets consumers introduced to beef, even though it isn’t real beef,” he noted.

Importers

Around the globe, China is the biggest importer in the world.

“From this year to last year, the growth of Chinese imports of beef was tremendous,” he explained. “They almost doubled their imports.”

While China’s consumption is good news for the world beef industry, it provides frustration for U.S. producers.

“The U.S. doesn’t have access to China,” Hanes said. “We can’t export our beef to China because of mad cow disease concerns.”

However, he also noted that the decision to not allow U.S. beef is also political, as the U.S. don’t import frozen Chinese poultry products.

Recent developments in agreement with Chinese poultry may open markets in the near future.

U.S. opportunities

Despite lack of access to China, recent increases in market export ability to Japan has been largely helpful.

“In some ways, lack of access to China might be good, because we have a change in access and demand has really increased in Japan,” said Hanes. “Access to Japan and China at the same time would be tough for consumers because it would mean a bigger price jump for domestic beef consumers.”

Additionally, he noted that U.S. beef is still available in China, as it is frequently smuggled into the country through a variety of different channels.

“The demand for U.S. beef in China is crazy,” he commented. “If we had access, the market would take off.”

Canada and Mexico also both provide major markets for U.S. beef as a result of the North American Free Trade Agreement (NAFTA).

“Right now, the U.S. is exporting 12 to 13 percent of our total production,” Hanes said.

Exported products

While the U.S. has the ability to export higher value products like steaks, it also finds significant value is exporting offal products.

“In the U.S., we don’t have a whole lot of demand for variety meats,” Hanes explained. “We are sending more than 90 percent of livers, hearts, kidneys and tongues overseas because emerging countries like it.”

The result is increased profit for American beef producers.

“We are able to export these products at a good price,” he said. “For example, in the U.S., tongues might bring $1.50 per pound. In Asia, we can get $6.50 a pound.”

USMEF data showed that exporting offal and variety meats adds approximately $272.90 in additional value to each animal that is sold.

“For producers raising cattle, that $272 can be the difference between being in the black and being in the red,” he commented. 

Importing beef

At the same time that the U.S. exports large amounts of beef, we also import significant qualities of the product.

“The second largest importer in the world is the U.S.,” explained Hanes. “Most people don’t realize that. The product we are bringing in is mainly trimmings and low-quality product from Australia that is mixed with grain fed beef to make hamburger patties for McDonald’s and Burger King.”

Because the U.S. is able to import low quality product very cheaply, it also has the ability to realize more profit and bring more value to consumers by providing higher quality cuts, such as steaks, for export.

“Exports provide a lot of opportunity for U.S. beef producers,” noted Hanes, “and opportunities are changing every day.”

Saige Albert is managing editor of the Wyoming Livestock Roundup and can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.


SIDEBAR:
Alternate proteins

Pork and poultry make up the majority of protein consumed in the world. 

“Poultry is the cheapest source of protein for most countries,” Greg Hanes of the U.S. Meat Export Federation said. “Pork is growing steadily as well.”

Around the world, China is the leading pork producer. 

However, the country is seeing little expansion of the industry as a result of environmental and food safety issues.

“China has had problems selling rat meat as beef and pork,” explained Hanes. “Consumers are raising concern about domestic production, so they are looking for safe products elsewhere. Chinese consumers are looking to the U.S. beef and pork industries to supply their protein.”

 

 

Torrington – Sharing the latest quarterly domestic product report, University of Wyoming Extension Marketing Specialist Bridger Feuz said the report for beef has been positive the last several quarters due to a consistent economy and consistent moderate growth. Solid growth has stimulated consumer confidence in products like beef. 

Feuz spoke to more than 100 cattle ranchers during the Southeast Wyoming Beef Production Convention in Torrington, on Nov. 20. 

“The consumption of beef has been pretty steady, but poultry is increasing year after year in per capita consumption,” he said. 

Despite that, beef per capita consumption is expected to increase again in 2019 and be at least stable in 2020. 

Feuz explained, “Consumers are willing to spend more of their disposable income on beef than on pork or poultry. It has been growing the last few years, but we expect it to level off in 2018.”

Cattle numbers

Although Feuz won’t have any new USDA data to share until January, predictions are for continued growth in cattle numbers through 2019. The cow inventory grew 1.6 percent last year, and growth is predicted to be more than one percent for 2018 and possibly 2019. 

While most of the growth is in Texas and South Dakota, Wyoming is seeing declining cow numbers, Feuz said. Wyoming ranchers have 714,000 stock cows, and growth was flat in 2017 and 2018, he explained. 

In the last 10 years, cow numbers have declined by 9,000 head in the Cowboy State. 

In the U.S., Feuz said growth is slowing in terms of the number of heifers held back for breeding. 

“Last year was the first year ranchers didn’t hold back as many heifers. I think we are starting to see signs that the growth of the cowherd is slowing down,” he said.

Next phases

Meanwhile, Feuz expects to see an increase in numbers of cattle on feed in 2019. 

“What is somewhat concerning to me is that the number of cattle on feed over 120 days has been higher than the five-year average. It could indicate cattle are being fed longer because the demand from the packer isn’t there,” he said. 

Feuz also sees a gradual increase in beef that is in cold storage. 

“I am hoping it moderates like it did last year, but if it continues to build, it could indicate too much production,” he said. “We are continuing to produce more beef as the world population continues to grow, but we have to be careful that production doesn’t outgrow demand.”

Overall, Feuz anticipates red meat and poultry production growth to slow in 2019. 

Lower calf prices

Consumer confidence and the export market are the main drivers that have helped support calf prices, instead of the $10 to $12 lower that was expected, Feuz said. He anticipates lower calf prices until 2020, when the market is expected to improve. 

The current outlook for 500- to 600-pound steers is $1.70 to $1.78 in third quarter of 2019, dropping to $1.64 to $1.74 in 2019’s fourth quarter. Comparatively, Feuz says 500- to 600-weight calves are trading at $1.65 to $1.67 this quarter. 

Feed prices

Usually, when the herd is growing, producers need more feed, which contributes to high prices. 

“We haven’t seen that this time,” Feuz said. 

The five-year average price of corn was $4.50, but corn is significantly below that at an average of $3.25. 

Alfalfa and other types of hay are slowly climbing in price and are coming closer to the five-year average, Feuz said. 

“Input costs are the biggest variable when talking about cattle prices. We have enjoyed relatively low feed prices, in terms of corn, during the last few years. The hay markets have fluctuated a little more,” he said. “However, we always need to keep it in the back of our mind that we are only one drought, or flood at the wrong time of year, from having a bad corn crop. Input costs are still variable.”

With lower feed prices, Feuz thinks feedlot profitability has improved in the last few years after a dismal year in 2016. 

Net exports

Japan and South Korea were strong export markets for U.S. beef in 2018, with Mexico showing some slight growth, and Canada showing steady.

“Overall, the U.S. is usually a net beef importer, which means we import more beef than we export,” Feuz said. “This year, we have been a net exporter most of the year, shipping out more beef than we have imported.”

In 2017, the U.S. exported $2 billion more total product than it imported. 

“Generally, even though we are a net beef importer in terms of weight, we are a net beef exporter in terms of dollar value,” Feuz said. 

Gayle Smith is a correspondent for the Wyoming Livestock Roundup. Send comments on this article to This email address is being protected from spambots. You need JavaScript enabled to view it..

Though the first weekly export update for 2019 wasn’t published until Feb. 14, the Daily Livestock Report (DLR) noted, “The supply of beef and pork that was sold but had yet to deliver at the start of the year was higher than at the same point a year ago.” 

However, DLR also noted a few caveats within the report. 

Beef

Looking deeper at beef numbers, outstanding export sales were 5.6 percent higher than a year ago, with outstanding export sales to Hong Kong at 64.7 percent higher than a year previous.

“This begs the question, will Hong Kong take possession of this product, or will it lead to significant cancellations in the next few months?” asked DLR. “It would not be a reach to suggest the delay may be a result of the current trade war between the U.S. and China, as Chinese officials appear to have tightened up border controls.”

Further, media reports have noted China has clamped down on “food smuggling.” In particular, Indian buffalo meat is not allowed into China, but reports have shown the product is often found in the country via “gray trade” from neighboring countries. 

“China beef imports exploded in 2018 due to growing demand for beef and possibly the effect of tighter border control rules,” explained DLR. 

Further, China became the top market for New Zealand’s beef in the last quarter of 2018, surpassing the U.S.

“Without the outstanding sales to Hong Kong, the remainder of outstanding U.S. beef export sales is lower than the previous year,” they commented.

Pork

On the pork side, DLR noted sales were up 14.8 percent from 2018, with a significant portion of sales also to China. 

“Much of the discussion in the market currently revolves around the potential demand from China in 2019 due to the spread and supply losses from African Swine Fever,” the organization noted. “This is a valid point and something the market may have to contend with later this year.” 

However, DLR also said tariffs in Mexico may have an even bigger impact on U.S. pork producers. 

“Outstanding pork sales to Mexico at the start of the year were 10 percent higher than the same period a year ago,” DLR wrote. “Mexican buyers were quite active in buying U.S. pork in December.” 

Net sales for the first three weeks of December averaged almost double the same period a year ago.

DLR commented, “With more product currently on the books and ongoing tariffs on U.S. pork, Mexican buyers appear to be in no rush to add even more to their position.”

Saige Albert is managing editor of the Wyoming Livestock Roundup and compiled this article from a Feb. 14 edition of the “Daily Livestock Report.” Send comments to This email address is being protected from spambots. You need JavaScript enabled to view it.