It looks like US beef cow inventory is headed lower for the year, possibly fueled by drought in western states and higher average prices for cull cows.
It’s a little hard to tell when looking at a graph of weekly federally inspected cow slaughter numbers from the USDA’s Agricultural Marketing Service and its National Agricultural Statistics Service, but weekly cow slaughter, at 60,675 head, has averaged 1,897, or 3.23%, more than the average of weekly averages for the year to date last year of 58,778 head.
MARKET WANTS COWS
“The market is calling for cows and bulls,” said Nevil Speer, a private market advisor in Bowling Green, KY, in an email.
A graph of weekly auction prices for Southern Plains slaughter cows is somewhat deceiving at first glance, a market analyst said. This year’s and last year’s weekly prices appear to twine around each other at a point well below the 2014-2018 average, but an average of the averages for the year to date shows a difference.
The 2014-2018 average is somewhat misleading in its own right, Speer said. It includes 2014 and 2015, years with all-time lows in terms of cow inventory.
USDA Agricultural Marketing Service data show weekly average prices for slaughter cows in the Southern Plains so far this year brought an average price of $50.77 per cwt, compared with an average price for the same period last year of $47.17.
That’s an average weekly increase of $3.60 per cwt, or 7.63%.
DROUGHT ALSO A BIG REASON TO SELL
In addition to higher average prices for cull cows this year, cow/calf operations in western states have had their pastures dry up in a major drought, trade sources said.
The US Drought Monitor is released from the National Oceanic and Atmospheric Administration each Thursday. A new one was scheduled for release this morning, but last week’s monitor continues to show growing areas of extreme drought in the southwest quarter of the continuous 48 states with abnormally dry to moderate drought even in Hawaii.
Most of Wyoming and Oregon also show excessive dryness to extreme drought conditions.
All of that includes some large rangeland areas that reportedly have had a lot of trouble even finding hay to feed.
Large portions of the drought-affected areas also grow winter wheat, and farmers likely will delay planting until they can get some rain, the market analyst said.
So, without grass and with prospects for less wheat pasture, some cow/calf producers have been forced to sell cows because there is nothing left to feed them.
And with forced sales, prices have been capped at levels below what they would have been with ample forage supplies, the analyst said.
Beef markets could go to imported beef for the extra lean product they seek from cows, but US beef and veal imports this year are estimated to be down at 3.022 billion pounds from 3.058 billion last year.
CATTLE, BEEF RECAP
Fed cattle trading was reported in the Plains this week at $102.50 to $104 per cwt on a live basis, down $2 to $2.50 from last week. Dressed-trading was done at $163 to $164 per cwt, down $3 to $4.
The USDA choice cutout Wednesday was down $0.76 per cwt at $227.58, while select was off $0.93 at $213.82. The choice/select spread widened to $13.76 from $13.59 with 72 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Tuesday was at $140.35 per cwt, down $0.17. This compares with Wednesday’s Sep contract settlement of $138.70 per cwt, down $1.42.