Questions about when and if the US beef cow herd is starting to be rebuilt after years of decline run rampant through the industry.
Trying to pin down when the rebuild will begin is a little like trying to catch smoke with your bare hand, but some indicators could be pertinent in deducing if it has begun.
COW SLAUGHTER MUST DROP
Many analysts and traders agree the primary indicator will be either a drop in cow slaughter or something that says it can’t get any lower. Once a producer, who has been culling the family herd for the last few years trying to preserve the available forage and maintain some semblance of a business foundation, decides to rebuild, the first step will be to stop selling.
What that cow/calf producer will stop selling first will be cows. By this point, he/she has already sold all of the oldest and weakest of the herd, leaving him/her with the youngest, and presumably healthiest, of his/her cows. There is no added incentive to keep designating and selling cull cows.
Once enough producers make that decision, it will show up in lower cow slaughter numbers reported by the USDA, the analysts and traders say.
But while cow slaughter has been declining for at least the last two years, it’s hard to say there has been a notable decline that would indicate the end of herd culling, a market analyst said. It doesn’t indicate that it has reached a critical point where further declines will be very hard to achieve.
BY THE NUMBERS
Data from the USDA’s Agricultural Marketing Service and National Agricultural Statistics Service that were compiled, graphed and published by the Livestock Marketing Information Center show weekly beef cow slaughter has been down from the corresponding week last year. And last year was down from the previous five-year average in all but one week in February.
Last week, for instance, beef cow slaughter was reported at 43,589 head, down from 45,818 a week earlier, down from 54,740 a year earlier and down from the 2019-2023 average of 70,280 head.
However, it remained higher than the latest low of 42,017 head a month earlier and the 42,573 of the first week on January.
The most that can be said for this year’s weekly beef cow slaughter trend is that it has been more stable, in a narrower trading range than last year, the analyst said. Is it that point at which it can’t get any lower? It’s hard to say.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $224.82 per cwt to $227.94, compared with last week’s range of $225.63 to $236.67 per cwt. FOB dressed steers, and heifers went for $355.17 per cwt to $360.77, compared with $353.56 to $365.67.
The USDA choice cutout Tuesday was up $2.06 per cwt at $393.04 while select was up $0.93 at $378.46. The choice/select spread widened to $14.58 from $13.45 with 79 loads of fabricated product and 20 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef was $411.10 per cwt, and 50% beef was $260.98.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.30 to $1.35 a bushel over the Sep corn contract, which settled at $3.98, down $0.05 1/2.
The CME Feeder Cattle Index for the seven days ended Friday was $312.04 per cwt, up $0.08. This compares with Monday’s Aug contract settlement of $319.22, up $5.40.