It’s not readily apparent in the day-to-day beef and cattle markets, but beef by-product values have increased dramatically in the past few months.
Derrell Peel, Oklahoma State University Extension livestock marketing specialist, said in a newsletter to Extension agents called Cow-Calf Corner that hide and offal values, which have generally declined in recent years, bottomed during the early stages of the pandemic in 2020 at the lowest levels since 2009.
But in the last 13 months, steer hide and offal values have risen to an August, 2021, value of $14.99 per cwt from $6.93 per cwt on a live fed steer basis in July 2020, an increase of $8.06, or 116.3%, Peel said.
The current by-product value is the highest since January of 2015, he said.
HIDES CARRY THE WATER
The sharp jump in by-product values is because of increases in hide values along with several other products included in the by-product totals, Peel said.
The largest component of by-product values is the hides, and August steer hide values were up 115% year over year, he said. In recent years, hides have dropped from roughly half of total by-product value to about 30% of the total.
Despite the doubling of hide values in the past year, though, hides still only represent 31.7% of current by-product value, Peel said. This is because many other by-product values have increased sharply in the past year, along with hides.
TALLOW UP SHARPLY
Edible and inedible tallow values also were up sharply in recent months, Peel said. Inedible tallow values were up 177% year over year while edible tallow values increased 85%.
Edible and inedible tallow combined represent 25.4% of the August total by-product values, he said.
Tongue prices were up 111% year over year in August and accounted for 19.5% of total by-product values, Peel said.
Liver values were 1.2% of the total value; hearts were 1.4%; cheeks were 3.7%; tripe was 4.1% and meat scraps were 4.2%. They combined to account for an additional 14.6% of the total August by-product value, he said.
Cheek, meat scrap and tripe values were up 30% to 90% since last year, Peel said.
Finally, several minor items added another 9.3% to the total by-product values, he said.
The majority of hides and offals are exported, Peel said. Over the past decade, exports of hides, variety meat and tallow added an average of $2.42 billion to total beef industry exports.
In 2020, the value of hide, variety meat and tallow exports was $1.7 billion, he said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $122.43 to $127.40 per cwt, compared with last week’s weekly range of $127.40 to $128.11. FOB dressed steers and heifers went for $192.44 to $203.38 per cwt, versus $202.27 to $203.18.
The USDA choice cutout Thursday was down $1.87 per cwt at $318.00, while select was down $3.62 at $280.27. The choice/select spread widened to $35.93 from $35.93 with 113 loads of fabricated product and 27 loads of trimmings and grinds sold into the spot market.
The USDA reported Thursday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.85 to $2.05 a bushel over the Dec futures and for southwest Kansas were unchanged at $0.40 over Dec, which settled at $5.29 1/2 a bushel, down $0.04.
The CME Feeder Cattle Index for the seven days ended Wednesday was $154.02 per cwt down $0.18. This compares with Thursday’s Sep contract settlement of $155.87 per cwt, up $1.15.