In today’s Beef Buzz, senior farm and ranch broadcaster Ron Hays speaks with Don Close of Terrain about shifting beef packing capacity and what recent plant announcements could mean for cattle producers.
Cargill’s Return Could Offset Tyson’s Cuts
Close says the return of Cargill’s Fort Morgan, Colorado, facility could eventually add significant slaughter capacity to the market, even as Tyson Foods scales back operations. “I think it’s going to take them some time to get there, but if you put Fort Morgan, you know, something between 45 hundred and 5,000 cattle a day, added to where we’re at, that’s quickly going to burn through any front-end load of market-ready cattle we have,” Close says.
He says the additional capacity could have a noticeable impact on the market, particularly with an additional 5,000 head of daily slaughter.
Joslin Closure Caught Close by Surprise
Close says Tyson’s decision to close its Joslin, Illinois, beef plant was particularly surprising because of the quality of cattle in the region and the plant’s historical performance. “With the Tyson announcement, you could have pushed me over with a feather when I first saw that Joslin was included,” Close says.
He adds that Joslin was widely viewed as one of Tyson’s most efficient plants and one of its highest-grading facilities. “For years and years, I’ve been on the interpretation that that was one of the most efficient and certainly the highest grading percentage plant in the whole Tyson system,” Close says. “So to give that up really, really threw me a curve.”
Pasco Sale Could Bring Capacity Back
Another unusual part of Tyson’s announcement was the company’s decision to seek potential buyers for its Pasco, Washington, facility. “That’s outside the norm for Tyson,” Close says. “Their company strategy has always been, if you close the facility, you do not sell it because you don’t want to be giving that capacity and competition, you know, advantage to your competition.”
Close believes there is a strong possibility another company could eventually purchase the Pasco facility, which could be important for managing cattle supplies in the Pacific Northwest. “I think there’s really high probability that somebody, if discussions aren’t already underway, they will be soon to get somebody to buy Pasco,” Close says.
Net Change in Capacity May Be Smaller Than Expected
Close says that when the potential changes are considered together, the overall shift in slaughter capacity may be much smaller than some of the headlines suggest. “If you take the 3,000 head capacity at Joslin, you restart B shift in Amarillo, and that’s going to take time. But the B shift, you’re talking 2,500,” Close says.
“With all that noise in the market, and I’m talking several cards playing at the right time, but with all that said, we’re only talking a net shift of 500 head a day,” he says.
Close says the potential reopening of Fort Morgan then changes the equation even further. “We’ve now got the confidence that Fort Morgan will reopen, and the size of that facility, we’re actually looking at a net increase in slaughter from where we thought we were a week, two weeks ago,” Close says.
Where Will Joslin Cattle Go?
With Joslin closed, producers in the region will have to find other outlets for their cattle. Close believes the market has more options than some of the initial discussion might suggest. “The lion’s share of those cattle will probably make their way to Dakota City,” Close says.
He also points to plants in Aurora, Illinois, Upper Iowa Beef and National Beef’s Tama, Iowa, facility as potential outlets. “I really think the market’s ability to absorb those cattle are probably greater than market conversation has warranted,” Close says.
However, he cautions that the closure will still create challenges for producers across the region. “I don’t want to take away from the added strain it is going to put on those far eastern Iowa and even Illinois, Indiana, and even Ohio,” Close says. “It’s going to create new challenges for those producers and a bigger freight cost to get them to an available slaughter facility.”
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Ag Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR above for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
