In central Alberta, Simmental-blended steers on barley and silage diet with medium flesh levels with full health records averaging just over 900 lbs. dropped the gavel at $241. In the Red Deer region, backgrounded mixed heifers weighing 900 lbs. charted course at $223. Northwest of Winnipeg, Charolais-based steers with a light layer of butter evaluated at 860 lbs. silenced the crowd at $253 and similar genetic and quality 800-lb. steers were bid up to $265. In southern Alberta, red Angus/Simmental-mixed heifers in light grain ration with medium to lower flesh levels and full health records weighing 815 lbs. were quoted at $226.

In central Saskatchewan, Angus-based steers with medium to light flesh on light grain diet weighing just over 700 lbs. notched the board at $285. In the same region, larger-frame tan heifers recorded at 722 lbs. with lighter flesh were quoted at $235. South of Calgary, Hereford mixed steers on light barley and silage diet averaging 732 lbs. were valued at $280. North of Calgary, background mixed red and black heifers scaled at 750 lbs. reportedly sold for $225.

In the Lethbridge area, a small group of backgrounded Charolais-blended steers with larger frames weighing 712 lbs. were valued at $302. Near feedlot alley in southern Alberta, black steers on light barley ration weighing 690 lbs. reached up to $310. North of Calgary, larger-frame Angus mixed steers weighing 603 lbs. reportedly sold for $320.

In central Alberta, tan steer calves weighing 502 lbs. were quoted at $340 and their younger brothers averaging 460 lbs. sold for $360. North of Brandon, Charolais-based heifers viewed at 530 lbs. silenced the crowd at $285.

According to Statistics Canada, total heifers, steers, and calves under one year old outside finishing operations in Western Canada as of Jan. 1, 2023, totalled 3.106 million head, down 102,200 head from 12 months earlier. U.S. feeder cattle supplies outside finishing feedlots as of Jan. 1, 2023, were 25.267 million head, down 723,700 head from last year. This is the lowest number since 2015. It all comes down to supply and demand. Lower supplies results in higher demand, which causes prices to trend higher.

— Jerry Klassen is president and founder of Resilient Capital, specializing in proprietary commodity futures trading and market analysis. Jerry consults with feedlots on risk management and writes a weekly cattle market commentary. He can be reached at 204-504-8339 or via his website at ResilCapital.com.

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There is a severe backlog of market-ready supplies in Alberta. After two weeks of lacklustre trade for fed cattle, all three packers were showing interest steady bids for nearby and deferred delivery. Favourable basis levels for fed cattle in the deferred positions appears to be supporting the cash feeder market. As soon as feedlots stop moving fed cattle out, they stop buying replacements and vice-versa. Packer buying activity tends to trickle down throughout the whole supply chain. Last week, packers were more aggressive and feeder market responded immediately.

The spring sales campaign is starting off on a firm tone. Alberta pen conditions are favourable. Steers averaging 800-850 pounds were quoted in the range of $195-$200 landed in a southern Alberta feedlot and 850- to 900-pounders were valued $184-188 delivered feedyard. In central Alberta, mixed medium-frame steers with light flesh averaging 825 lbs. on small grain ration with full health records dropped the gavel at $195. In the same region, a small beautiful package of Angus-blended heifers with full health background averaging 850 lbs. were valued at $166 in the ring.

Northwest of Winnipeg, Charolais-based steers with very little butter averaging 760 lbs. were quoted at $206 in the ring; Simmental-blended heifers weighing 725 lbs. were reported at $187. In central Saskatchewan, red mixed steers averaging 730 lbs. were valued at $209 in the ring while similar-quality and -weight heifers were reported at $178.

Calves appeared to hold a small premium outside the major feeding regions of southern Alberta. Major feedlots appeared to focus on mid-weight to heavier replacements and pastures south of Highway 1 are on the dryer side. North of Calgary, 630-lb. mixed steers dropped the gavel at $232 and run-of-the-mill red heifers weighing 605 lbs. sold for $195. South of Edmonton, a larger group of tan steers averaging 450 lbs. soared at the sky-high level of $265. In central Saskatchewan, red mixed steers weighing 525 lbs. were valued at $239. In Manitoba, Charolais steers weighing 525 lbs. dropped the gavel at $244 and Angus-based heifers weighing 540 lbs. were quoted at $209.

Placements in Canada and the U.S. have been larger than anticipated over the past few months. We now find feeder cattle supplies outside feedlots down from year-ago levels and the tighter supply situation is resulting in higher prices. Feeder cattle prices tend to experience a seasonal rally from May 1 through July 15. Feedlot operators are jumping ahead and securing ownership ahead of this surge in the price structure.

— Jerry Klassen is president and founder of Resilient Capital, specializing in proprietary commodity futures trading and market analysis. Jerry consults with feedlots on risk management and writes a weekly cattle market commentary. He can be reached at 204-504-8339 or via his website at ResilCapital.com.

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Tight feed grain supplies continue to temper the upside in 800-plus-lb. cattle. Despite the positive outlook for fed cattle during the summer months, some operations are on the sidelines and will remain there until rail delays are alleviated. It’s a very difficult situation. For mid-weight categories, there appears to be solid buying interest because these cattle can take on more forage early in the feeding period. If the feedlot extends these cattle into August and September, the final pounds will be put on with lower cost inputs. Demand for grass-quality cattle has surged over the past couple of weeks. U.S. and Ontario demand has contributed to the stronger price structure. Canadian feeder cattle exports to the U.S. for January are estimated at 14,000 head, up from 4,100 head during January of 2021. The bulk of these cattle are light-weight feeders.

In central Alberta, medium- to larger-frame 900-lb. mixed steers with full health records on light grain ration sold for $185. Larger-frame lower-flesh Charolais-blended heifers averaging 860 lbs. on light barley ration with full health papers were quoted at $177. In central Saskatchewan, larger-frame medium-flesh Simmental-based steers averaging just over 970 lbs. reportedly sold for $184. Northwest of Winnipeg, red mixed steers weighing 885 lbs. were quoted at $190 and Charolais-based heifers weighing 900 lbs. were valued at $189.

In southern Alberta, Hereford-based steers weighing just over 700 lbs. were valued at $203 and northeast of Calgary, Limo-based steers weighing 705 lbs. were quoted at $200. In southern Manitoba, Charolais steers weighing 530 lbs. were quoted at $230 and 550-lb. Angus blended heifers were valued at $191. Near Lethbridge, a small group of black steers weighing 475 lbs. were quoted at $259; in northwestern Manitoba, black steers weighing 400 lbs. dropped the gavel at $470.

Alberta packers were buying fed cattle on a dressed basis at $265-$275 delivered, up $5 on average from last week. Margins are deep in red ink on average pen closeouts. The Alberta feedlot operator is facing high feed grain prices and an extremely wide fed cattle basis. The U.S. feedlot situation is the reverse. Operations in the southern U.S. Plains have a positive margin structure which includes manageable feed grain supplies and average fed cattle basis.

— Jerry Klassen is president and founder of Resilient Capital, specializing in proprietary commodity futures trading and market analysis. Jerry consults with feedlots on risk management and writes a weekly cattle market commentary. He can be reached at 204-504-8339 or via his website at ResilCapital.com.

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The initiative comes amid rising concerns that a handful of big beef, pork and poultry companies have too much control over the U.S. meat market, allowing them to dictate wholesale and retail pricing to profit at the expense of their suppliers and customers.

“Capitalism without competition isn’t capitalism. It’s exploitation,” Biden said. “That’s what we’re seeing in meat and poultry industries now.”

A recent White House analysis found that the top four meatpacker companies — Cargill, Tyson Foods, JBS and National Beef Packing Co. — control between 55 and 85 per cent of the market in the hog, cattle, and chicken sectors.

The U.S. Department of Agriculture (USDA) will spend the US$1 billion from American Rescue Plan funds to expand the independent meat processing sector, including funds for financing grants, guaranteed loans, and worker training, said Agriculture Secretary Tom Vilsack, who was speaking at an event with Biden.

USDA will also propose rules this year to strengthen enforcement of the Packers and Stockyards Act and to clarify the meaning of “Product of USA” meat labels, which domestic ranchers have said unfairly advantage multinational companies that raise cattle abroad and only slaughter in the United States.

Attorney General Merrick Garland, also speaking at the event, said “too many industries have become too consolidated over time,” and that the antitrust division of the Department of Justice has been chronically underfunded.

The Biden administration issued an executive order last year that advocated a whole-of-government approach to antitrust issues.

A central concern in agriculture has been meat prices, which have risen at a time when the White House is fighting inflation. An analysis in December by the White House economic council found a 120 per cent jump in the gross profits of four top meatpackers since the pandemic began.

The meat industry has said the White House analysis was inaccurate and criticized the new plan.

National Chicken Council president Mike Brown called the plan “a solution in search of a problem.”

North American Meat Institute spokesperson Sarah Little said staffing plants remains the biggest issue for meatpackers and that the White House plan would not address it.

“Our members of all sizes cannot operate at capacity because they struggle to employ a long-term stable workforce,” she said. “New capacity and expanded capacity created by the government will have the same problem.”

Eric Deeble, policy director at the National Sustainable Agriculture Coalition, cheered the plan, calling it a “very positive step to ensure farmers and ranchers receive fair prices.”

The anticipated rulemaking under the Packers and Stockyards Act “could have a significant impact,” said Peter Carstensen, emeritus professor of law at University of Wisconsin-Madison and former antitrust attorney at the Department of Justice. But he noted that investment in independent processing itself would not address market concentration.

Austin Frerick, deputy director of the Thurman Arnold Project at Yale University, an antitrust research centre, said the plan does not go far enough to tackle the power of the top meatpackers.

“I do not believe this (plan) will meaningfully change the concentration numbers,” he said.

— Leah Douglas reports on U.S. agriculture and energy policy for Reuters from Washington, D.C.; additional reporting by Diane Bartz and Trevor Hunnicutt.

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Robust sales of U.S. beef to domestic consumers and overseas buyers have helped support Chicago Mercantile Exchange (CME) cattle futures.

USDA, in a monthly report, raised its 2021 beef production forecast by 0.2 per cent from October to 27.885 billion lbs., citing larger expectations for slaughtering of fed cattle and heavier carcass weights.

The agency raised its average price estimate for cattle by 0.2 per cent to $121.31/cwt (all figures US$).

CME December live cattle futures ended up 0.1 cent at 132.2 cents/lb. on Tuesday, after rising on Monday to their highest since Sept. 3 at 132.5 cents.

The most actively traded January feeder cattle contract slipped 0.6 cent to settle at 159.8 cents/lb. The contract matched its Monday high of 160.6, which was the highest price since Oct. 27.

Traders said they are waiting to see whether cash prices for fed cattle strengthen this week as they did toward the end of last week in a sign of demand from meatpackers.

Profit margins for beef processors eased to $561 per head of cattle from $579.05 per head on Monday and $569.55 a week ago, marketing advisor HedgersEdge.com said.

Boxed beef prices slipped by 0.85 cent for choice cuts, to $287.80, and rose by $2.02, to $270.62/cwt, for select cuts, USDA said in a daily report.

“The boxed beef rally has kind of cooled off,” said Matt Wiegand, a commodity broker for FuturesOne.

For pork, USDA raised its 2021 production forecast from October and lowered its annual price forecast for hogs in the monthly report.

In CME lean hog futures, the benchmark December contract settled 1.425 cents lower at 74.95 cents/lb.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.

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The hog market was pressured by concerns about demand in China, where high prices have slowed the consumption of pork.

CME December live cattle settled down 0.9 cent at 128.65 cents/lb. after hitting 123.675 cents, its lowest since June 9 (all figures US$).

October feeder cattle dropped 0.775 cent to 159.275 cents/lb., touching its lowest since July 19.

Beef prices eased, with choice cuts of boxed beef down 33 cents, to $334.86 per hundredweight (cwt), while select cuts falling $3.73, to $298.17/cwt, the U.S. Department of Agriculture said.

Margins for beef packers were about $890.40 per head of cattle, down from $904.75 on Tuesday and $943 a week earlier, according to livestock marketing advisory service HedgersEdge.com.

The Biden administration plans to take a tougher stance toward meatpacking companies it says are causing sticker shock at grocery stores.

The administration will funnel $1.4 billion in COVID-19 pandemic stimulus money to small meat producers and workers, administration aides said in a blog post. They also promised action to “crack down on illegal price fixing.”

CME lean hog futures ended lower, with the most-active October contract settling down 0.725 cent at 87.375 cents/lb.

— Mark Weinraub is a Reuters commodities correspondent in Chicago.

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The executive order, expected within days, will also address such competitive issues as delayed airline baggage, cellphone company practices and Pentagon contracts, a source briefed on the matter told Reuters.

The order would encourage the Federal Trade Commission to limit the ability of farm equipment manufacturers to prevent tractor owners from using independent repair shops or repairing their own equipment.

Reuters first reported the action on repairs earlier on Tuesday and the planned executive order last week.

White House press secretary Jen Psaki said on Tuesday the effort would help farmers “fight back against abuses of power by giant agribusiness corporations and give farmers the right to repair their own equipment how they like.”

The FTC wrote a report for Congress in May that discussed “Right to Repair,” addressing the limits that manufacturers put on who can repair items ranging from mobile phones to home appliances to cars. Such limits may also raise the price of those repairs.

The source said the scope of any “Right to Repair” rules would be set by the FTC.

Biden’s order could encourage the FTC to lift further limits consumers face for repairing products they buy.

Some tractor manufacturers like Deere, Agco and CNH use proprietary repair tools and software to prevent third parties from performing some repairs. Shares of the companies fell on news of Biden’s plans, first reported by Reuters on Tuesday.

John Deere said in a statement it “does not support the right to modify embedded software due to risks associated with the safe operation of the equipment, emissions compliance and engine performance.”

It added that “less than two per cent of all repairs require a software update, so the majority of repairs farmers need to make, can be made easily.”

The FTC did not immediately comment.

The source said Biden and the U.S. Department of Agriculture (USDA) “believe farmers should have the right to repair their own equipment how they like.”

‘Product of USA’

Separately, Biden plans to direct USDA to write rules to boost competition in agricultural industries, including one under the Packers and Stockyards Act making it easier for farmers to bring claims, the White House said. There will also be anti-retaliation protections for farmers who raise concerns about bad practices.

Biden will also direct USDA to issue new rules defining when meat can bear “Product of USA” labels, Psaki said.

Under current labeling rules, meat can be labeled “Product of USA” if it is processed in the United States, even if the livestock is raised overseas and then processed into cuts of meat at a U.S. facility.

Meatpacking has come under increased scrutiny after slaughterhouses closed temporarily during the start of the COVID-19 pandemic last year, boosting prices for meat sold by processors such as JBS USA and Tyson Foods while lowering prices for farmers’ livestock.

USDA Secretary Tom Vilsack has said he wants to make agricultural markets more fair and resilient after the pandemic highlighted how concentration in the sector can hurt farmers.

Four companies slaughter about 85 per cent of U.S. grain-fattened cattle that are made into steaks, beef roasts and other cuts of meat for consumers

USDA said in June it would start working on three rules to strengthen enforcement of the Packers and Stockyards Act, passed 100 years ago to protect farmers and ranchers from unfair trade practices.

— Reporting for Reuters by David Shepardson and Diane Bartz; additional reporting by Tom Polansek and Rajesh Kumar Singh.

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The decision issued Wednesday in U.S. District Court in Minnesota could raise costs for meatpackers like Seaboard Foods and Clemens Food Group and slow meat production after COVID-19 outbreaks in slaughterhouses limited output last year.

A lawsuit brought against USDA by the United Food and Commercial Workers Union had challenged the 2019 rule, arguing that faster slaughter speeds undermined worker safety.

A federal judge said there was no evidence the Trump era rule had evaluated worker safety. USDA says it is evaluating the decision.

The North American Meat Institute, which represents meat companies, said it was disappointed in the verdict. The institute has argued that line-speed increases have not correlated with increased injury rates.

“We would like to see the agency appeal and ask for a stay,” the institute said.

Seaboard Foods, the second-biggest U.S. pig producer after Smithfield Foods, sped up its Guymon, Oklahoma, pork plant last year, becoming the first company to operate under the new rule. Workers told Reuters the faster line speeds increased injuries at the plant.

Seaboard did not immediately respond to requests for comment on Thursday.

The rule change allowed pork plants to slaughter as fast as they want, as long as they prevent fecal contamination and minimize bacteria. The U.S. court stayed its decision to vacate the rule for 90 days, giving companies and the Biden administration time to adapt.

The elimination of line speeds was part of the New Swine Inspection System, which also lets pork plants use some company inspectors instead of USDA ones.

Tyson Foods will press ahead with plans to implement the system over the coming months at plants in Madison, Nebraska, and Perry, Iowa, spokeswoman Liz Croston said. The company is focused on modernizing inspections and food safety, not line speeds, she said.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.

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Daily hog slaughter regained from holiday pace, with 495,000 head processed compared to 472,000 head the week prior, according to U.S. Department of Agriculture data, but was still short of prior year pace.

“We’ve still got big hog numbers right now,” said Dough Houghton, technical analyst at Brock Capital Management. “There’s backups from the holidays, plus we had the Columbus Junction pork plant from Tyson that was down.”

Tyson Foods resumed processing today at its pork processing plant at Columbus Junction, Iowa, after a Dec. 16 shutdown due to mechanical issues.

Lean hog futures fell for a second day after four days of gains. CME February lean hogs settled down 1.15 cent at 69.775 cents/lb., its biggest slide since Dec. 11, 2020 (all figures US$).

Meanwhile, live cattle futures inched lower as traders weighed declining beef cutout values against expected tighter market-ready cattle supplies in the second quarter of the year.

Wholesale beef fell for a second day, with choice boxed-beef cuts down 63 cents, to $205.27/cwt, and select cuts down 41 cents at $196.08, USDA said.

Chicago Mercantile Exchange (CME) February live cattle futures settled 0.05 cents lower at 115 cents/lb., while feeder cattle futures felt pressure from rising corn futures, with CME March feeder cattle settling 0.85 cents lower at 136.575 cents/lb.

Cattle slaughter remains lower, with just 117,000 head processed compared to 124,000 the same period last year, putting week-to-date beef production at 347,000 — 1.4 per cent behind last week and 5.7 per cent behind the same period last year.

“That’s not good, coming out of the holidays, when you hope to see good beef clearance,” said Houghton.

— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.

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U.S. states, cities and hospitals are scrambling to buy freezers that can safely store Pfizer’s COVID-19 vaccine at temperatures of -70 C, significantly below the standard for vaccines.

Moderna’s vaccine can be stored at -20 C.

Smithfield, owned by China’s WH Group, has multiple “ultra-cold” freezers and will work with local authorities to provide assistance as needed, said chief administrative officer Keira Lombardo, without providing details.

The company is “ready and willing to assist health agencies should storage capacity become constrained,” she said in a statement to Reuters.

Thousands of meatpacking workers employed by Smithfield and rivals like Tyson Foods and JBS USA have been infected with COVID-19. Nearly 20 U.S. meat plants were shut in the spring due to outbreaks, tightening supplies, raising prices and making meatpacking one of the industries most impacted by the pandemic in the United States.

Smithfield may be able to keep Moderna’s vaccine in static freezers that store meat before it is exported or sold, said Chris Hodges, a former senior vice-president of business development for the company.

Other “blast” freezers that push cold air onto meat before it is moved into static freezers could potentially get cold enough to hold Pfizer’s version, although it would be very expensive to run them for long periods of time, he said.

“As it becomes more clear that successful vaccines will become available, we have communicated our capabilities and continued willingness to partner with health officials, including with vaccine distribution and storage,” Lombardo said.

Working with health agencies, Smithfield expects it can help distribute vaccines rapidly to food and agricultural workers hit hard by the pandemic, Lombardo said. The company also offered to aid distribution to other essential workers through healthcare offices at its facilities.

Meatpacking workers are considered essential in many states, but not at the top of the list for vaccines, which are expected to be distributed first to healthcare workers and nursing home residents.

Organizations representing food and meat companies have asked U.S. President Donald Trump and President-elect Joe Biden for priority access to vaccines for workers.

Tyson said in an e-mail to Reuters it was closely monitoring the development of vaccines and working with healthcare experts on planning and distribution models for employees.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.

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