The USDA’s Economic Research Service lowered its 2018 beef production forecast by 30 million pounds to 26.9 billion pounds from its estimate a month ago.
The forecast, contained in the ERS’ monthly Livestock, Dairy, and Poultry Outlook Thursday, went on to say the mild revision was based on numbers at the close of the third quarter along with fourth-quarter expectations of slightly fewer steers and heifers to be slaughtered and fewer bulls in the slaughter mix.
However, despite an adjustment to lower the steer and heifer slaughter in the fourth quarter and an extra weekday available in the quarter to slaughter cattle, the steer and heifer slaughter rate per weekday in the fourth quarter was expected to remain above levels for the same period last year.
The 2019 beef production forecast was lowered by 100 million pounds from a month ago to 27.8 billion pounds, the report said. The adjustment reflected fewer-than-expected cattle placed into feedlots in the third quarter of this year, reducing the expected number of fed cattle marketed and slaughtered in early 2019.
According to the latest National Agricultural Statistics Service Cattle on Feed report, in September there were 4.7% fewer cattle placed into feedlots, but 3.6% fewer cattle marketed to packing plants than last year. As a result, 5.4% more cattle remained on feed than a year ago, which supports the expectation of strong marketings in first-half 2019.
FEEDERS OUTSIDE FEEDLOTS FRACTIONALLY HIGHER
The ERS website Livestock & Meat Domestic Data has a table titled “Feeder Cattle Supplies Outside Feedlots.” The table estimates the number of cattle available to place into feedlots on Oct. 1 at 30.1 million head, only 0.06% larger than this time last year.
That suggests that about the same number of cattle were available to be placed into feedlots as were placed a year ago, the report said. Winter forage seemed to be in better condition than last year, which could provide a home for those calves over the winter.
That may be a positive sign for feeder calf prices in the coming months, but limiting factors were the record number of cattle already on feed at the beginning of October and expectations for higher feed prices, the report said.
In addition, cattle are staying on feed longer than last year, the ERS said. The higher number of cattle already in feedlots may limit the competition from feedlots for ownership of more calves, and higher feed prices may limit feedlot management’s willingness to pay higher prices for calves.
BEEF DEMAND RESILIENT
Since early August, wholesale choice beef cutout prices have avoided the third-quarter slump of the past two years, staying well above year-early levels, the ERS said. The weekly beef cutout price for the week ended Nov. 9 climbed to within June price levels despite higher year-over-year third-quarter beef production and higher expected fourth-quarter production.
Fed steer prices also avoided a third-quarter price dip, the report said. Feeders facing poor returns resisted lower bids.
CATTLE, BEEF RECAP
Cash cattle traded Wednesday at $110 to $112 per cwt on a live basis, down $3 to $5 from last week, while dressed-basis trading was reported at $175 to $176 per cwt, down $3 to $4.
The USDA choice cutout Thursday was up $0.39 per cwt at $213.55, while select was up $0.40 at $197.58. The choice/select spread narrowed to $15.97 from $15.98 with 94 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Wednesday, was $148.93 per cwt, down $0.45. This compares with Thursday’s Nov settlement of $148.62, down $0.35.