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Fed Cattle Recap

Fed Cattle Recap | Cash market for fed cattle continues post-fire recovery

Cash trades for fed cattle were mostly $2-$5 higher with much lower numbers of 15-30 day delivery cash sales, meaning nearly all cash trades were available for immediate delivery.

Ed is taking a break this week, so while his audio report is available, let’s turn to Derrell Peel, Extension livestock marketing economist at Oklahoma State University, for a condensed look at the aftermath of the Tyson beef plant fire in Holcomb, Kan.:

The fire on August 8, 2019 at the Tyson Finney County, Kan., packing plant caused huge disruptions in markets like a big rock thrown into a pond. With seven weeks passed since then, the impacts and resulting ripple effects are clearer now and are fading as expected. 

Despite the loss of roughly 5% of steer and heifer slaughter capacity, the packing industry has done a remarkable job of maintaining yearling slaughter while total industry capacity is pushed very near to the limit. In the week after the fire, Monday-Friday yearling slaughter was down 4.6% (a decrease of 22,158 head) but a large Saturday kill resulted in a weekly total slaughter down just 1,002 head from the pre-fire week, a decrease of 0.6%. 

In the second week after the fire, weekday slaughter was down 3.8% (18,345 head decrease), but a large Saturday kill brought the weekly total up for an increase of 2,423 head compared to the week prior to the fire. In week 3 after the fire, weekday steer and heifer slaughter was down 11,511 head, 2.4% lower, compared to the pre-fire total; but once again a large Saturday total made the weekly yearling slaughter total only 175 head less than the week prior to the fire.

In total, steer and heifer slaughter in the four weeks after the fire was 2,016,178 head, an increase year over year of 12,562 head (up 0.6%). This was accomplished as a result of considerable logistical contortions and extra cost, including big Saturday kills and rerouting cattle to other plants farther away.

It is clear that no significant backup of finished cattle occurred despite the squeeze on packing capacity after the fire. Any significant backlog of more than 2 million head of slaughter-ready cattle would have pushed carcass weights up. However, in the four weeks after the fire, both steer and heifer carcass weights were down 4.25 pounds year over year, close to the year-to-date decreases of 4.97 pounds for steers and 5.46 pounds for heifers.

The risk going forward is whether the packing industry can continue to hold slaughter rates high through the end of the year under emergency conditions. Large Saturday kills are not only more costly but cannot be maintained indefinitely. 

There will continue to be stresses on fed cattle demand and flows of cattle to slaughter until the damaged plant returns to operation. 

 

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