The decline in beef production this year means ground beef supplies will be smaller and prices higher going forward, said Oklahoma State University Extension Livestock Marketing Specialist, in a letter called Cow-Calf Corner.
Ground beef is an important component of total US beef consumption and is the inexpensive alternative that consumers increasingly turn to when beef prices rise, Peel said.
BEEF PRODUCTION DOWN
Total beef production in the US was down 5.2% year over year through the first three quarters of the year.
Non-fed beef production makes up an average of 16% to 17% of total beef production over time, while non-fed beef production has averaged 16.5% of total beef production thus far in 2023 and was down 6.1% percent through September.
Through September, total cow slaughter was down 5.4% with a 4.4% increase in dairy cow slaughter partially offsetting a 13% year over year decline in beef cow slaughter, he said. Cow carcass weights were down as well, averaging 3.8 pounds lighter this year compared with 2022.
Bull slaughter was down 6.1% year over year through September, and bull carcass weights were down 5.6 pounds compared with one year ago, Peel said. Bull beef makes up an average of 10% of total non-fed beef.
NON-FED BEEF
Non-fed beef is used for a variety of products including muscle cuts, sausage products and a wide variety of processed beef products but the largest use is for ground beef production, he said. Non-fed beef is characterized by 90% lean trimmings, which are combined with fatty trimmings from fed cattle, characterized by 50% lean trimmings to make ground beef.
Those trimmings are the basis for the majority of hamburger used for food service, especially quick service restaurants and some retail grocery ground beef, he said. Retail grocery ground beef often includes primal specific grinds, such as ground round or ground chuck.
Fed beef production from fed steers and heifers includes 50% lean trimmings that are used for ground beef production, he said. Fed beef production was down 4.8% year over year through September with steer slaughter down 5.3% and heifer slaughter down 1.8% year over year.
Steer carcass weights were down 5.6 pounds, and heifer carcasses were down 9.6 pounds from a year ago, Peel said. This leads to a smaller supply of 50% lean trimmings.
Prices for 90s and 50s are higher year over year, he said. So domestic non-fed beef supplies are supplemented by imports of processing beef for ground beef production.
As domestic processing beef supplies tighten, beef imports are increasing, as expected, Peel said. Total beef imports through September were up 5.4% year over year.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $185.18 per cwt to $185.68, compared with last week’s range of $184.00 to $189.69 per cwt. FOB dressed steers, and heifers went for $291.68 per cwt to $291.85, compared with $289.71 to $296.04.
The USDA choice cutout Monday was up $1.71 per cwt at $309.28 while select was up $0.77 at $280.89. The choice/select spread widened to $28.39 from $27.45 with 38 loads of fabricated product and 22 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged to up $0.03 at $1.25 to $1.38 a bushel over the Dec corn contract, which settled at $4.78 1/4 a bushel, down $0.02 1/2.
No live cattle contracts were posted for delivery Monday.
The CME Feeder Cattle Index for the seven days ended Friday was $236.53 per cwt, down $3.20. This compares with Monday’s Nov contract settlement of $237.67, up $0.77.