Only about 20% of the offering sold in the weekly Fed Cattle Exchange auction on Wednesday. Specifically, 480 head sold out of the 2,554 offered. The weighted average price was $119.51/cwt. for delivery at 1-9 days and $120 for delivery at 1-17 days.
Country trade in Nebraska opened even lower at $118/cwt. on a live basis, which was $1-$5 less than last week. Dressed trade there was $3-$4 lower at $190-$191. Similar prices and declines were seen on early sales in the western Corn Belt, but there were too few to trend.
Choice boxed beef cutout value was $4.48 lower Wednesday afternoon at $229.43/cwt. Select was $2.59 lower at $212.67.
Even so, and despite early pressure, Cattle futures rebounded late in the session to close with gains.
Live Cattle futures closed an average of 79¢ higher (60¢ to $1.10 higher).
Feeder Cattle futures closed an average of $1.61 higher (60¢ to $2.10 higher).
Major U.S. financial indices closed sharply higher on Wednesday, buoyed in part by a more dovish tone from the European Central Bank, regarding ongoing quantitative easing in those countries.
The Dow Jones Industrial Average closed 143 points higher. The S&P 500 closed 21 points higher. The NASDAQ closed 87 points higher.
Beef Products Inc. (BPI)—the nations’ leading supplier of Lean Finely Textured Beef (LFTB)—settled its billion-dollar lawsuit against ABC and Jim Avila, according to a statement from BPI yesterday.
“We are extraordinarily pleased to have reached a settlement of our lawsuit against ABC and Jim Avila,” reads the statement. “While this has not been an easy road to travel, it was necessary to begin rectifying the harm we suffered as a result of what we believed to be biased and baseless reporting in 2012. Through this process, we have again established what we all know to be true about Lean Finely Textured Beef: it is beef, and is safe, wholesome, and nutritious.”
You’ll recall that ABC ignited a firestorm of controversy about LFTB with what it termed a startling investigation into what could be found in ground beef (first broadcast in march of 2012). By the time ABC reporter Jim Avila was through telling all that would listen that: “…70% of the ground beef we buy at the supermarket contains something he (former USDA scientist) calls pink slime, beef trimmings that were once only used in dog food and cooking oil, now sprayed with ammonia to make them safe to eat…” it was easy for anyone unfamiliar with LFTB to walk away feeling like they’d been feeding their families something harmful.
In fact, LFTB is 96-98% lean beef, first approved by USDA in 1993, borne by technology that enables the mechanical separation of lean from fat. It’s not sprayed with ammonia, as the ABC report indicated. The process employed by BPI blasts a puff of ammonium hydroxide on the beef. Ammonium hydroxide is approved by the FDA for use in many food industry practices.
Consumer reaction was furious and fast, fueled by the Internet. Major grocers quit buying ground beef that included LFTB. Food service giants like McDonalds and Burger King followed suit. Along the way, even USDA gave schools participating in its National School Lunch Program the option of buying ground beef with or without LFTB.
Less than three weeks after the ABC report, BPI was forced to idle three of its four plants, costing around 700 jobs. In the meantime, the price of 50% ground beef plunged and the drop credit sank. The reason is that LFTB means more of every beef carcass can be utilized at a higher value.
In September of 2012, BPI sued ABC and others associated with the report.
“Through nearly 200 false, misleading and defamatory statements, repeated continuously during a month-long disinformation campaign, ABC and other individuals knowingly misled consumers into believing that LFTB was not beef and not safe for public consumption, which is completely false,” said Dan Webb, Chairman, Winston & Strawn LLP at the time. “BPI has filed suit because their business has been severely damaged by this conduct. As a result, we will be asking a jury to award BPI over one billion dollars in compensatory and statutory damages, plus punitive damages.” BPI sought to recover damages for defamation, product and food disparagement, and tortious interference with business relationships.
The trial finally began the first week of June this year. Terms of the settlement were not disclosed.