In this file:
· Where Does The Market Go After Tyson Fire?
· Cattle Markets Hammered Monday By Tyson Fire News
· LIVESTOCK-Cattle futures plunge after fire shutters Tyson plant
· Major US beef abattoir fire could disrupt beef and cattle markets
Where Does The Market Go After Tyson Fire?
Brad Hulett, Drovers
August 12, 2019
The lack of packer participation in both the north and south, highlighted that packers had better cattle inventory numbers than was anticipated at the start of trade early last week. The south was probably the most absent of bidders, with only one packer participating in Kansas and only two in Texas.
The better-quality cattle bought in the south traded at $110 late Friday afternoon. Regional packers in the north were the first to offer bids with some dressed bids up to $185. The north bid would drift lower as the week wore on with cash topping out at mostly $113-$114.
As many of readers already know, an extensive fire occurred late Friday evening in Tyson’s Finney County packing plant. For all of those impacted by this fire, the Tyson group, all the employee families, and all affiliated businesses, you are in our thoughts.
As disappointing as last week’s lower market might seem, it pales in comparison to the unknowns in the cattle market in the coming weeks and likely months. The extent of the damage to the plant is not known, but anticipated to be extensive, and potentially with a lengthy timeline for reopening...
Cattle Markets Hammered Monday By Tyson Fire News
by Greg Henderson, AgWeb
Aug 12, 2019
Monday’s CME cattle futures opened and locked limit lower on reaction to Tyson was forced to close its Holcomb, Kan., beef processing facility due to Friday night’s fire. In the short-term, analysts say the fire will be bearish for cattle prices and bullish beef prices. Futures contract limits expand to $4.50 for live cattle and $6.75 for feeder cattle futures tomorrow.
For its part, Tyson affirmed it would work to reopen the Holcomb facility and is “taking steps to move production to alternative sites.” Yet, traders realize that even in the best of scenarios, daily cattle slaughter will drop in the near-term with the loss of operations at Holcomb. The plant has a capacity of 6,000 head per day, though actual slaughter numbers are likely lower.
According to CattleFax, Tyson's Holcomb plant accounts for 6% of total U.S. fed cattle packing capacity, and 23.5% of Kansas fed cattle packing capacity. CattleFax also noted the growing supply of finished cattle stood at 11.5 million head July 1, which was record large. About 21% of U.S. total cattle on feed are in Kanas.
In a statement, the Kansas Livestock Association asked the National Cattlemen's Beef Association to make contact with the Commodity Futures Trading Commission. NCBA made the regulatory agency aware of the situation and contacted the office of U.S. Ag Secretary Sonny Perdue to apprise USDA of the plant fire.
Alternative Tyson facilities are located in Amarillo, Tex., and Lexington, Neb., though both are three-plus hours from Garden City, Kan. The industry anticipates other packers may pick up the slack by adding Saturday shifts, but no announcement has been made. While the industry may hope other plants could pick up the slack, America's packing industry was already struggling with significant labor shortages, and expanded hours at other plants may prove problematic.
Tyson has not announced a timeline for the plant repairs, but industry speculation was rampant Monday. The low-end of such speculation is two months.
Sterling Marketing president John Nalivka said U.S. beef packers were running at about 91% of capacity before the fire, and absorbing cattle from the Holcomb plant would push packer capacity utilization to about 96%. He said the beef industry is set to harvest about 26 million cattle this year, and Tyson’s Holcomb plant accounts for about 5% of that total.
“It will definitely hurt front-end demand,” Nalivka told Drovers. “There’s the potential that...
LIVESTOCK-Cattle futures plunge after fire shutters Tyson plant
Mark Weinraub / Reuters
August 12, 2019 / 3:18 PM
CHICAGO, Aug 12 (Reuters) - Chicago Mercantile Exchange cattle futures dropped their daily trading limits on Monday after a fire at a major beef plant threatened to limit demand for the animals for months, traders said.
Live cattle prices settled at their lowest since July 3 while feeder cattle contract dropped to their lowest since June 28.
U.S. meat processor Tyson Foods Inc said on Monday it will rebuild the heavily damaged Kansas plant, which would be down “indefinitely” following Friday’s fire. The plant processed about 6,000 cattle per day, representing around 5% of the total industry and a bit over 20% of Tyson’s capacity, J.P. Morgan analyst Ken Goldman said. He estimated the plant will be shut for months.
“There simply is not any way to soften the blow,” Hales Trading Co said in a note to clients. “It will have an exceedingly bearish impact of fed cattle prices and then on feeder cattle prices as well”...
Major US beef abattoir fire could disrupt beef and cattle markets
Jon Condon, BEEF Central (Australia)
August 12, 2019
A FIRE which destroyed one of the largest beef processing facilities in the United States on Saturday (Australian time) has the potential to disrupt beef and cattle markets, analysts say.
Fire, believed to have started in a carton manufacturing area, swept through the 6000-head per day Tyson Foods Garden City facility in Kansas, closing the plant indefinitely. The plant employs about 3800 staff.
On Monday Tyson announced it would rebuild the plant, and will pay employees in the interim.
“Officials are still assessing the damage, so it’s too early to establish a timeline, but work to clear damage has already begun,” a company statement said.
The closure is already disrupting US cattle markets, at least temporarily.
US Live cattle futures prices fell the daily limit on Monday morning, as the closure means less demand for cattle in the immediate term.
Len Steiner’s Daily Livestock Report suggests the event had the potential to cause significant disruptions to both US beef and cattle markets.
Based on annual data collected by Steve Kay’s Cattle Buyers Weekly, a publication that for decades has kept meticulous records of US plant packing capacity, the Garden City plant near the town of Holcomb, Kansas can harvest about 6000 head of fed cattle per day or 30,000 head per week, representing about 6pc of overall US fed cattle packing capacity.
“That’s a significant number, considering there is very little capacity slack in the beef processing industry at this time,” the Daily Livestock Report said.
The chart published here shows US fed cattle packing capacity among the main competitors. Top packers currently processed somewhere between 84pc and 88pc of all fed cattle in the US, DLR estimated.
Tyson Foods is currently the biggest beef packer in the US, accounting for around 29pc of fed cattle packing capacity in the country.
“Given its size, the company is a major supplier to both US retail and foodservice customers,” Daily Livestock Report said.
“The short term effect is that with 6pc of processing capacity going dark there will potentially be less beef available in the market.”
“End-users that normally would get product from this plant now will be serviced by others, but that will limit supplies in the spot market. Higher prices will be necessary to either ration-out some demand or cause other packers to run extra shifts. Supplies in the spot market will likely be very light, which normally results in a bidding war from those that are short,” DLR said.
The fire happened at a time when US retailers are gearing-up for Labor Day holiday promotions, a time when US beef demand generally gets a boost.
“The USDA Choice grade beef cutout has been trending higher recently, and this disruption will likely cause prices to advance further,” DLR said.
As for the impact on fed cattle prices, it was generally negative, although the extent of the impact would depend greatly on how long it took to bring the plant back to full production.
“As distinct from pigs, where supplies can quickly back-up and result in dramatic price declines, beef feedlot operators have a bit more flexibility. But the effect could quickly increase, the longer this plant stays out of commission and it becomes necessary to adjust the flow of cattle through the entire supply chain,” DLR said.
“For that to happen, higher prices will be needed at the consumer level and lower prices at the producer level.”
A Tyson spokesman said the company was taking steps to move production to alternative sites.
“Tyson Foods has built in some redundancy to handle situations like these and we will use other plants within our network to help keep our supply chain full,” a statement said...
more, including chart