Larger Cattle Slaughter May Stay Below Year Ago, Average

If cattle slaughter rises in the short term as many expect, the kill may still remain below last year and the five-year average, even if it reaches its highest weekly rate for 2014.

USDA data show estimated total weekly slaughter last week at 574,000 head.  This is 0.53% more than the previous weekly kill of 571,000 head, but it’s 48,200, or 7.75% fewer than the 622,200 in the same week a year ago.  It’s also 75,280 head, or 11.59%, fewer than the five-year average.

That means, weekly cattle slaughter could rise by about 48,000 and still be below a year ago.  Even this year’s weekly high of 616,467 in the second week of June would be below the 628,400 slaughtered in this week a year ago.

Some of that lowered slaughter rate from last year and the average has come about through reduced heifer slaughter.  USDA data show heifer slaughter being below average all year, sometimes significantly below.  Heifer slaughter also has been below a year ago in most weeks.

During the third week of July, the latest week in which data is available, heifer slaughter totaled 158,413 head, 18,887, or 10.65%, below a year ago.  It also was 23,487, or 12.91%, below the five-year average.

Total cow slaughter also remains below a year ago and the average with the divergence becoming greater after March as pastures generally improved around the country.  The greatest change in cow slaughter has been in beef cows where data show a kill during the third week of July of 49,286 head, 16,414, or 24.98%, below last year and 22,194, or 31.05%, below the five-year average.

 

SLAUGHTER WEIGHTS KEEP RISING

 

Live slaughter weights during the latest reporting week continued to rise, reaching 1,281 pounds, a gain of two pounds, or 0.16%, from a week earlier and up five, or 0.39%, from 1,276 pounds last year.  It also was up 17.2 pounds, or 1.36%, from the five-year average.

Dressed weights also are rising.  USDA data show total carcass last week at 803 pounds, up one from the previous week and up six, or 0.75%, from a year ago and up 19.6 pounds, or 2.50%, from the five-year average.

Dressed weights of steers and heifers are above last year and the average and are rising fast as feeder cattle prices continue to set new record highs and corn prices continue to slide.  It only makes sense to many that they should add weight to the cattle on hand rather than invest in new feeders if they can put it off for a week or more.

 

BEEF PRODUCTION REMAINS SUBDUED

 

However, beef production remains subdued.  Production last week was estimated at 460.2 million pounds, up 3.2 million from a week earlier, but 34.4 million, or 6.96%, below a year ago and 46.86 million, or 9.24%, below average.

Beef production has followed the average trend all year, just at a lower level, so if this tendency continues, beef production won’t rise much for the rest of the summer.  And even if it does, it seems likely to remain below a year ago and the average.

 

CASH MARKETS QUIET

 

No trade was reported in cash markets with asking prices around $164 to $165 per cwt on a live basis, up about $2 from last week.

The USDA’s choice boxed-beef cutout value Tuesday was reported at $263.27 per cwt, up $0.05 while select was down $1.28 at $256.75 in a continued seasonal widening of the choice/select spread, which moved out to $6.52.

The CME Feeder Cattle Index for the seven days ending Monday was $225.15 per cwt down $0.53.