Two beef plants to close on Saturdays

[Tommy]

Two beef plants to close on Saturdays



by Deb Silvers



National Beef Packing Co., the fourth largest U.S. beef producer, will close two plants in Kansas one a day a week — Saturdays — because of excess supplies of meat.

Plants in Liberal and Dodge City, Kan., will halt slaughter operations on Saturdays indefinitely, reducing production by 10,000 cattle a week. The plants normally process some 70,000 animals weekly.

"The industry is killing too many cattle given current domestic beef demand and the continued closure of our largest export markets," said Tim Klein, National Beef president and chief operating officer.

National Beef follows in the footsteps of Tyson Foods, Cargill and Swift & Co., the three largest U.S. beef packers, all of whom trimmed capacity earlier this year.


I thought the reason for the plant closings were the experts said we weren't getting enough cattle and we needed the Canada cattle to keep them open. Now this says we have too many..

 

[Jason]

Try to keep up with the current markets. The article says because of too much beef. Demand has fallen so with margins in the red packers are slowing the chains to lessen the losses.

Canadian cattle would have helped the margins in plants close enough to the 49th, WHEN the margins were positive.

Agman called this decline in demand months ago, almost a year even.

Those with foresight knew these plants would suffer when the margins tanked because they never had the supply of cattle while margins were positive.

The cattle/beef industry usually works on a make more while you are making it than you lose while losing it.

Primary producers seldom lose money on the actual cattle, but expansion plans, new pick-ups, or drought can force them out of business.

 

[Tommy]

From AMI website June 10, 2005.

June 10, 2005

The two year ban on Canadian cattle and some Canadian beef imports has claimed yet another American victim, with Packerland Packing in Gering, Nebraska announcing that it will be laying off its entire workforce and closing its doors permanently. The plant joins the growing list of U.S. meatpacking plants who have short shifted or shut down completely, landing more than 6,300 hardworking Americans in the unemployment line. For a summary of the lost employment and negative economic impact of the ban, click here: http://www.openbeefborders.com/economicimpact/FactSheet-SummaryofNegativeImpactsBeefPackingIndustry-1.pdf

"The massive hemorrhage of jobs and economic growth caused by this unnecessary and damaging prohibition against Canadian cattle is permanently scarring hardworking Americans and causing massive displacement in rural communities across the country," said Mark Dopp, Senior Vice President of Regulatory Affairs and General Counsel of the American Meat Institute (AMI).

A spokesman for the plant told the Associated Press that the company couldn't procure enough cattle to maintain production levels at the plant, a situation he said was "largely due to the ban on importing cattle from Canada into the United States." 205 workers will be laid off when the plant closes.


So Jason, this plant in Neb. closed in June because of not enough cattle, and two months latter plants in Ks. are closing one day a week because of too many cattle. Go figure.

 

[agman]

From AMI website June 10, 2005.

June 10, 2005

The two year ban on Canadian cattle and some Canadian beef imports has claimed yet another American victim, with Packerland Packing in Gering, Nebraska announcing that it will be laying off its entire workforce and closing its doors permanently. The plant joins the growing list of U.S. meatpacking plants who have short shifted or shut down completely, landing more than 6,300 hardworking Americans in the unemployment line. For a summary of the lost employment and negative economic impact of the ban, click here: http://www.openbeefborders.com/economicimpact/FactSheet-SummaryofNegativeImpactsBeefPackingIndustry-1.pdf

"The massive hemorrhage of jobs and economic growth caused by this unnecessary and damaging prohibition against Canadian cattle is permanently scarring hardworking Americans and causing massive displacement in rural communities across the country," said Mark Dopp, Senior Vice President of Regulatory Affairs and General Counsel of the American Meat Institute (AMI).

A spokesman for the plant told the Associated Press that the company couldn't procure enough cattle to maintain production levels at the plant, a situation he said was "largely due to the ban on importing cattle from Canada into the United States." 205 workers will be laid off when the plant closes.


So Jason, this plant in Neb. closed in June because of not enough cattle, and two months latter plants in Ks. are closing one day a week because of too many cattle. Go figure.

The Gering plant is a cow slaughter only plant. Cows are not crossing the border are they? Packer margins are deeply in the red due to continued weakness in beef demand. At this time of year packer margins are normally at their peak for the year. Slaughter this week will be hard pressed to achieve 615,000 head which is 33,000 head below my projected level of 648,000 head given the available supply of fed cattle. Kill levels in Sep-Oct need to exceed 660,000 head per week given the supply of domestic fed cattle. Kill levels are being cut to force beef cutout values in line with live cattle costs. That is a demand issue, not a supply issue.

 

[alabama]

Agman: "That is a demand issue, not a supply issue."

Agman in an over simplification of the issue we must remember that if supply were down the demand issue would not be an issue at all. Supply is always related to demand.
I saw cows selling for 800 to 1000 dollars each yesterday. This was 6 year old and older cows. I also saw replacement heifers 2 months bred sell for $1150 each. Nice heifers but not that nice. The cow market is still up around hear but then everyone I talked to said they had more grass than the can remember in a long time. I my travels I have noticed most pastures had been bush-hogged or cut for hay. And cows still standing in knee-deep grass.
I did think that calves were down though. 400 to 600 # calves went for $1.12/ pound.
So while cows are still up the demand for calves is dropping. Could this be due to the extra supply of calves from Canada?

 

[RobertMac]

The Gering plant is a cow slaughter only plant. Cows are not crossing the border are they? Packer margins are deeply in the red due to continued weakness in beef demand. At this time of year packer margins are normally at their peak for the year. Slaughter this week will be hard pressed to achieve 615,000 head which is 33,000 head below my projected level of 648,000 head given the available supply of fed cattle. Kill levels in Sep-Oct need to exceed 660,000 head per week given the supply of domestic fed cattle. Kill levels are being cut to force beef cutout values in line with live cattle costs. That is a demand issue, not a supply issue.

Kill levels are being cut to force live cattle costs in line with beef cutout values. Why is this not true?

 

[Bill]

I would put my money on beef demand dropping in large part due to the US consumer starting to wonder about the safety of BEEF after being lied to by R-Calf and consumer groups about BSE in Canada for the past 2 years?

It was extreme stupidity on their part to gamble with BSE never being proven to exist in the US cowherd and now everyone will have to live with the consequences.

 

[pknoeber]

Agman: "That is a demand issue, not a supply issue."

Agman in an over simplification of the issue we must remember that if supply were down the demand issue would not be an issue at all. Supply is always related to demand.
So while cows are still up the demand for calves is dropping. Could this be due to the extra supply of calves from Canada?

Ummm.... well actually supply and demand are most generally not related at all unless it is a "status symbol" good. Now price levels are directly related to both because it is a function of the two. I've never seen a consumer decide they want more/less beef because there is more/less of it out there. However I have seen them buy more/less because the price has changed. The boom (high price levels) in the cattle business has been more a result of an increase in demand than the decrease in supply although both did have an impact on the price levels. Sure enough, right now as demand is pulling back (bye bye Atkins diet) everybody's screaming that it's the Canadians fault. No it's not, beef is just going through a tougher fight at the meat counter and is losing ground to other products. Just my $0.01.
Phil

 

[Kathy]

Just curious, what is the cost for beef compared to chicken and pork, in the grocery stores?

Most consumers don't even register BSE on their radar, all that matters to the majority is cost.

Can we get some prices on hamburger, steaks, roasts - compared to pork, and compared to various chicken (breast, whole, thighs).

 

[pknoeber]

Well, according to the latest grocery flyer chuck roast is $2.69/lb. Pork round roast is $2.49/lb. Chicken leg quarters are $0.79/lb. 91% lean ground hamburger is $2.99/lb.
Phil

 

[packerland]

Retailers have had prices in the stratosphere for beef for months due to the volatility of the market ($6 up one week, $10 down the next, etc etc). They've only just started featuring beef again in ads and have begun dropping prices in the meat counter as the box cutout has started showing some signs of stability. Beef definitely went from a loss leader to a profit driver during this period.

As for the demand and slaughter issue... sadly you've got the majors battling it out over marketshare. They're unwilling to cut kills back and give ground on their markets even if they have to lose money to do it. Perhaps, finally, after two years of packer idiocy in cattle buying and boxed sales we will see them act like they're running a business that's supposed to be profitable.

 

[RobertMac]

Meatscanner prices from Dec 04 to May 05...

all beef ~$3.50
all pork ~$2.50
all poultry ~$1.60

 

[agman]

Agman: "That is a demand issue, not a supply issue."

Agman in an over simplification of the issue we must remember that if supply were down the demand issue would not be an issue at all. Supply is always related to demand.
I saw cows selling for 800 to 1000 dollars each yesterday. This was 6 year old and older cows. I also saw replacement heifers 2 months bred sell for $1150 each. Nice heifers but not that nice. The cow market is still up around hear but then everyone I talked to said they had more grass than the can remember in a long time. I my travels I have noticed most pastures had been bush-hogged or cut for hay. And cows still standing in knee-deep grass.
I did think that calves were down though. 400 to 600 # calves went for $1.12/ pound.
So while cows are still up the demand for calves is dropping. Could this be due to the extra supply of calves from Canada?

Your first statement regarding demand is incorrect. Supply is distinct from price. Demand is a price / quantity function. What price level is obtained for any given supply level is a function of demand.

Weekly domestic cow slaughter is approximately 6,500 head per week below year ago levels. Demand for ground beef remains firm, supportive to cow prices, while demand for middle meats continues to decline leading to lower fed cattle prices. Fed cattle prices have declined $16/cwt while beef cutout values declined $41/cwt. Fed cattle are now losing approximately $75 per head and everyday that goes by more feeders and calves will have to go to market. It is that time of year. So you have less demand for feeders and calves due to mounting losses in the fed cattle sector at a time when domestic supplies are increasing. That is leading to lower feeder and calf prices.

Total feeder and calf imports through yesterday were 9,153 head for the thirteen days since the border reopended. We place into feedyards approximately 420,000 head of feeders and calves per week from our domestic supply. That would equate to approximately 840,000 feeders and calves placed in the past two weeks. The 9,153 feeder and calf imports approximates 1% of weekly U.S. placements. Do you really believe imports are the cause of lower calf prices in the U.S.? I don't think so.

 

[agman]

Retailers have had prices in the stratosphere for beef for months due to the volatility of the market ($6 up one week, $10 down the next, etc etc). They've only just started featuring beef again in ads and have begun dropping prices in the meat counter as the box cutout has started showing some signs of stability. Beef definitely went from a loss leader to a profit driver during this period.

As for the demand and slaughter issue... sadly you've got the majors battling it out over marketshare. They're unwilling to cut kills back and give ground on their markets even if they have to lose money to do it. Perhaps, finally, after two years of packer idiocy in cattle buying and boxed sales we will see them act like they're running a business that's supposed to be profitable.

There are those who believe there is no competition at the packer level. That is a real joke as you already know. If there was no competition and they could manipulate the market as some claim they certainly would not elect to lose $40/head.

 

[Kato]

Looks to me like the cattle cycle is turning to the down side. Now assuming a 10 year cycle, and we missed an entire top side of the last cycle, that doesn't say much for our future does it? It's the top side of the cycles that get us through the low side. We haven't seen the top side of a cycle now in many years. We were just getting into it when the border closed.

Miss that, and it's a long time waiting for good times to come back eh? :?

 

[Maple Leaf Angus]

Looks to me like the cattle cycle is turning to the down side. Now assuming a 10 year cycle, and we missed an entire top side of the last cycle, that doesn't say much for our future does it? It's the top side of the cycles that get us through the low side. We haven't seen the top side of a cycle now in many years. We were just getting into it when the border closed.

Miss that, and it's a long time waiting for good times to come back eh? :?

Thanks Kato! What else can you come up with to brighten the CDN. producers day? :wink: :?

 

[Sandhusker]

From AMI website June 10, 2005.

June 10, 2005

The two year ban on Canadian cattle and some Canadian beef imports has claimed yet another American victim, with Packerland Packing in Gering, Nebraska announcing that it will be laying off its entire workforce and closing its doors permanently. The plant joins the growing list of U.S. meatpacking plants who have short shifted or shut down completely, landing more than 6,300 hardworking Americans in the unemployment line. For a summary of the lost employment and negative economic impact of the ban, click here: http://www.openbeefborders.com/economicimpact/FactSheet-SummaryofNegativeImpactsBeefPackingIndustry-1.pdf

"The massive hemorrhage of jobs and economic growth caused by this unnecessary and damaging prohibition against Canadian cattle is permanently scarring hardworking Americans and causing massive displacement in rural communities across the country," said Mark Dopp, Senior Vice President of Regulatory Affairs and General Counsel of the American Meat Institute (AMI).

A spokesman for the plant told the Associated Press that the company couldn't procure enough cattle to maintain production levels at the plant, a situation he said was "largely due to the ban on importing cattle from Canada into the United States." 205 workers will be laid off when the plant closes.


So Jason, this plant in Neb. closed in June because of not enough cattle, and two months latter plants in Ks. are closing one day a week because of too many cattle. Go figure.

Mr. Dopp neglected to mention that the normal supply of cull cows was disrupted by a prolonged drought in the Gering area and ranchers had culled deeply because of that in previous years (giving that same plant a higher-than-usual supply of culls).

Wonder why he forgot to mention that? :roll:

 

[Denny]

I would put my money on beef demand dropping in large part due to the US consumer starting to wonder about the safety of BEEF after being lied to by R-Calf and consumer groups about BSE in Canada for the past 2 years?

It was extreme stupidity on their part to gamble with BSE never being proven to exist in the US cowherd and now everyone will have to live with the consequences.

I would put the demand dropping is due to MOST people ARE BROKE......

Most people have a budget their heating and auto fuels have gotten much higher so they eat mac and cheese and not steak simple as that........got to stay in a budget one way or another.......

 

[Denny]

Well, according to the latest grocery flyer chuck roast is $2.69/lb. Pork round roast is $2.49/lb. Chicken leg quarters are $0.79/lb. 91% lean ground hamburger is $2.99/lb.
Phil

T-Bone steaks are 7.99 a lb porkchops center cut are $2.89 per lb. were having porkchops tonight. I have a budget to keep also.....

 

[agman]

I would put my money on beef demand dropping in large part due to the US consumer starting to wonder about the safety of BEEF after being lied to by R-Calf and consumer groups about BSE in Canada for the past 2 years?

It was extreme stupidity on their part to gamble with BSE never being proven to exist in the US cowherd and now everyone will have to live with the consequences.

I would put the demand dropping is due to MOST people ARE BROKE......

Most people have a budget their heating and auto fuels have gotten much higher so they eat mac and cheese and not steak simple as that........got to stay in a budget one way or another.......

You got it patially right Denny; people are not all broke. Individuals in the fixed and lower income strata are forced to buy lower priced beef cuts or buy the alternative meats as a result of the squeeze on their discretionay income due to high energy costs. The top income strata is already eating all the beef they are going to eat. Demand data by primal cut confirms the demand shift to lower priced cuts and ground beef within the beef complex.