Seven weeks after the Aug. 8 fire at Tyson’s Finney County, Kan., beef plant, the ripple effects are clearer and fading as expected, an Oklahoma State University agricultural economist said in a letter to Extension agents.
The fire caused huge market disruptions, but it is clear that no significant back-up of finished cattle occurred, despite the squeeze on packing capacity, said Derrell Peel in the Cow/Calf Corner newsletter.
PACKERS DOING “REMARKABLE” JOB
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 capacity is pushed near to its limit, Peel said. In the week after the fire, weekday yearling slaughter was down 4.6% (or 22,158 head), but a large Saturday kill resulted in a weekly total that was down just 1,002 head from the pre-fire week, a decrease of 0.6%.
In the second week, weekday slaughter was down 3.8% (18,345 head), but a large Saturday kill brought the weekly total up for an increase of 2,423 head compared with the week prior to the fire, he said.
In week three, weekday steer and heifer slaughter was down 11,511 head, or 2.4%, compared with the pre-fire total, Peel said. But once again, a large Saturday total made the weekly yearling slaughter total only 175 head less than the week prior to the fire.
YEAR-EARLIER COMPARISONS
Year-over-year comparisons show the same pattern, Peel said. In the four weeks after the fire, weekday steer and heifer slaughter was down every week compared with the previous year, with a range from 0.4% less to 2.9% less and an average decrease of 2.0%.
However, year-over-year Saturday slaughter totals were up anywhere from 14.4% to 54.6%, with an average 22.3% in the four weeks after the fire, he said. In total, steer and heifer slaughter in the four weeks after the fire was 2,016,178 head, a year-over-year increase of 12,562 head, or 0.65%.
And, any significant backlog of more than 2 million head of slaughter-ready cattle would have pushed carcass weights up, he said. However, in the four weeks after the fire, steer and heifer carcass weights were down 4.25 pounds from the 2018 period, close to the year-to-date decreases of 4.97 pounds for steers and 5.46 pounds for heifers.
Steer and heifer carcass weights currently are rising to a seasonal peak, typically in October or November, Peel said. In the latest data, steer carcass weights were 891 pounds, down 5 from last year while heifer carcass weights were 811 pounds, even with a year ago.
CAN IT HOLD?
The risk now is whether packers can continue to hold slaughter rates high through the end of the year, Peel said. Large Saturday kills are more costly and 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, he said.
CATTLE, BEEF RECAP
Cash cattle trade took place in the Plains last week at $103 up to $107 per cwt on a live basis, up $3 from the previous week, and at mostly $165 per cwt on a dressed basis, steady to up $5.
The USDA choice cutout Monday was down $0.14 per cwt at $212.44, while select was down $2.75 at $187.11. The choice/select spread widened to $25.33 from $22.72 with 79 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Friday was $142.51 per cwt, up $0.74 from the previous day. This compares with Monday’s Oct contract settlement of $142.40, down $1.92.