Data on the condition of cattle markets after the Aug. 9 fire at Tyson’s Holcomb, KS, beef plant are becoming available slowly, providing more clarity to the situation and correcting some misconceptions, said Derrell Peel, Oklahoma State University agricultural economist in a letter to Extension Agents called Cow/Calf Corner.
Cattle and beef markets continue to recover from the disruptions resulting from the Tyson fire, and lots of scrutiny and suspicions are being directed at cattle and beef markets, Peel said.
SLAUGHTER DATA
Actual slaughter data is available from the Agricultural Marketing Service with a two-week lag, he said. Thus, on Aug. 29, data became available to compare the pre- and post-fire effect on cattle slaughter.
Slaughter rates Monday through Friday following the fire were down 22,158 head, or 4.6%, from the week before the fire, Peel said. This reduction is close to the estimated capacity of the closed plant.
However, by Saturday the industry was able to increase steer and heifer slaughter by 21,156 head, compared with the previous week, he said. This resulted in a net slaughter decrease of 1,002 head the week after the fire.
Numerous early media reports indicated that estimated slaughter the week after the fire was up by 9,000 head, but this was incorrect, Peel said. This was mostly because it included a large estimated increase in cow and bull slaughter and because it was based on daily slaughter estimates.
Actual slaughter data for the second week after the fire will be available later this week, he said. The estimates currently available suggest total steer and heifer slaughter two weeks after the fire may be up slightly compared to the week before the fire.
BEEF PRICES JUMPED
The beef-production reduction provoked a sharp response in cash prices for boxed beef with varied responses for the different beef primals, Peel said. The choice cutout peaked on Aug. 20 and 21, up 11.7% from Aug, 9.
Cutout values have since decreased and were up 7.1% on Aug. 30 compared with Aug. 9.
In general, middle meats spiked after the fire but have decreased sharply, he said. Ribs peaked at 11.3% higher on Aug. 21 and have dropped back to being up 2.4% from pre-fire levels.
Loins peaked at 13.3% higher on Aug. 20 but dropped back to levels 4.8% above pre-fire levels by Aug. 30.
End cuts are sustaining higher levels since the fire, Peel said. Chucks peaked at 13.5% higher on Aug. 22 and still were 9.6% higher on Aug. 30.
Rounds have maintained sharply higher levels with the Aug. 30 value the highest so far, up 14.5% from pre-fire levels, he said.
These patterns of value changes confirm the complexity of beef wholesale and retail markets and the product market contortions that have occurred as a result of the fire, Peel said.
CATTLE, BEEF RECAP
Cash cattle trade was reported last week at $103 to $108 per cwt on a live basis, steady to $2 lower than the previous week. Dressed-basis trade was at $170 to $173, down $2 to $5.
The USDA choice cutout Wednesday was down $0.01 per cwt at $230.65, while select was off $2.67 at $208.95. The choice/select spread widened to $21.70 from $19.04 with 88 loads of fabricated product sold into the spot market.
Five heifer and no steer contracts were tendered for delivery against the Aug contract Tuesday at zero.
The CME Feeder Cattle index for the seven days ended Tuesday was $138.84 per cwt, down $0.25 from the previous day. This compares with Wednesday’s Sep contract settlement of $135.55, up $1.40.