The USDA’s Economic Research Service Thursday said in its monthly Livestock, Dairy, and Poultry Outlook that its fourth-quarter 2019 beef production estimate was adjusted upward by 15 million pounds to 7.0 billion from the December report, raising estimated annual production to 27.2 billion pounds.
NON-FED SLAUGHTER UP SHARPLY
The increase was based on a faster-than-expected pace of non-fed cattle slaughter in December, in particular beef cow slaughter. Based on AMS reports of Actual Slaughter Under Federal Inspection for the first four weeks of December, the year-over-year change in beef cow slaughter ranged from 13% to 25% higher.
The increase in non-fed cattle slaughter more than offset a decline in expected fed cattle slaughter in December.
Since the week ended Nov. 15, prices for live cutter cows remained more than 10% more than prices for the same period a year earlier. This, coupled with tight forage supplies for some producers, likely encouraged higher culling rates, the ERS said.
The National Agricultural Statistics Service’s Cattle on Feed report for December estimated 2.1 million head of cattle were placed into feedlots in November. This was larger than expected and likely will generate greater expected cattle marketings and beef production in second-quarter 2020.
However, because those calves were placed into feedlots rather than remaining on winter wheat pastures as expected, the placement forecast for first-half 2020 was reduced. As a result, fewer fed cattle marketings were anticipated in second-half 2020, contributing to less expected beef production during that time.
Further, increases in cattle dressed weights were anticipated to be slower in 2020. The 2020 beef production forecast was lowered by 75 million pounds from last month to 27.4 billion.
NASS is scheduled to release the semi-annual Cattle report on Jan. 31, which will provide estimates of heifers held for breeding and an insight into the number of cattle that might be available for placement during 2020.
STRONG CATTLE PRICES EXPECTED IN 2020
On Jan. 6, Oklahoma City National stockyards sales of 750- to 800-pound feeder steers were reported at $146.95 per cwt, about $0.50 above a month earlier. Based on this price data and fewer expected cattle overwintering on pasture, the price forecast for first-quarter 2020 feeder steers was raised by $4 to $144 per cwt.
The second-quarter price forecast was raised $2 to $144.00. The fourth-quarter forecast was raised $1 to $145 per cwt on expected feedlot demand.
The 2020 annual price forecast for feeder steers was raised $2 to $145 per cwt. Wholesale beef prices are below year-ago levels, but packers continue to pay slightly higher prices to bid cattle out of the feedlots.
That strength was carried into first-quarter 2020, and that price forecast was raised by $3 to $125 per cwt. However, larger numbers of fed cattle were expected during the second quarter, which was expected to moderate prices. The 2020 average price for fed steers was forecast at $117.50 per cwt.
CATTLE, BEEF RECAP
Cash cattle trading took place in the Plains this week at mostly $124 per cwt on a live basis, with a few up to $124.50, generally steady to down $1.50. Dressed-basis trading was reported at $198 to $199 per cwt, down $1 to $2.
The USDA choice cutout Thursday was up $0.37 per cwt at $212.90, while select was up $1.80 at $211.47. The choice/select spread narrowed to $1.43 from $2.86 with 94 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Wednesday was $146.35 per cwt, down $0.22. This compares with Thursday’s Jan contract settlement of $145.42, unchanged.