Cattle futures dropped hard Tuesday, in response to the uncertainties spawned by disruptions to JBS processing facilities, caused by the Sunday cyber-attack on that company’s global IT infrastructure. They clawed back some of the losses by the end of the session, though.
According to a JBS news release: “On Sunday, May 30, JBS USA determined that it was the target of an organized cyber-security attack, affecting some of the servers supporting its North American and Australian IT systems. The company took immediate action, suspending all affected systems, notifying authorities and activating the company’s global network of IT professionals and third-party experts to resolve the situation. The company’s backup servers were not affected, and it is actively working with an Incident Response firm to restore its systems as soon as possible.
“The company is not aware of any evidence at this time that any customer, supplier or employee data has been compromised or misused as a result of the situation. Resolution of the incident will take time, which may delay certain transactions with customers and suppliers.”
Widespread reports suggested JBS packing facilities closed. At press time there was no word on when normal production would resume. However, there were unconfirmed reports Tuesday evening that operations would resume Wednesday.
There was no negotiated trade report from the Agricultural Marketing Service as of press time Tuesday evening.
Negotiated cash fed cattle prices last week were at $116-$120/cwt. in the Texas Panhandle, at $119-$120 in Kansas and at $120 in Nebraska and the western Corn Belt. Dressed prices were at $191 in Nebraska and at $189-$191 in the western Corn Belt.
Feeder Cattle futures closed mixed on Tuesday, with JBS uncertainty weighing on the front months.
Feeder Cattle futures closed an average of $1.28 lower through the front half of the board, (45¢ lower to $2.20 lower in spot Aug) and then an average of 36¢ higher.
Live Cattle futures closed an average of $1.70 lower in the front three contracts (77¢ to $2.32 lower) and then an average of 89¢ higher, except for unchanged in the back contract.
Choice boxed beef cutout value was $3.59 higher Tuesday afternoon at $334.56/cwt. Select was $5.55 higher at $306.45.
Grain markets were up on Tuesday on news of a hot, dry forecast for the next two weeks in northern U.S. growing areas as well as southern Canada. Brazil’s drought also worsened.
Corn futures closed 28¢ to 32¢ higher through Jly ’22 and then mostly 10¢ to 15¢ higher.
Soybean futures closed mostly 16¢ to 24¢ higher.
Major U.S. financial closed narrowly mixed Tuesday as investors wait for economic data coming out this week to indicate how well the economy is rebounding and to get a feel for inflation.
The Dow Jones Industrial Average closed 46 points higher. The S&P 500 2 points lower. The NASDAQ closed 12 points lower.
“With the economy opening up and growing rapidly, meat markets of all types are enjoying strong demand,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. “In numerous cases, wholesale prices for specific meat products are at record levels, exceeding the levels provoked by the pandemic disruptions one year ago; and unlike last year, lack of supply is not the issue. Year-to-date production of beef, pork and broilers is higher, not only compared to last year but also compared to 2019 levels.”
Wholesale beef tenderloin set a new record at more than $17/lb., Peel says, in his weekly market comments. Ribeye prices also set a new record at more than $13/lb.
“Tenderloin is almost exclusively a restaurant item, while ribeye is popular in restaurants, at retail grocery and for export,” Peel explains. “Strip loins are very popular at retail grocery and prices have also increased sharply this year but failed to exceed the pandemic levels from last year. Brisket prices have increased dramatically since January, averaging over $7/lb. in May; another indication that BBQ is back.”
Prices for chuck and round products—driven by retail grocery for use as value cuts and ground beef—are higher, too, but less steeply than middle meats, Peel says.