Fed cattle supplies appear to be tightening, sending cash prices higher, threatening more record highs.
Many analysts think ranchers are holding heifers back to rebuild herds, and USDA data show weekly heifer slaughter well below a year earlier and the previous five-year average since early July. The last week of June, federally inspected heifer slaughter was listed at 171,924 head, 11,976 head, or 6.51%, below a year ago and 17,396 head, or 9.19%, below the average.
In the latest reporting week, heifer slaughter was 162,436 head, 25,964 head, or 13.8%, below last year’s 188,400. It also was 30,624 head, or 15.9%, below the average.
COW SLAUGHTER DECLINING
Total cow slaughter also is down from last year and the average, and herd rebuilding may be taking place via lower cow culling rates and a tentative holding of heifers. Almost all of the decline in total cow slaughter is in beef cows, as dairy cow slaughter is holding very near to average levels.
Total slaughter began to diverge from average and last year the first week in April and has slowly widened the gap ever since.
Livestock Marketing and Information Center graphs of cow slaughter show total slaughter in the latest reporting week at 98,420 head, down 16,080 head, or 14.0%, from last year and down 28,320 head, or 22.3%, from the previous five-year average.
That compares with the last week of March when total cow slaughter was 112,544 head, down only 7,656 head, or 6.37%, from a year earlier but up 544 head from the average.
Dairy cow slaughter remains below a year ago, and for the last month it has remained below the average as well, but a graph of weekly slaughter rates shows it tracking the average fairly well throughout the year, even though it continues to hold below last year.
BEEF COW SLAUGHTER KEY
Beef cow slaughter, however, shows the same divergence from the average and last year as does a chart of total cow slaughter, although a case could be made that it began the breakaway about a month earlier than total slaughter. Slaughter the last week of March was listed by the USDA at 54,834 head, down 2,366, or 4.24%, from 57,200 a year earlier, and down 3,026, or 5.23%, from the five-year average.
But by the latest reporting week, beef cow slaughter had dropped to 43,946 head, 11,854 head, or 21.2%, below last year’s 55,800 and 25,554, or 36.8% below the previous five-year average. The gap continues to widen, indicating that herd rebuilding is likely taking place, even if it’s only vaguely evident in heifer slaughter data.
2015 SLAUGHTER COULD REMAIN DEPRESSED
Beef slaughter in 2015 could remain below this year and the average as the herd is grown even more. Sources said they expected 2016 slaughter to pick up again and nearly match 2015 as the herd stabilizes and begins to grow.
That could lend pressure to prices at the time, which could be complicated by forecasts for more pork production. Slaughter and pork production data indicate producers have begun to out-produce losses from the Porcine Epidemic Diarrhea virus, and a new vaccine could cut losses even more to increase production and undercut prices.
Some sources even said total 2016 pork production may surpass beef production for the first time since 1959.