Beef Byproduct Values Show Strength

The beef byproduct value is showing some late-season strength despite a rising US Dollar Index since early September as hide values climbed, said the Livestock Marketing Information Center in its Livestock Monitor.

The byproduct value is the total value of all non-meat items produced from an animal such as cheek meat, hearts, livers, tripe, tongue, meat and bone meal, edible and inedible tallow and hides.  Byproduct values are a significant factor in driving packer margins.

Collectively, they are called “the drop credit” in the cattle and meat industry because they are all of the useful items that “drop” off of a carcass, which is then processed into meat and meat products.  The edible parts often are referred to as “variety meats.”

Steer and hog byproduct values have seen steady price support so far this year, although prices remain 14.5% below the five-year average.  They could continue to see support through the rest of the year.  Factors that strongly influence these byproduct values include live animal supply and exchange rates.

Exports are a driver of most byproduct values.  Variety meats have a much higher consumer preference in overseas markets, including Asian countries and Mexico, and most US hides are processed overseas.




Steer byproduct values bottomed around $10.50 per cwt (live animal basis) at the end of 2015, and have rebounded since then, according to the USDA’s Agricultural Marketing Service.  As of mid-October, the steer byproduct value was $11.55 per cwt, up $0.44, or 3.96%, from $11.11 a year ago but down $1.96, or 14.5% from $13.51 for the previous five-year average.




Within all of the byproduct categories, hides are the largest contributors to overall value.  Most US hides get shipped to China for processing.  They then are shipped back or to other countries for further use.  Often, the hides are reimported in the form of the finished products like shoes, automobile seats, clothing or furniture.

As of mid-October Heavy Native steer hides were priced at $75 apiece, up $7, or 8.54%, from $82 a year ago.

Other beef variety meats that have experienced higher prices compared with a year ago include head meat, oxtails and the semiannually contracted pet food items.  Livers, lips, heart, and cheek meat prices were all below 2015.




As of mid-October, hog byproduct values were at $3.71 per cwt., slightly improved compared with the year-ago level of $3.30 but still below the previous five-year average of $5.37.

Within hog byproduct categories, heart and stomach prices were above their year ago levels, while cheek meat and liver prices have fallen below their respective 2015 levels.




Cash cattle markets Wednesday were up $5 to $6.50 per cwt at $103 to $105 on a live basis after trading last week $98 to $98.50 and at $102 per cwt on a live basis and at $154 dressed.

Fed Cattle Exchange prices also were $103 to $105.

The USDA’s choice cutout Wednesday was $0.24 per cwt higher at $182.31, while select was off $0.47 at $168.45.  The choice/select spread widened to $13.86 from $13.15 with 113 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Tuesday was $119.95 per cwt, up $0.27.  This compares with Wednesday’s Oct settlement of $121.97, up $0.42, and Nov’s $123.92, up $1.27.