Given the current demand for beef and the projected production, it might be a good time to invest in some form of cattle and/or beef production business.
Things can change the current consumer buying interest for beef, like prices or spendable income or the latest food scare and competition from other proteins, but with projections for lower production through 2022, it might seem like a good bet for many.
QUARTERLY BEEF OUTPUT SEEN LOWER
Economists at the Livestock Marketing Information Center in Denver projected quarterly commercial beef production through 2022, basing their forecasts on data from the USDA’s National Agricultural Statistics Service. The estimates did not separate choice, prime, select or non-graded beef, nor did the projections separate cow beef from fed beef.
A graph of quarterly beef production through 2022 showed the second quarter of last year to seem out of synch with the other three quarters. Projections out through 2022 also show second-quarter commercial beef production to be down from the other three quarters of their respective years, which is uncharacteristic.
The 2015-2019 average commercial beef production showed a stepped increase in beef production through the third quarter, followed by a lesser increase in the fourth quarter.
Last year, COVID-related production disruptions caused a marked decline in second-quarter commercial beef production. What’s interesting, though, is that in spite of average quarterly increases in beef production and a known disrupter in that quarter last year, the projections for this year and next show a second-quarter production decline, compared with the first and third quarters of the same years.
BY THE NUMBERS
By quarters, 2015-2019 average beef production comes to 6.157 billion pounds, 6.398 billion, 6.603 billion and 6.668 billion, respectively, according to USDA data.
However, last year showed more variation. First-quarter beef production totaled 6.929 billion pounds, while second-quarter output dropped to 6.054 billion. Third-quarter production rebounded to 7.110 billion pounds but dropped again in the fourth quarter to 7.052 billion.
Quarterly beef output this year was projected at 6.810 billion pounds in the first quarter, 6.518 billion in the second quarter, 6.778 billion in the third quarter and 6.763 billion in the fourth quarter. There still is a production dip from the first quarter, but it’s up from second-quarter 2020, but the projection also shows a first-quarter production decline from the same quarter last year, which may be important.
Quarterly beef production for the fourth quarter was projected at 6.770 billion pounds in the first, 6.438 billion in the second, 6.646 billion in the third and 6.636 billion in the fourth. Each quarter’s estimated production is down from the same quarter in 2021.
CATTLE, BEEF RECAP
Fed cattle trading was reported in the Plains and Midwest this week at $110 to $113 per cwt, up $1 to $2 from last week. Dressed-basis trading last week was seen at $172 to $174 per cwt, down $2 to $3.
The USDA choice cutout Wednesday was up $0.60 per cwt at $229.66, while select was up $1.66 at $218.99. The choice/select spread narrowed to $10.67 from $11.73 with 83 loads of fabricated product and 37 loads of trimmings and grinds sold into the spot market.
The USDA reported Wednesday that basis bids for corn from livestock feeding operations in the Southern Plains were down $0.02 to $1.21 a bushel at $1.00 to $1.25 over the Mar CBOT futures contract, which settled at $5.34 a bushel, up $0.01 3/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $134.83 per cwt, down $0.13. This compares with Wednesday’s Jan contract settlement of $135.62 per cwt, down $0.02 and Mar’s $140.07, down $1.40.