The fire at the Tyson plant in Holcomb, Kansas, pushed prices for almost all beef products higher
Best Value Buys
Beef Tenderloins rise this time of year and into the holiday season. With prices only 5% above last year, when much of the complex is notably higher, tenderloins are presented as a value.
Whole Chickens & Breast Meat are favorably priced.
Butter prices begin to climb heading into the Fall in preparation for the late-year baking season. Seeing that prices are in line with where they were last year, it is good risk-management to take some of your Q4 needs off the table now.
Eggs are 55% lower than they were at this time last year. Eggs typically rise at the start of the school year. Any buyer who worked during the Avian Flu Epidemic knows the value in locking this item on a long-term contract at prices near all-time lows.
What to Watch for – The Buyers’ Perspective
Unless you have been under a rock the past week or so, you have heard of the fire at the Tyson plant in Holcomb, Kansas causing havoc on the industry at every level (futures, cash, slaughter, etc.). That literal fire has caused boxed beef prices to be metaphorically “on fire”. Some items gained 20% week-over-week and were already higher than this time last year. Cutouts jumped $15 over the course of last week. Beef demand is exceptional and peak seasonal kills already occurred in Q2. Seasonally, we typically don’t see great demand this time of year, but the rib had already bottomed in July and strengthened the loin was staging a rally before the fire occurred. End users are scrambling to cover needs for Labor Day and the rally in the cutout is expected to continue. Do not expect a normal seasonal. The packing industry has seen margins explode with this event and have every incentive to add Saturday shifts and work over time. This should help calm the markets down. This is a developing and dynamic story.
Unless needed, stay away from the bellies/bacon and chicken wings.
According to a Reuters report released June 30th, industry insiders say the swine fever toll in China may be twice as high as reported. African Swine Fever has had some influence on the market thus far, but not to what many people feared. We believe this is the calm before the storm. Although pork prices have risen in China in some areas, they have not had the severe reduction in pork production as forecasted. This is because any farmer that has a healthy animal is bringing it to slaughter to avoid getting the virus. This is causing a flood of production in the near term. However, once this cycle crop is complete and the Chinese, according to their government, are facing a minimum of 20% loss of herd (private analysts say 40-50%), the real shortage of protein will present itself. This will affect all proteins across the board as chicken and beef will become substitutes for the Chinese staple.
