Beef production so far this year is up 3.6% on larger cattle slaughter and increased carcass weights, adding pressure to an already stressed beef market, said Derrell Peel, Oklahoma State University Extension livestock marketing specialist, in the Extension Service’s newsletter “Cow/Calf Corner.”
Year-to-date cattle slaughter is up 3.8%, driven by increases in female slaughter, Peel said. Heifer slaughter is up 8.0% from a year ago and cow slaughter is up 8.1% so far this year. Beef cow slaughter is up 12.2%, and dairy cow slaughter 4.5% more than last year.
At the same time, steer slaughter is up a scant 0.1% year over year, he said.
CARCASS WEIGHTS UP
Cattle carcass weights are up from last year after dropping sharply in 2017, Peel said. Overall carcass weights are up about five pounds for the year.
Steer carcass weights are up nearly seven pounds while heifer carcass weights are up more than eight pounds for the year to date, he said.
Cow carcass weights also are up nearly eight pounds compared with last year.
Steer and heifer carcass weights have bottomed seasonally and will increase to seasonal peaks in the fall, but the question will be how much and how fast will the seasonal increase in carcass weights be compared with last year?
Beef production typically is larger in the second half of the year, and Peel said he expected continued year-over-year growth in beef production to contribute to annual beef production growth of more than 4% in 2018.
2017 BEEF DEMAND SUPPPORTED PRICES
Last year, unexpectedly strong domestic and international beef demand provided extra support for cattle and beef prices in the face of growing beef supplies, he said. To some extent this has continued this year though not as pronounced.
After holding quite firm through May, boxed beef prices were pressured into mid-June with choice boxed beef prices dropping last week. Large beef supplies are weighing on markets, and the challenge may grow moving into the summer doldrums.
However, Peel said he expected relative fed cattle supplies to tighten in the third quarter.
WEAKER CATTLE PRICES STILL STRONGER THAN EXPECTED
Fed cattle prices have declined seasonally but are holding generally better than expected, Peel said. In early April, Jun live cattle futures dropped below $100 per cwt and have since traded as high as $110 and now are trading about $108.
June isn’t over, and the next couple of weeks could have a large effect on commodity markets as the reality of a trade war settles on markets.
Feeder cattle prices have declined seasonally from spring peaks but have remained quite robust, he said.
MOVING FORWARD
Moving forward, beef production will be more a factor of slaughter than carcass weights, Peel said. Further herd-growth slowing keeps adding females to total slaughter and could continue.
CATTLE, BEEF RECAP
Eleven hundred head of Nebraska cattle sold Wednesday on the Livestock Exchange Video Auction at $110 per cwt, steady with the last sales three weeks earlier.
Limited cash trade was reported last Wednesday at $180 per cwt on a dressed basis, down $4 from the previous week. Live-basis cash action was seen at $110 to $113, down $2 to $4.
The USDA choice cutout Thursday was down $0.88 per cwt at $217.41, while select was up $0.56 at $201.61. The choice/select spread narrowed to $15.80 from $17.24 with 76 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Wednesday, was $142.21 per cwt, up $0.80. This compares with Thursday’s Aug settlement of $148.47, down $0.95.