US Weekly Report – Sample

PLEASE NOTE:  Regular reports include interactive price charts for major selections. These have been disabled in the sample reports. To see price charts and spreadsheets, you must sign up for a free trial subscription.

The Week at a Glance:

• Prices stabilize
• APLF presents series of webinars to connect industry
• JBS Pennsylvania beef plant to reopen on Monday
• COVID-19: Cargill meatpacking plant in Fort Morgan scales back
• Perdue aims to reassure as COVID-19 shuts down more meatpacking facilities
• Cattle industry losses expected at $13.6 billion
• Thirty workers at Tyson Pasco plant positive for COVID-19
• JBS Colorado plant closed for at least 2 weeks over COVID-19
• Cargill Canadian facility cuts production to one shift
• Tyson Foods issues Q&A on use of walk-through temperature scanners
• Container volume at major Chinese ports dropped last week
• Pou Chen production in Vietnam temporarily suspended
• Lear takes additional steps to address COVID-19 impact
• Combined export sales 723,600
• Combined shipments 466,700
• Combined outstanding 4,552,200
• Sales exceed slaughter, shipments below slaughter
• Forecast: Neutral
• Market Observations: Not impressed

Heavy Texas Steers higher

Again this week, little trading was reported in Texas, which was not surprising given packer positions and lower slaughter. Selections averaging 62/46 lbs. sold higher than last reported at $16.00.
 

Branded Steers steady

Branded steers/Colorados were one of the few selections to see much of any active trading this week. Sales were reported in a range similar to last, from a low of $12.50 to a high of $15.00 for 62/64 lb. averages.
 

Butt Branded Steers gain $1.00

What trading in butts was reported during the period was generally steady and in some cases, a dollar higher. Averages of 62/64 lbs. sold for $19.00 early in the week but by Thursday sold for $21.00. Some buyers who received bids at the low end of the range countered, holding out for $21.00, given the reduced supply.
 

Heavy Native Steers steady

Few natives were available this week given packer positions and the lack of offers. A carryover sale of 62/64 lbs. was reported at $23.50. At the end of the week, a sale of $25.00 for 62/64 lb. averages was reported, but most said it does not necessarily indicate a higher market just yet.
 

Heifers

Seasonal weight brands were reported to sell for $10.00. No sales of natives were reported.
 

Plump Cows

Buyers looking for even better bargains were numerous this week, with some fishing for anything they could get under $10.00 c&f. After the large sales of the past two weeks, little trading was reported. No sales of cows were reported this week.
 

Holsteins

Dairy cows averaging 52/54 lb. sold at $9.50 and $10.00. No sales of dairy steers were reported and packers say that premium types are well sold.
 

INDUSTRY NEWS

APLF presents series of webinars to connect industry

Given the challenges related to the pandemic, ALPF has established a number of online tools for connecting industry members during this uncertain time. A series of webinars is one of the tools being presented. Experts and professionals from different industries will focus on Sustainable Fashion, Technology, Trends Forecast, and Hides & Skin Production.

In April, two webinars are planned, and you can see all the online events here.

Beef and Leather in Latin America: Eliminating Deforestation from Supply-Chains
Presented by Mauricio S. Bauer
Moderated by Rafael Andrade
National Wildlife Federation
21 Apr 2020    |    7-8 pm HKT (check your time zone)

International Wildlife Conservation is the international program of the National Wildlife Federation. With over 30 years of experience, the International Wildlife Conservation program combines expertise in the fields of natural resource economics, remote sensing and GIS, international law, and tropical ecology to advance market-based solutions and public policy to eliminate the loss of tropical forests around the world.

We promote “zero deforestation” agriculture production in the tropics, focusing on the commodities that have the greatest impacts on forests and wildlife, such as beef, leather, soy, palm oil, and biomaterials. Our work also focuses on advancing strong and comprehensive international agreements that protect forests and our climate.

This webinar will be presented in English. Save Your Seat.

How can Digital Design, Artificial Intelligence, Digitalized Supply Chains and Smart Factories Become the Main Strategy for Brands and Suppliers in the Post COVID Era?

Presented by Andrey Golub
CEO of Else Corp
28 Apr 2020    |    5-6 pm HKT (check your time zone)
We expected Fashion, Footwear and Leather to become sustainable in the near future. We talked a lot about adapting Digital Design, Smart Manufacturing, and even Artificial Intelligence to those sectors, but just as an option, a privilege for important and well-structured companies.

We dreamed about Digital Supply Chains, B2B platforms… And now we see how quickly COVID-19 is changing the industry from inside out, making “high-tech strategy” the only way to survive. Are we ready? Do we know and understand well enough the technological landscape? Can we filter the buzz and think of the impact on our business?

This webinar will be presented in English. Save your seat.
 

JBS Pennsylvania beef plant to reopen on Monday

Seeking Alpha
The JBS Foods Souderton, PA beef production facility, which closed on March 31 after a number of management team members became ill, will reopen Monday. Seeking Alpha cites a Bloomberg story.

The Souderton plant, with a capacity of 2,500 head per day, is the largest beef facility east of Chicago. Before shutting down, it had added a “Saturday kill” to keep up with strong demand by grocery stores.

COVID-19: Cargill meatpacking plant in Fort Morgan scales back

The Denver Post reports that Cargill’s meatpacking plant in Fort Morgan is scaling back operations to protect workers after one employee died from COVID-19 and as many as 18 others have contracted the disease.

Fifteen employees have tested positive for the virus, while three others are considered probable cases, according to data released Wednesday by the Colorado Department of Public Health and Environment.

In a statement, Cargill Protein’s North America Lead Jon Nash said the company is reducing shifts at the plant in order to minimize COVID-19’s impact.

“We’ve taken extra steps to focus on safety and remain operational – including temporary wage increases, bonuses and waiving co-pays for COVID-19 testing,” Nash said. “We also implemented additional safety measures like temperature testing, enhanced cleaning and sanitizing, prohibiting visitors, adopting social distancing practices where possible and offering staggered breaks and shift flexibility. Our facility will be back to operating at full capacity as soon as is it is safe to do so.”

Cargill eliminated the second shift because so many workers were calling out, afraid to come to work, said Steve Vairma, principal executive officer at Teamster Local 455. By eliminating that shift, the company will be able to better clean the facility before workers come back, he said.

“Their representation has been that they’re putting safety ahead of profits and production and that seems to be the case,” Vairma said, noting a shipment of masks is on its way, as well as some of the other health guidelines the company is adopting. “They seem to be putting an effort on this, unlike some other facilities.”
 

Perdue aims to reassure as COVID-19 shuts down more meatpacking facilities

Politico reports that the White House appears to be growing more nervous about the increasing press coverage of COVID-19 shutting down major meat plants. US Secretary of Agriculture Sonny Perdue made a rare appearance in the Rose Garden on Wednesday for the daily pandemic briefing to remind food industry workers to comply with public health guidelines.

“We need our local health authorities and our state health authorities to do everything they can to balance the demand of keeping our facilities operational and our critical industries going, while at the same time keeping the health and safety of employees as a top priority as well as our communities,” said Perdue.

Meanwhile, the crisis is growing in South Dakota: One of the largest U.S. pork processing plants reported 518 infections among its employees and another 126 in people connected to them as of Wednesday, according to the Associated Press. That makes the now-shuttered Smithfield Foods plant in Sioux Falls the epicenter of one of the largest clusters of infections in the country.

The South Dakota Smithfield plant accounts for about 5 percent of the country’s pork processing and the mounting list of closures is being felt across the industry. Hog farmers are considering euthanizing animals to deal with the backlog of pigs, reports Pro Ag’s Liz Crampton.

Canadian capacity is also under threat. Cargill reduced production at one of the largest beef-packing plants in Canada this week after several dozen employees fell ill, according to Reuters.

The meatpacking industry is reassuring shoppers that there’s no indication food will become scarce, but if outbreaks worsen and more plants shut down, consumers could see emptier shelves at grocery stores. At the news conference, Perdue reiterated that there is enough food to feed people, it’s just taking some time to sort out the retail supply chain. “I want to be clear, the bare store shelves you may see in some cities in the country are a demand issue, not a supply issue,” he said.
 

Cattle industry losses expected at $13.6 billion

Drovers
A new study estimates cattle industry losses as a result of the COVID-19 pandemic will reach $13.6 billion. The study was commissioned by NCBA and conducted by a team of industry-leading agricultural economists led by Derrell Peel, Breedlove Professor of Agribusiness and Extension Livestock Marketing Specialist at Oklahoma State University, to assist USDA in determining how best to allocate CARES Act relief funds to cattle producers.

The study shows cow-calf producers will see the largest impact, with COVID-19-related losses totaling an estimated $3.7 billion, or $111.91 per head for each mature breeding animal in the United States. Without offsetting relief payments, those losses could increase by $135.24 per mature breeding animal, for an additional impact totaling $4.45 billion in the coming years.

View the executive summary here.
View the full economic assessment here.
 

Thirty workers at Tyson Pasco plant positive for COVID-19

Drovers reports that dozens of workers at Tyson Foods’ beef plant near Pasco, Wash., have tested positive for COVID-19. The Walla Walla County Department of Community Health (WWCDCH) said Monday 30 cases were detected among Tyson employees.

Tyson’s Pasco plant is one of the few facilities located in the northwestern U.S., with harvest capacity of 2,300 cattle per day. The plant employs about 1,400 workers.

WWCDCH officials said they are confident Tyson is “taking necessary precautions to prevent, or mitigate, additional spread” of the virus. Tyson has not announced any plans to close the plant.
 

JBS Colorado plant closed for at least 2 weeks over COVID-19

Colorado Public Radio
Colorado state health officials have closed the JBS meatpacking plant in Greeley after dozens of workers there contracted COVID-19.

There are 43 confirmed positive cases among JBS workers. A second plant employee died last week, according to the Weld County Department of Health and Environment.

A new health department order published Monday instructs the plant to stay closed until it finishes testing its thousands of employees, disinfecting the facility and implementing social distancing practices. The plant will be closed for at least two weeks, JBS announced Monday, but the closure could extend longer if the company doesn’t meet all the requirements.

Weld County health officials will be conducting random inspections of the plant to ensure the company is complying with the order.

“While the Greeley beef facility is critical to the U.S. food supply and local producers, the continued spread of coronavirus in Weld County requires decisive action,” said Andre Nogueira, the U.S. CEO of JBS, in a news release. “As a leading member of this community, we believe we must do our part to support our local health professionals and first responders leading the fight against coronavirus.”

The company closed its plant in Pennsylvania last week because management employees there were showing flu-like symptoms, according to a company spokesperson.

National Beef closed its Iowa Premium plant in Tama after several employees became infected with the virus. It became the second Iowa meat processing plant to suspend operations after Tyson Foods idled its Columbus Junction pork plant.

Kansas City-based National Beef purchased the Tama plant last year where it employs about 850.
 

Cargill Canadian facility cuts production to one shift

Cargill’s High River, Alberta., beef harvest facility has slowed to one shift beginning this week, according to RealAgriculture.com. The publications said that the plant will decrease to one shift, with the daily cattle harvest cut down to roughly 1,500 per day from the usual 4,000 to 4,500 per day with two shifts.

Jon Nash, Cargill Protein – North America Lead, said in a statement: “As we continue to prioritize the health and safety of Cargill employees, we have decided to temporarily reduce shifts at our High River protein plant. This will allow us to minimize the impact of COVID-19 and continue to follow health department guidelines. This was a difficult decision for our team, but our values are guiding our actions.

“We want our employees and the community to know we care. We’ve taken extra steps to focus on safety and remain operational – including temporary wage increases, bonuses and waiving co-pays for COVID-19 testing. We also implemented additional safety measures like temperature testing, enhanced cleaning and sanitizing, prohibiting visitors, adopting social distancing practices where possible and offering staggered breaks and shift flexibility. Our facility will be back to operating at full capacity as soon as is it is safe to do so,” Nash said in the statement.

The CBC reported the United Food and Commercial Workers Canada Union local 401 was demanding a two-week closure due to health risks to workers after dozens of positive cases at the plant.
 

Tyson Foods issues Q&A on use of walk-through temperature scanners

In a news release posted via Globe Newswire, Tyson Foods announced that it has purchased more than 150 infrared walk-through temperature scanners to help ensure a safe workplace for employees during the COIVID-19 pandemic.

So far, four Tyson facilities have the scanners: pork plants in Iowa and Indiana and poultry plants in Arkansas and Georgia. We expect that eventually every one of our food production facilities will have at least one in place.

No beef packing facilities have the scanners as of yet, according to the release.

Read the entire Q&A here.
 

Container volume at major Chinese ports dropped last week

Seatrade
 

The container volume of China’s eight major ports declined 4.4% for the past week, which is the first weekly decline since the middle of February this year. Affected by the shortage of cargo resources, the average container cargo volume at major Chinese ports declined in the past week, especially the ports at Pearl river delta. Recent weeks have seen major lines starting to blank large numbers of sailings between Asia and Europe/US as the COVID-19 pandemic impacts demand in Western countries.

China Ports & Harbors Association warns of severe challenges for the container sector due to the spread of COVID-19 globally. The association forecasts a 10 to 15 percent decline of container throughput at foreign-trading hub ports in the second quarter of this year.
 

Pou Chen production in Vietnam temporarily suspended

Citing Vietnamese state media, Reuters reports that Pou Chen Corp, the world’s largest manufacturer of branded athletic and casual footwear for the likes of Nike and Adidas, was ordered to suspend production at its Pouyuen Vietnam facility over COVID-19 concerns.

Pouyuen Vietnam must suspend production for two days from Tuesday after failing to meet local rules on social distancing according to the newspaper Tuoi Tre. The report said the company, which has about 70,000 employees, failed to keep its workers from gathering and keeping a safe distance from one another.
 

Lear takes additional steps to address COVID-19 impact

Lear Corporation announced it is taking new measures to address industry conditions created by the COVID-19 pandemic.

In addition to previously announced actions to further strengthen its balance sheet and improve financial flexibility, Lear will be implementing the following compensation-related actions, effective April 16:

• There will be a temporary 20% salary deferral for all U.S. and Canadian salaried employees.
• In addition to a 20% salary deferral, Lear CEO and President Ray Scott’s salary will be reduced by 10%, and other named executive officers’ salaries will be reduced by 5%, in both cases for the remainder of 2020. Deferred compensation for the CEO and other named executive officers will not be paid until certain financial targets are achieved by the Company or before all other employees have been paid all owed deferred compensation. Reduced salary will not be paid at a later date.
• Lear Board of Directors cash retainer fees will be reduced by 25% for the remainder of 2020.

Latest US Drought Monitor

This U.S. Drought Monitor week saw drought expansion across portions of the South (Louisiana, Mississippi) and Southeast (Florida) where warm and dry conditions prevailed during the past 90-day period causing declines in soil moisture and streamflow levels. In Texas, significant rainfall across parts of the state led to improvement in drought-related conditions in South Texas and the Hill Country while areas along the Texas Gulf Coast missed the heavier accumulations. In the northern Plains, record-breaking cold affected the region including eastern portions of Wyoming and Montana. Further West, another series of Pacific storms delivered beneficial rainfall to coastal areas and valley locations in California and Oregon while significant mountain snowfall was observed across the Sierra Nevada, Trinity Mountains of northern California, Cascades, and the northern Rockies. For the month of March, the contiguous U.S. experienced its 30th wettest on record as well as its 10th warmest including record-warmth observed in areas of Texas, Louisiana, Mississippi, Alabama, Georgia, and Florida.
 

EXPORTS

Raw hide sales down 19%

Net sales of hides and skins for the week ending April 9th were 695,800 pieces. This is down 19 percent from the previous week’s 858,800 but up 19 percent from the prior 4-week average. Two weeks ago, total sales were 619,300.

Destinations were:

Shipments of 411,600 pieces reported for the week ending April 9th. This is up 2 percent from the previous week’s 402,100 and 13 percent from the prior 4-week average. Two weeks ago, shipments were 368,200.
 

Wet blue sales down 79%

Net sales of 27,800 wet blues for 2020 were reported for the week ending April 9th. This is down 79 percent from the previous week’s 129,300, and 71 percent from the prior 4-week average. Two weeks ago, sales were 55,600.
 

Destinations were:

Shipments of 55,100 wet blues were reported for the period, which is down 54 percent from the previous week’s 118,700 and 60 percent from the prior 4-week average. Two weeks ago, shipments were 153,500.
 

Combined Outstanding up 6%

Combined Shipments down 10%

Combined wet salted and wet blue shipments for the period ending April 9th were 466,700. This is down 10 percent from the previous week’s 520,800. Two weeks ago, shipments were 521,700.
 

Sales exceed slaughter, shipments below slaughter

Federally inspected slaughter for the week ending April 11th was 536,000. Combined export sales during the like period were 723,600. Adding an estimated domestic consumption of 35,000 brings total sales to 758,500. Combined export shipments were 466,700. Therefore, sales exceeded slaughter by 222,500 and but slaughter surpassed shipments by 69,300.
 

Wet Blue Splits

Total net sales of 16,100 splits were for Vietnam.  Exports of 329,900 pounds were to Vietnam (322,700 pounds) and China (7,200 pounds).

FORECAST

Neutral

For the time being, the decline in prices has been halted due to lower supply. Sellers should be able to hold levels steady in the coming week, leaving us with a neutral bias.
 

Tale of the Scale

The pressure on producers to sell has eased due to the COVID-related slaughter decrease. At the same time, there’s no demand and buyers from China are only looking for bargains. With neither side in urgent need, we are putting the scales in balance this week.

3.20.20

3.27.20

4.3.20

4.10.20

4.17.20

How was last week’s forecast?

Meh. We predicted that prices would remain soft and that any changes will be downward. We didn’t foresee the increase in packer plant closings that affected slaughter and helped stabilize prices.
 

And for the coming week

Prices will be relatively stable.

This is a temporary lull in the decline growl the bears. Sure, slaughter is down and the market has racked up a few weeks of good sales, but in the end, demand is the only thing that will improve the situation. All those bargain shoppers in China have stocked up on hides and if the orders don’t come, they won’t need to make purchases for quite some time.

The bulls are feeling a little less depressed this week. Sales in the past few weeks have been high and slaughter has dropped by 25 percent over that time. This will stop the bleeding in the US hide market — at least in the short term. With COVID-19 infections still not under control in the meat plants, slaughter numbers will likely remain below par, moderating the supply of hides during this time of globally stunted demand.
 

MARKET OBSERVATIONS

Not impressed

Being a “glass is half-full” optimist in the current pandemic-driven environment can be hard to handle. The same can be said for dealing with the hide market. Discussions this week have led to a few comments that are particularly salient.

Since the start of the year, prices have been sliding, but plummeting slaughter numbers in the past couple of weeks have given packers a breather and stabilized prices for likely a short period of time. But, as one source put it, “Leather orders are the cure for what is going on — the kill does not matter.” He’s right.

Slaughter is down and has more than likely given packer positions a boost, but it can’t last without improvements in demand. As we wrote last week, the sales feeding frenzy is driven by bargain prices not the need for hides. Moreover, a seller noted that the dip in slaughter and lower hide availability “has failed to impress the Chinese,” who, by the way, bought the lion’s share of US hides again last week. Without orders, it’s unlikely that they will keep buying if prices firm up. This is especially true because many tanners are experiencing delayed payments from leather buyers, which creates cash flow issues for them.

The bottom line is that until economies start to phase back into life, the orders won’t come and the market won’t improve. Another tanner told us this week that “the worst is yet to come with regard to damage to our industry.” Unfortunately, he’s probably right too.
 

Federally Inspected Slaughter down 6%

Federally inspected slaughter for the week ending Saturday, April 18th is estimated to be 502,000. This is 6 percent lower than last week’s 536,000 and the lowest non-holiday week total in decades. For the year to date, FIS is 9,697,000. This is 0.2 percent lower than last year’s 9,715,000.
 

Quotes for Success

“Endurance is one of the most difficult disciplines, but it is to the one who endures that the final victory comes.”
― Gautama Buddha

PRICES AT THE CLOSE OF TRADING