It looks like the US is in for more beef production this year as it takes time for the total herd declines to result in fewer cattle to slaughter.
For the first two months of the year, weekly fed cattle slaughter rates ran ahead of last year and the previous five-year average. This, along with higher weights, produced more beef per week than last year and the average.
The Jan. 1 Cattle (Inventory) report confirmed what many in the industry already suspected – that the total herd had peaked and was moving lower as the cattle cycle turned downward. However, because of the 1 ½ to two years between when a calf if born and when it is harvested for beef, no appreciable decline in cattle slaughter was expected this year by many market analysts.
Any decline in 2020 beef production, then, will have to come from declines in slaughter weights, which were up from last year and the average through February.
Through January and February, total weekly cattle slaughter has averaged 623,844 head, up 22,016, or 3.66%, from 601,828 during the same period last year and up 56,655, or 9.99%, from 567,189 during the 2014-2018 average. This data is from the USDA’s Agricultural Marketing Service and the National Agricultural Statistics Service compiled by the Livestock Marketing Information Center.
If total weekly cattle slaughter follows average trends, it will increase unevenly to a seasonal high about mid-June. After the Independence Day dip in weekly slaughter levels, slaughter rates should pick up until just after the Labor Day dip.
Weekly fed steer slaughter ran parallel to last year through January but diverged above year-earlier and five-year average levels in February.
If the seasonal trend is followed, steer kills should rise into mid-May with the annual weekly peak coming in mid-June. Last year’s fed steer slaughter rates followed the 2014-2018 average through the year with only brief, unsustained divergences.
What seems different, and bears watching, according to at least one analyst, is the dip in female kill rates. Cow and heifer slaughter ran above the average through February, but both dipped in February.
It could be that that was just this year’s outworkings of a normal wintertime decline, the analyst said, since it’s common for cow kills to dip after January into late summer, and heifer slaughter rates tend to level out until late this month when they bump up before declining into late May.
BEEF PRODUCTION UP
With an increase in slaughter weights this year, beef production is up, which could weigh on prices if export markets don’t get over the Coronavirus, a market analyst said.
Through February, weekly steer dressed weights averaged 904.14 pounds, up 18.71, or 2.22%, from 885.43 during the same period last year and up 18.31, or 2.07%, from the previous five-year average of 885.83 pounds.
Heifer dressed weights also have been above last year and the 2014-2018 average all year.
CATTLE, BEEF RECAP
Cash cattle traded in the Plains Wednesday at $113 per cwt, down $2 to $6 from last week. No dressed-basis trade was reported but took place last week at $186 to $187 on a dressed basis, down $3.
The USDA choice cutout Wednesday was up $0.20 per cwt at $206.82, while select was down $1.19 at $201.51. The choice/select spread widened to $5.31 from $3.92 with 127 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday was $133.75 per cwt, down $0.25 from the previous day. This compares with Wednesday’s Mar contract settlement of $134.85, up $1.32.