Sort & Cull

Packers Cut Throughput in Attempt to Regain Footing

ShayLe Stewart
By  ShayLe Stewart , DTN Livestock Analyst
Last week packers drastically cut throughput as they're trying to get ahead of the cash cattle market and its unweakening rally. (Photo by Pamela Smith)

Last week most market participants may have stepped away to enjoy the Christmas holiday, but feedlot managers and packers went toe-to-toe just as they have been throughout most of the 2024 calendar year.

It's normal to see production speed cuts during weeks of major holidays as packers don't normally operate on major holidays; or they sometimes just run a reduced kill schedule. But this year was different. Not only did packers elect to reduce the week's throughput for the Christmas holiday, but packers also attempted to drastically slash last week's slaughter in hopes it would help alleviate some pressure on their margins. Last week's slaughter only totaled 434,000 head -- which was down 66,000 head from the previous year.

The ripple effect of last week's slaughter is really two-pronged. First, it affected boxed beef prices, which we saw bright and early Monday as choice cuts jumped $3.00 to $325.38 and select cuts jumped $2.96 to $294.09 on the morning report as retailers scrambled to find product after the Christmas run. Secondly, packers are hoping it will help them regain some footing in the cash cattle market. But I don't believe packers have enough supply built up for the second point of this plan to come true as last week's negotiated cash cattle trade only totaled 44,027 head, and the week before that, the week's negotiated cash cattle trade only totaled 49,864 head.

This upcoming week the market will again see a lighter-than-normal kill schedule as most plants will be down on New Year's Day. But early estimates expect the week to process anywhere from 515,000 head to 550,000 head -- depending on who you ask.

So as we continue to trudge through the nameless days between Christmas and the New Year -- when no one really seems to know what day it is or what's going on -- I recommend keeping an eye on cash cattle prices, throughput, beef demand, and any developments regarding cattle imports from Mexico as those currently are the big hitting factors that will affect the market in the early part of 2025.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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