Significant Beef Production Drop Could Wait For 2025

The Department of Labor’s Bureau of Labor Statistics released the July 2024 Consumer Price Index last week.

The August Livestock, Dairy, and Poultry Outlook report from the USDA said the all-items CPI was 315 in July.  Beef prices showed the most growth since the early 1980s; the July 2024 beef and veal CPI was 429; 4.5% higher than the year before.

The CPI for food also was higher than the all-items CPI, with a July value of 331, the USDA said.  The year-over-year increase in the food CPI was less than the increase in the all-items CPI, 2.2% for food and 2.9% for all-items.

Poultry and dairy’s inflation rates were lower than the all-items CPI, the USDA said.  Pork increased 3.6% and eggs by 19.1%.

 

UPTICK IN HEIFERS ON FEED

 

The USDA cancelled the July Cattle (Inventory) report, starting this year, so the industry does not have the information it needs regarding heifers on feed.

However, the July Cattle on Feed report broke down the number of steers and heifers in feedlots with capacity of 1,000 head or more on July 1.  To some degree this can reflect the sentiment of cow-calf producers’ willingness to retain young females for breeding during the first half of the year.

From that report, the USDA estimated that on July 1, 6.824 million steers and 4.480 million heifers were on feed, an increase of 0.8% and 0.1%, respectively, from a year ago, the Outlook report said.  Lacking the number of breeding heifers that cow-calf producers were intending to retain this year, the number of heifers on feed suggested that herd expansion could be delayed further as producers appeared to be capitalizing on strong calf prices.

 

MEXICAN FEEDERS UP

 

One contributing factor to the number of heifers in feedlots was the increase in feeder cattle from Mexico, the USDA said.  Based on weekly USDA Agricultural Marketing Service data, US – Mexico Livestock Imports/Exports for January through June, importation of feeder heifers from Mexico increased 91%, or 126,210 head, compared with the same period last year.

Further, the proportion of heifers imported from Mexico jumped to 36% from 23% of total feeder calves from Mexico in the same period last year, the USDA said.

 

BEEF PRODUCTION UP

 

The outlook for 2024 beef production was raised 81 million pounds from last month to 26.736 billion pounds, the USDA said.  This reflected a slightly faster-than-expected pace of cattle slaughter projected through the end of the year.

Yet a slower-than-expected placement rate meant some expected 2024 beef production was shifted to early 2025, the USDA said.

 

CATTLE, BEEF RECAP

 

The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $186.55 per cwt to $196.79, compared with last week’s range of $184.41 to $196.56 per cwt.  FOB dressed steers, and heifers went for $297.17 per cwt to $298.10, compared with $294.90 to $303.69.

The USDA choice cutout Monday was down $1.90 per cwt at $315.55 while select was down $0.58 at $302.01.  The choice/select spread narrowed to $13.54 from $14.86 with 117 loads of fabricated product and 17 loads of trimmings and grinds sold into the spot market.

The weighted average USDA listed wholesale price for fresh 90% lean beef was $374.37 per cwt, and 50% beef was $181.61.

The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.50 to $1.60 a bushel over the Sep corn contract, which settled at $3.78 a bushel, up $0.07 1/2.

No live cattle contracts were tendered for delivery Monday.

The CME Feeder Cattle Index for the seven days ended Friday was $243.99 per cwt, down $2.72.  This compares with Monday’s Aug contract settlement of $242.37, down $0.40.