Weekly beef cow slaughter rates have been above last year in all but two weeks this year, signaling that cattle herd growth may have come to an end.
Data compiled from the USDA’s National Agricultural Statistics Service and the Agricultural Marketing Service show that the only weeks in which beef cow slaughter did not exceed last year’s was the first week of January and the second week of April.
Dairy cow slaughter also is up from a year ago, but the trend is not as defined as with beef cows. Only since June has dairy cow slaughter been above last year with any consistent pattern.
With beef cow slaughter rates up for such an extended period of time, total cow herd size must be holding steady or declining. The telling figure would be the extent of heifer slaughter and its relationship to last year.
The data show that weekly heifer slaughter has been above last year in all but one week, the third week of January. For all other weeks this year, heifer slaughter has held above last year.
WHAT IT MEANS
What that means is that if cow slaughter and heifer slaughter are holding above last year, the rate of herd growth must be holding steady or, more likely, declining.
And, if the number of females in the total herd is declining, the number of calves that will be born in the following years also will decline, making it harder for feedlots to fill bunk space. This could raise the price of feeder calves if feedlots are turning cattle to packers at a profit.
The latest USDA Livestock, Dairy, and Poultry Outlook report Monday said economists there expected lower commercial beef production in 2018 as a slower rate of placements expected in the second half of this year digs into available supplies in the feedlots in the first half of next year.
With a possible decline in herd sizes, such a decline in fed cattle numbers could be more of a long-term thing.
USDA economists also saw fed steer prices rising in the first half of next year into a range of $132 to $140 per cwt on a live basis. They attributed the rise more to seasonal support than to anything else, but the start of a longer-term trend toward fewer calves also could be in play in the first half of 2018.
CATTLE, BEEF RECAP
Three lots of cattle sold Wednesday on the Livestock Exchange video auction at $106.50 to $106.75 per cwt, up $1.75 to $2 from the previous week.
So far this week, the USDA’s five-area market report has 156 steers weighing 1,451 pounds at $104.03 per cwt and 1,977 heifers weighing 1,365 pounds selling at $105. A total of 505 head were sold on a dressed basis weighing 954 pounds at $164.95 per cwt.
Cash trade was reported last Friday at $104 to mostly $105 per cwt on a live basis, steady to down $1 from the previous week, and at mostly $165 to $166 on a dressed basis, steady to down $1.
The USDA’s choice cutout Wednesday was down $0.07 per cwt at $192.04, while select was off $0.31 at $188.52. The choice/select spread widened to $3.52 from $3.28 with 101 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday was $150.46 per cwt, down $0.01. This compares with Wednesday’s Sep settlement of $153.97, up $2.40.