At first glance, rising slaughter cattle carcass weights are cause for concern among market analysts, but while they shouldn’t be discounted completely, summer gains are predictable and seasonal, said a university Extension economist.
Derrell Peel, extension livestock economist at Oklahoma State University said in a market comment that the cattle industry should keep an eye on rising carcass weights as it could have dramatic effects on fall beef supplies.
USDA Agricultural Marketing Service and National Agricultural Statistics Service data show steer dressed weights are following a seasonal pattern but are running just below last year and well above the 2010-2014 average.
Even though carcass weights are expected to continue rising seasonally, the rate of gain is something to watch as it could result in more beef production than can be consumed and pressure prices.
So far this summer, carcass weights of fed steers have more or less paralleled the five-year average. But from here on, weekly averages last year widened the gap between themselves and the average as feed and fed cattle prices declined.
“We expect to continue to increase through the fall here,” Peel said. “They typically peak in October or November. I think that’s the real key.
“I think the fact that it is growing is not as much of a concern,” he said. “But how fast its growing seasonally here in the next eight weeks or so, will be really critical.”
If the seasonal increase is more normal into the end of October, slaughter weights could run 10-15 pounds below last year.
Such declines will be necessary as cattle slaughter is expected to rise with the number of feedlot placements this year.
BEEF PRODUCTION ABOVE 2015
So far this year, US beef production is running above a year earlier, but with few exceptions remains below the 2010-2014 average. AMS and NASS data put production last week at 492.1 million pounds and year-to-date production at 15.415 billion pounds, a gain of 4.5% over 2015’s 14.747 billion.
Last week’s estimated beef production of 492.1 million pounds was 36.2 million, or 7.94%, above the 455.9 million produced in the same week a year earlier. However, it was 10.94 million, or 2.17%, below the five-year average of 503.04 million. On a graph, it looks like this:
True to form, last week’s beef production was the highest of the year. If the pattern holds, this week’s beef production is liable to be even higher before it falls off into December.
But if last year’s carcass weight pattern is repeated, Peel said there could be trouble with rising beef production. Add to this a possible lower cost of feed with bumper grain crops and the temptation to feed to heavier weights may be too great for feeders to ignore, pressuring beef and cattle prices even more.
CASH CATTLE MARKETS $3 LOWER
Cash cattle markets were $3 per cwt lower Wednesday with cattle trading in a range of $114.50 to $115.50 with most at $115. On a dressed basis, cattle traded at $181 to $183, down $3 to $4.
The USDA’s choice cutout Wednesday was $0.07 per cwt lower at $200.32, while select was up $0.07 at $193.73. The choice/select spread narrowed to $6.59 from $6.73 with 106 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Tuesday was $147.73 per cwt, down $0.11. This compares with the Aug settlement Wednesday of $146.65, up $0.20.