In a year where market uncertainty has been the norm, the fed cattle market took another shot Friday, August 10, when Tyson’s Finney County, Kan., beef plant was partially destroyed by fire.
“The loss of 30,000-35,000 head of slaughter capacity per week will disrupt both boxed beef and fed cattle markets at least initially and potentially longer, depending on the duration of the plant closure,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. Cattle futures plummeted Monday on the news.
According to CattleFax, that amounts to 6% of total U.S. fed cattle packing capacity the rest of the processing industry will need to absorb. The plant represents 23.5% of Kansas fed cattle packing capacity.
“The disruptions will add costs for both fed cattle and boxed beef as additional logistics are needed to adjust flows of slaughter cattle and boxed beef. There are many unknowns for Tyson and the industry going forward, including the possibility that this sets the stage for new investment in beef packing. The U.S. has not seen major new beef packing infrastructure for many years,” Peel says.
Meanwhile, for the week ending August 10 before the fire’s impact was felt, the Five Area formula sales volume totaled 263,079 head, compared to about 244,000 the previous week. The Five Area total cash steer and heifer volume was 60,797 head, compared to about 79,000 head the previous week.
Nationally reported forward contract cattle harvest was about 50,000 head for the week. The packers have 226,000 head for August. National cash sales this week included about 24,703 head of 15- to 30-day delivery as well as 23,000 head from the previous week, so big numbers are in the pipeline with those 15-30 day purchases along with forward contracts.
Now looking at prices, the Five Area weekly weighted average cash steer price for the week ending August 10 was $112.37 per cwt, $1.45 lower than the week prior.
The weighted average cash dressed steer price was $182.23, $2.07 lower.
The Five Area weighted average formula price was $182.39, 38 cents higher.
The estimated weekly total federally inspected cattle harvest was 642,000 head and that compares with 647,000 head the same week last year.
The latest average national steer carcass weight for the week ending July 27 was 869 pounds, which was 3 pounds higher than the previous week and still well below the 874 pounds the same week last year.
The Choice-Select spread was $22.56 on Friday, compared with $24.10 the previous week and an $8.84 spread last year. The spread is definitely helped again by much higher Choice rib and loin primal prices this year than last year.