At a time when most cattle traders are focused on beef and corn prices, something as mundane as beef cattle female slaughter could slip under the radar, but it shouldn’t, a market analyst said.
Continued drought in many western US states appears to be adding to a move to liquidate some beef cows, just as it did last year, the analyst said.
The Jan. 1 Cattle Inventory report from the USDA showed a declining US cattle herd, and part of this focus on increasing female slaughter could be linked to this. However, drought also is linked to herd-reduction efforts because of a lack of feed.
BEEF COW KILL UP FROM 2020, AVERAGE
The first indication that something is wrong is the elevated level of beef cow slaughter without a corresponding decline in the number of heifers sent to town.
Data from the USDA’s Agricultural Marketing Service and the National Agricultural Statistics Service and compiled by the Livestock Marketing Information Service showed federally inspected beef cow slaughter last week at 67,868 head, up 4,227, or 6.64%, from 63,641 a week earlier, up 18,068, or 36.3%, from 49,800 in the same week a year ago and up 16,542, or 32.2%, from the 2015-2019 average of 51,326.
Comparing beef cow slaughter week by week may not be very valid, but it climbed last week, in contrast to the 2015-2019 average when it generally is fairly flat.
Comparing beef cow slaughter to last year at this time also may not be particularly valid as beef packing plants last year were shutting down to stem the tide of COVID-19 cases among employees. Slaughter of most everything then was slashed.
But it is noteworthy to look at the general trends of weekly beef cow slaughter this year and last year over the previous five-year average. In this case, beef cow slaughter is seen for what it is – up. Weekly beef cow slaughter last year was above the 2015-2019 average in all but six weeks with four of these coming during the pandemic work stoppages.
HEIFER KILLS ALSO ABOVE AVERAGE
In addition to the advanced beef cow slaughter, weekly federally inspected heifer slaughter rates have been trending roughly along the same level as last year, which is well above the 2015-2019 average.
Heifer slaughter likely will tend well above last year for the next few months as weekly kill rates last year plummeted with total fed cattle slaughter as beef packing plants closed and lost employees to the COVID, the analyst said.
But to give a flavor of heifer slaughter, last week’s kill was put at 195,048 head, up 38,848, or 24.9%, from last year’s 156,200 and up 40,301, or 26.0%, from the previous five-year average of 154,747.
CATTLE, BEEF RECAP
Fed cattle traded this week at $117 to $119 per cwt on a live basis, down $1 from last week. Dressed-basis trading was seen at $188 to $190 per cwt, down $1 to $3.
The USDA choice cutout Wednesday was up $3.56 per cwt at $304.78, while select was up $2.27 at $286.18. The choice/select spread widened to $18.60 from $17.31 with 94 loads of fabricated product and 27 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 unchanged at $1.04 to $1.18 a bushel over the May CBOT futures contract, which settled at $7.53 1/4 a bushel, up $0.08 1/2.
The CME Feeder Cattle Index for the seven days ended Tuesday was $132.55 per cwt down $0.21. This compares with Wednesday’s May contract settlement of $131.47 per cwt, up $1.72.