Strong demand is mostly offsetting increased beef supply this year and has a good chance of mitigating next year’s expected production increases, said Derrell Peel, Oklahoma State University extension livestock marketing specialist, in the “Cow/Calf Corner,” an OSU Extension newsletter.
The September USDA Cattle on Feed report pegged Sep. 1 feedlot inventory at 10.504 million head, 103.6% of last year. August placements were 102.6% of a year ago, Peel said.
What may be overlooked is the continued strong marketings pace, he said.
August marketings were close to pre-report expectations at 105.9% of 2016. Marketings outpaced August placements and pulled down the year-over-year-increase in feedlot inventories, though not as much as expected, Peel said.
For the first eight months of the year, total placements were up 1.16 million head, an 8.4% increase. However, total marketings were up 0.847 million head, 6.1% more than last year and largely offsetting the increased placements.
As a result, the on-feed inventory was up a modest 369,000 head from last year.
Higher feedlot throughput is reflected in the year to date increase in steer and heifer slaughter, up 5.9%, Peel said. Steer slaughter is up 3.3% while heifer slaughter is up 11.7%.
Additionally, beef cow slaughter is up 11.3% so far this year, and dairy cow slaughter is up 3.9%. Total bull slaughter also is up 13.1%.
CARCASS WEIGHTS DOWN
Offsetting increased cattle slaughter are lighter carcass weights, Peel said.
While steer and heifer weights are increasing seasonally, they remain below year-earlier levels, he said. In the most recent data, steer carcasses were 896 pounds, seven pounds below a year earlier; heifer carcasses were 816 pounds, down five pounds.
For the year to date, steers carcasses have averaged 14.1 pounds lower than last year while heifer carcasses were 12.3 pounds lighter.
Total beef production for the first 36 weeks of the year is up 4.5%. Annual beef production has been projected at 26.3 billion pounds, up 4.4%.
Domestic annual beef consumption was projected at 56.6 pounds per capita, up 2.2%. Despite the increase in domestic beef consumption, retail beef prices remain strong, he said.
August’s choice beef price was $5.94 a pound, down from $6.10 in July but nearly 1% higher than last year. The all-fresh beef retail price was $5.794 a pound, fractionally higher than a year ago.
Beef production was expected to increase again in 2018 to 27.4 billion pounds he said. This would be a record, exceeding the previous high of 2002 at 27.0 billion pounds.
Increased all-meat production was projected to surpass 101 billion pounds in 2018, another record.
Clearly the supply challenges will continue for the foreseeable future, Peel said. However, 2017 has demonstrated that strong domestic and international demand for US beef can mitigate much of the price pressure.
CATTLE, BEEF RECAP
Three lots of cattle sold Wednesday on the Livestock Exchange video auction at $106.50 to $106.75 per cwt, up $1.75 to $2 from the previous week.
Cash trade was reported last week at $104 to $109.50 per cwt on a live basis, mostly $108, up about $2 to $4 from the previous week, and at $170 to $172 on a dressed basis, up $3.50 to $5.
The USDA’s choice cutout Monday was up $2.36 per cwt at $193.96, while select was up $2.16 at $190.89. The choice/select spread widened to $3.07 from $2.87 with 58 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Friday was $152.60 per cwt, up $1.16. This compares with Monday’s Sep settlement of $150.47, down $2.92, and the Oct settlement of $151.60, down $4.50.