Cattle Slaughter Up, Still Too Slow

5-15-20 – Fed cattle slaughter picked up the last two weeks, but it remains below what feedlots need to keep up with the number of head coming due for their date with the packer, trade sources said.

It likely will take many weeks for slaughter rates to catch up with the growing backlog of fed cattle and get the industry current once again, said Derrell Peel, Oklahoma State University agricultural economist, in a letter to Extension agents called Cow/Calf Corner.




All cattle producers are responding to the need to slow cattle down and hold them longer in a variety of production settings before proceeding to finish in feedlots, Peel said.

But fed cattle weights are increasing and pushing carcass weights higher counter-seasonally, he said.  The latest actual weekly slaughter shows steer carcass weights at 891 pounds, higher than the three prior weeks and up 37 from the same period last year.

Heifer carcasses are 24 pounds heavier year over year, he said.  Steer and heifer carcass weights typically reach a seasonal low in late May.

COVID-19 began affecting employees at beef packing plants in early April, Peel said.  In the last five weeks, cattle slaughter decreased by an average of 27% year over year.

That compares with the previous five weeks in March, when cattle slaughter averaged 5.5% more than year-ago levels, he said.  The effects got progressively worse for four weeks with weekly slaughter dropping 17.1% the week of April 11 to a decrease of 36.8% year over year in the week ending May 2.




There is some hope, however, Peel said.  Last week, estimated cattle slaughter was 452,000 head, still down 32.2% year over year, but up 6.4% from the prior week.

That may indicate the beginning of recovery of packing capacity in coming weeks, he said.  Risks remain, however, and it is not clear how fast packing plant capacity will recover.

New safety measures and work protocols likely mean effective maximum capacity in beef packing plants will be reduced from pre-COVID-19 levels.

Beef production dropped sharply in April resulting in some shortages of fresh beef, Peel said.  In the five weeks ended May 9, total beef production was down nearly 690 million pounds year over year.

In the week ended May 2, estimated total beef production was 347.1 million pounds, down 190.5 million from the same week last year, he said.  Estimated beef production last week was down 31% year over year but was up 5.9% from the prior week, reflecting the slight increase in cattle slaughter.




Total 2020 beef production forecasts have only been slightly reduced from previous projections and still are at or near a record level of 27.2 billion pounds, Peel said.

However, the timing is altered with second-quarter production forecast down 13.3% year over year, he said.  Beef production will be pushed into the third quarter, which is forecast to be up 5.4%.

Fourth-quarter beef production was forecast to be slightly higher.




Fed cattle trade was reported this week at $110 to $117 per cwt on a live basis, up $2 to $15 from last week.  Dressed-basis trading was seen at $170 to $185 per cwt, up $5 to $30 from last week.

The USDA choice cutout Thursday was down $15.07 per cwt at $450.92, while select was up $0.16 at $437.40.  The choice/select spread narrowed to $13.52 from $28.75 with 75 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Wednesday was $123.95 per cwt, up $0.43.  This compares with Thursday’s May contract settlement of $123.80, down $1.50.