Live cattle gave up some of Tuesday’s gains before settling slightly higher, with a meatpacking plant on strike and dry weather and fires in Nebraska further tightening historically low cattle numbers.

CBOT corn futures climbed on Wednesday following crude oil prices, which rose more than five per cent on Wednesday after Iran’s Revolutionary Guards threatened to attack several energy facilities across the Middle East, heightening the risk of further disruptions to energy supplies in the region.

Strength in crude oil is seen as supportive given corn’s role as a feedstock for ethanol. However, rising corn prices also makes feeding cattle more expensive, supporting feeder cattle futures, according to Karl Setzer, co-founder of ConsusAg Consulting.

Meanwhile, workers have gone on strike at a large JBS meatpacking plant in Greeley, Colorado, which is likely to reduce U.S. beef production at a time when consumers face record prices for beef.

CME April live cattle settled 0.175 cents higher at 235.4 cents per pound. April feeders finished down 1.075 cents at 358.725 cents per pound.

Meanwhile, dry weather and fires in pasturelands of Nebraska could displace tens of thousands of head of cattle and spur ranchers to slaughter parts of the herd they have been working to rebuild, according to analysts.

Beef packer margins rose to $142.15 per head on Wednesday, up from gains of $128.90 on Tuesday, and losses of $10.45 a week ago, according to livestock marketing advisory service HedgersEdge.

CME lean hog futures LHJ26 ended up 0.025 cent at 93.75 cents per pound.

— Reporting by Renee Hickman

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The United States is Brazil’s second most important beef products market after China, which is the South American country’s number one importer of the commodity, according to trade data.

Why it matters: The U.S. faces a tight beef market as it recently re-closed the border to Mexican cattle due to New World screwworm concerns. Canadian beef producers may see increased U.S. demand as a result.

“New shipments are under analysis by the private sector due to the increase in tariffs,” Perosa said on Tuesday.

The announcement of the tariffs affected Brazil’s cattle market last week and on Monday, with companies sharply reducing purchases of animals because of the uncertainty related to the tariff announcement, said Alcides Torres, a beef market consultant with Scot Consultoria.

“The market turned cold,” Torres said.

Brazil accounts for some 23 per cent of U.S. beef imports, according to calculations by Genial Investimentos.

Minerva, a listed beef packer in Brazil, derives around five per cent of its net revenue from beef sales to the U.S., the company said after the U.S. announced the imposition of the new tariff from August 1.

The company did not have an immediate comment on the status of its beef shipments to the U.S.

A recent shortage of cattle in the U.S. increased the country’s demand for Brazilian beef imports, trade data shows. According to analysts, the new tariff could make beef more expensive for the U.S. consumer.

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The proposal is a blow to U.S. meat companies also facing tighter cattle supplies due to a halt of livestock imports from Mexico over New World screwworm, a flesh-eating pest spreading south of the border.

The tariff would slash imports of Brazilian beef and force companies to seek supplies from other nations as Trump is broadening his global trade war, analysts said.

“If it does not get modified, you just cease the importation of Brazilian beef to this country,” said Bob Chudy, a consultant for U.S. companies that import beef. “Not one pound will be economic at those levels.”

Beef already at record highs

U.S. beef prices climbed to records this year and production is projected to fall two per cent to 26.4 million pounds, after farmers reduced the nation’s cattle herd to its smallest size in more than seven decades. A years-long drought dried up pasture land used for grazing, making it too expensive for many producers to feed their cattle.

Food makers have ramped up imports in response. U.S. beef imports from Brazil over the first five months of the year more than doubled from the same period in 2024, to 175,063 metric tons, according to the latest U.S. government data. That accounted for 21 per cent of total U.S. imports.

A 50 per cent duty starting on August 1 would bring the tariff rate on Brazilian beef to about 76 per cent for the rest of the year, livestock analysts said.

“It is absolutely freezing trade today,” Chudy said of the proposal. “We don’t know what to do as an import community.”

Consumers face prices hikes

U.S. consumers also face sharp price rises on staples including coffee and orange juice.

The U.S. is Brazil’s second-largest trading partner after China, and the tariffs are a major increase from a 10 per cent duty Trump announced in April. The 10 per cent tariff already started slowing U.S. beef imports from Brazil in June, traders said.

U.S. companies import lean beef from Brazil and other countries to mix with domestic supplies to make hamburger meat. Consumers have shown they are generally willing to pay high prices for meat so far, though the tariff would be a new test of their demand.

“This tariff will likely raise the price of beef, a staple food for many, on the heels of Congress voting to reduce food assistance to the most vulnerable consumers,” said Thomas Gremillion, director of food policy at the Consumer Federation of America.

The tariff forces importers to pay more for Brazilian beef or source it from other, higher-cost suppliers, said Austin Schroeder, commodity analyst for Brugler Marketing & Management.

“It effectively helps to raise the price,” he said.

Beef importers may try to boost purchases from Australia, Argentina, Paraguay and Uruguay after the duty on Brazilian goods takes effect, analysts said.

“There’s not going to be a whole lot of Brazilian beef coming this way,” said Altin Kalo, chief economist at Steiner Consulting Group. “That’s the reality of it.”

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While the USDA will still release a cattle inventory report each January, the July update has been of particular interest to traders in recent years as the U.S. beef cattle herd shrank to its smallest size in decades due to drought.

“Cancelling the July inventory report is a major blow to the livestock sector, who will now be limited to a once-a-year snapshot,” said Scott Irwin, an agricultural economist at the University of Illinois.

The National Cattlemen’s Beef Association (NCBA), a trade group representing cattle producers, called on the USDA to reverse its decision.

“It is disingenuous for the same agency which touts its commitment to transparency in livestock markets to arbitrarily cease publication of reports which provide just that,” Ethan Lane, NCBA’s vice president of government affairs, said in a statement.

The USDA’s National Agricultural Statistics Service also announced it was discontinuing its objective yield survey for cotton as well as all county estimates for crops and livestock, beginning with the 2024 production year.

“The decision to discontinue these surveys and reports was not made lightly, but was necessary, given appropriated budget levels,” the agency said in a statement.

The loss of county-level crop data will pose a challenge for commercial grain handlers who rely on the information for planning purposes. The USDA’s decision “came as a surprise,” said Bevan Everett, a risk management consultant with StoneX, a commodities brokerage.

“Our customers, which include processors and cooperatives, depend on those county yields to make business decisions for the season. Those include (grain) storage, origination, and risk strategies,” Everett said.

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JBS, which released financial results on Tuesday that were below analysts expectations, said Seara and the U.S. beef division presented the biggest challenges for the company last year, when it lost about 1 billion reais (C$272.3 million) compared with a 15.457 billion real annual profit (C$4.21 billion) in 2022.

JBS shares dropped about three per cent in early trading after the results, which were also negatively affected by global poultry oversupplies and high grain prices, especially in the first half of 2023.

“JBS reported what we view as good (Q4) results, tough high market expectations could drive a negative price reaction,” Goldman Sachs told clients.

Goldman said JBS’ fourth-quarter earnings before interest, tax, depreciation and amortization (EBITDA) was in line with its expectations, even as the U.S. beef division “printed negative profitability.”

The weakness of the U.S. beef unit, the company’s largest by sales, was offset by the results of Pilgrim’s Pride and the strength of operations in Australia and the beef business in Brazil, Goldman noted.

“We remain constructive on the forward, and expect momentum to be supported by PPC, Australia, (the) U.S. pork (division) and Seara,” Goldman analysts wrote.

In the United States, a lack of cattle supplies made the company’s EBITDA negative in the fourth quarter of 2023 for that division.

JBS managers, who addressed analysts in a conference call to discuss results, said the U.S. beef segment will continue to face headwinds this year.

Regarding the Seara division, CEO Gilberto Tomazoni said it is poised to report double-digit margins as early as the first quarter as the company identified issues and is executing a plan to make industrial processes more efficient.

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The company said it plans to resume production on Monday, following a blaze Wednesday night in the facility’s loading dock area. The plant processes about 6,000 cattle per day, which accounts for roughly five per cent of daily U.S. production.

Local media outlet KSN News reported the fire began in loading trailers and spread to the building. All employees were safely evacuated. Most of the damage was to trailers loaded with boxed beef, however overhead doors in the loading dock and the building’s exterior walls were also affected.

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The rule, proposed last March, is a victory for U.S. ranchers who argued for years that use of the voluntary label by companies who raised animals abroad and only slaughtered or processed them in the U.S. was misleading and disadvantaged domestic producers.

“This final rule will ensure that when consumers see ‘Product of USA’ they can trust the authenticity of that label and know that every step involved, from birth to processing, was done here in America,” said Agriculture Secretary Tom Vilsack in a statement.

Vilsack announced the final rule to cheers at the annual meeting of the National Farmers Union in Scottsdale, Arizona.

“The abuse of the ‘Product of U.S.A.’ label stripped America’s cattle producers of a vital opportunity to market their USA beef while denying consumers the opportunity to support them,” said Joe Maxwell, co-founder of the farm group Farm Action, in a statement.

Producers using “Product of USA” or “Made in the USDA” labels will need to comply with the rule by Jan. 1, 2026.

Canadian concerns

The Canadian meat sector has been concerned about the change in labeling practice could have on meat and live animal exports to the U.S.

The Canadian government said that country of origin labeling would run contrary to shared goals of reducing inflation, improving food security and building resilient supply chains, it said in a submission during consultations on the U.S.’s country of origin labeling rules.

Canada has argued that supply chains operating under the proposed rules will have to segregate Canadian and U.S. animals and products. This would be costly and inefficient and discourage companies from using Canadian inputs.

A similar rationale led to the downfall of vCOOL’s mandatory predecessor, struck down in 2015 following a World Trade Organization challenge that ruled in favour of the complainants, Canada and Mexico.

The new proposed rule could also harm U.S. producers, the Canadian government said.

“For example, in recent years, there has been an increase in live cattle exports from the United States to Canada due to feedlot capacity expansion in Canada, higher processing volumes, and strong demand for beef,” the submission read.

“Under the new proposed rule, if an American rancher sends an animal to a Canadian feedlot, by virtue of availability, proximity, or economics, that is then sent back to the U.S. for slaughter and processing, that product would no longer be allowed to bear a ‘Product of USA’ claim.”

–With files from the Glacier FarmMedia network.

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“The new terms, which take effect immediately, allow U.S. products from all cattle, regardless of age, to enter Japan for the first time since 2003,” U.S. Agriculture Secretary Sonny Perdue said in the statement.

The agreement reopens full beef trade after Japan banned U.S. beef over concerns about bovine spongiform encephalopathy (BSE) that roiled the beef industry in the U.S. and elsewhere.

The 2003 ban followed the discovery of the first case of BSE in the U.S., and in 2005 Japan resumed imports of beef from cattle under 20 months of age. That age limit was relaxed to 30 months in 2013.

The “expanded access could increase U.S. beef and beef product exports to Japan by up to $200 million annually,” according to USDA.

The agreement came alongside the Group of 20 agricultural meeting last week in Japan, USDA officials said.

U.S. and Japanese officials are seeking to hammer out a wider trade deal that the Trump administration has said could come later this month.

— Reporting for Reuters by Humeyra Pamuk; writing by Susan Heavey.

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Both the Nikkei business daily and Mainichi newspaper said officials are discussing removing the curbs that currently only allow beef from cattle that are 30 months-old or younger.

A Japanese government committee will discuss the issue on Thursday and recommend in a report that doing away with the age limit would not harm human health, Mainichi said, without citing sources.

The committee’s report will likely be submitted to the ministry of health, labour and welfare following a public comment period, Nikkei said, adding the restrictions may be scrapped several months after that.

About 90 per cent of U.S. beef are from cattle that are 30 months old or younger, Mainichi reported.

Japan banned U.S. beef in 2003 after the discovery of the first case of BSE in the U.S., but resumed the beef trade in 2005 after imposing the 20-month age limit. The age limit was subsequently relaxed to 30 months in 2013.

— Reporting for Reuters by Osamu Tsukimori.

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The Commission, which negotiates on behalf of the 28 EU nations, said it would open formal talks in the coming days on increasing the U.S. share of an existing 45,000-tonne quota. It concerns beef that has not been treated with certain growth hormones.

The Commission said it would do so in the coming days.

The beef issue is not part of EU-U.S. talks designed to improve transatlantic trade ties and remove tariffs on industrial goods following an agreement by U.S. President Donald Trump not to impose import duties on EU cars.

“Nevertheless, finding a mutually beneficial solution to our longstanding dispute over beef would be a major step forward in improving our trade cooperation,” the Council, which speaks on behalf of the EU’s members, said.

The dispute dates back to 1981 when the European Union banned the use of growth hormones in meat across the bloc, including imports, prompting a U.S. complaint at the World Trade Organization.

The EU and the U.S. eventually concluded an agreement in 2009 to grant a quota for hormone-free beef imports. However, under WTO rules, the quota also had to be made available to non-U.S. suppliers.

The U.S. share of that quota has slipped to less than 30 per cent in the year to the end of June, according to the U.S. Meat Export Federation (USMEF). Australia and Uruguay, and more recently Argentina, have steadily increased their shares.

The Commission may also need to negotiate with them to ensure that they accept lower shares of the quotas.

— Reporting for Reuters by Philip Blenkinsop.

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