Tyson: “Months Not Weeks” For Rebuild

Aerial view of Tyson's fire-damaged Holcomb, Kan., facility. ( . )

Tyson is working “as quickly as possible” to return its Holcomb, Kan., beef processing facility to full operations after fire caused “major damage,” Tyson Fresh Meats Division president Steve Stouffer said. However, he told media in Garden City Wednesday “it will be a matter of months, not weeks, but no specific timeline at this point.” A spark from welding during maintenance likely caused the fire, Stouffer said.

Wednesday’s cattle market showed signs of stabilizing after two volatile days to begin the week. CME Live Cattle closed mixed, ending two days of limit-down losses. October closed down 75 cents at $98.50, while December rose 60 cents to $104.80. CME Feeder cattle contracts surged $4.70 higher to the maximum $6.75.

A few cash cattle traded on Wednesday. USDA’s Agricultural Marketing Service reported 280 head weighing 1,490 pounds sold at $106, fully $5 per cwt. lower than on Friday before the fire. On a dressed basis, 330 steers and 726 heifers sold at $170 per cwt., $10 under last week.

Spiking higher since the fire, the Choice Beef cutout values rose another $5.98 Wednesday to $232.34. Select increased $5.34 to $205.92 per cwt. Since Friday’s close, the Choice cutout has increased $15.97 per cwt.

Market reaction since Friday’s fire confirms packer’s solid leverage in the current market. Cattle bought at $5 under Friday’s price is $75 per head, and a choice cutout price $16 per cwt. higher adds $120 to $150 per carcass on the sales end. Per head profits were calculated by Sterling Marketing at $191 per head last week before the fire.

Such margins will likely be labeled “excessive” by cattle feeders. Yet, Sterling Marketing president says the current situation is better with packers solidly in the black.

“They (Tyson) will be more inclined to get that plant running quickly, and other packers will be more aggressive to take up the slack if they are all making good profits,” Nalivka said. “The opposite might be true if they were only making a few dollars per head.”

At Wednesday’s press briefing, Tyson officials said the square footage of the damaged area is small compared to the entire plant, but that the fire impacted critical operating systems. Tyson says structural work can begin immediately, but other repairs, particularly electrical, will likely take more time. The company says it's completing a full assessment of the plant with electrical and structural engineers on site.

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