Since New World Screwworm closed the US off to Mexican cattle, questions about if and how the Mexican industry could handle the million-plus head that typically were exported to the US.
Oklahoma State University Livestock Marketing Specialist, Derrell Peel said in a letter called Cow-Calf Corner that the Mexican beef industry had evolved significantly in the past two decades, rendering many older views outdated and incorrect.
MEXICAN CATTLE INVENTORY
For the past 15 years, the total Mexican cattle inventory averaged 17 to 18 million head, with a total cow herd of roughly 11.5 million head, Peel said. Cows make up about 65% of total cattle inventories compared with the US, where the cow herd is about 43%.
That is because cattle flow through the Mexican industry faster than in the US, he said. More young cattle typically are included in the total US inventory because calves remain on pasture and in feedlots, whereas 14% to 16% of the Mexican calf crop usually is exported, and cattle do not remain in feedlots as long as in the US.
The Mexican calf crop averaged just over 8.0 million head in recent years, with a calf crop percentage of roughly 71%, up from about 65% 25 years ago, Peel said. Mexican cattle exports have averaged 1.2 million head over the last 25 years and typically represent 14% to 16% of the calf crop.
MEXICAN BEEF PRODUCTION
Mexican beef production has increased an average of 2% a year in the last decade, he said. This is the result of increased cattle slaughter, about 1.6% annually, and increasing carcass weights.
Average cattle carcass weights increased from about 600 pounds 25 years ago to roughly 710 pounds currently, Peel said. The Mexican beef industry evolved from predominantly grass-fed production to current production where most cattle are fed in feedlots. This, along with improved cattle genetics and management, has led to the increased carcass weights.
Per-capita beef consumption in Mexico averages about 24 pounds per year, retail weight, he said. Mexican beef imports were equivalent to roughly 10% of production in recent years but down from about 22% of production two decades ago.
Moreover, Mexico has become a net beef exporter, rising to No. 11 worldwide, Peel said.
A MODERNIZED INDUSTRY
The Mexican beef industry has modernized and developed significant infrastructure the past two-plus decades, he said. Cattle and beef trade between Mexico and the US has evolved from a long history of cattle exports to the US to include Mexico becoming a major beef export destination for the US, and recently with Mexico becoming a significant source of US beef imports. The increasingly integrated trade relationship adds value to the beef industries in both countries.
Not exporting feeder cattle to the US means more cattle are being finished in Mexico, Peel said. It also likely means fewer cattle are being imported from Central America, which has been a source of supplemental cattle supply.
Mexican beef imports likely will decrease, and beef exports will increase in the absence of cattle exports, he said. Mexican production systems and supply chains will continue to evolve.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $255.83 per cwt to $256.39, compared with last week’s range of $255.83 to $260.00 per cwt. FOB dressed steers and heifers went for $405.36 per cwt to $405.60, compared with $405.60 to $410.81.
The USDA choice cutout Monday was down $0.59 per cwt at $386.48 while select was down $1.56 at $365.87. The choice/select spread widened to $20.61, from $19.64 with 69 loads of fabricated product and 33 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $460.88 per cwt, and 50% beef was $179.11.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.23 to $1.43 a bushel over the Jul corn contract, which settled at $4.40 3/4 a bushel, up $0.15 3/4.
The CME Feeder Cattle Index for the seven days ended Friday was $371.11 per cwt, down $1.52. This compares with Monday’s Aug contract settlement of $360.50, down $0.12.