The USDA’s Livestock, Dairy, and Poultry Outlook this week said 2021 beef production was expected to be lower on lighter second-half carcass weights as drought continues to affect the beef industry.
The 2021 beef production forecast was reduced by 33 million pounds from last month to 27.872 billion, the USDA said.
FORAGE PRODUCTION DROPPING
Based on the USDA’s National Agricultural Statistics Service Crop Progress report for the week ended Aug. 1, dry and low-moisture soil continues to worsen in some of the Northwestern States. This has resulted in declining pasture and range conditions in the affected areas.
Some states had very poor to poor conditions on as much as 80% to 90% of their pasture and range areas. According to US Drought Monitor Data on Aug. 3, about 32% of the cattle inventory was in areas experiencing some level of drought.
CARCASS WEIGHTS BELOW YEAR AGO
For the week ending July 24, average cattle carcass weights were 15 pounds lighter than the same week last year. Steer, heifer, and cow average carcass weights were 9, 13 and 7 pounds, respectively, below last year.
While average carcass weights were lower, cow slaughter was up 16% from the same period from a year earlier. Given the expected tight forage supplies, cow-calf producers will remain relatively aggressive in cow culling in the second-half of 2021, the Outlook report said. Third- and fourth-quarter cow slaughter expectations were raised, increasing the proportion of lighter-weight cattle in the slaughter mix.
HERD STILL CONTRACTING
The USDA’s National Agricultural Statistics Service’s midyear Cattle (Inventory) report July 23 estimated the US cattle herd at 100.9 million head, 1% fewer than the 2020 estimate of 102.2 million. The number of beef cows was down 2% from a year earlier at 31.4 million head, but the number of dairy cows was estimated to be 2% more than last year at 9.5 million.
The 2021 calf crop was expected to be 35.1 million head, down slightly from last year.
Producers intend to keep about 4.3 million beef heifers as cow replacements, 2% fewer than last year. Based on the number of beef cows on July 1 and beef cow slaughter in the first half of the year, the Economic Research Serviced estimated that 13% fewer beef heifers entered the herd in first-half 2020 than a year earlier.
CATTLE, BEEF RECAP
Last week, the USDA reported an average formula net live-basis price for all steers and heifers of $124.29 per cwt, and a formula dressed basis price of $197.67.
The USDA reported a formula base price for live FOB fed steers Thursday of $124.34 per cwt and for FOB fed heifers of $123.96. FOB dressed steers went for $191.59, while FOB dressed heifers sold at $193.64.
The USDA choice cutout Thursday was up $1.55 per cwt at $341.63, while select was up $6.61 at $316.41. The choice/select spread narrowed to $25.22 from $30.28 with 52 loads of fabricated product and 23 loads of trimmings and grinds sold into the spot market.
The USDA reported Thursday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.60 to $2.00 a bushel over the Sep futures and for southwest Kansas were unchanged at $0.70 over Sep, which settled at $5.50 a bushel, down $0.11 3/4.
No contracts were tendered for delivery Thursday against Aug cattle futures. Twenty-five steer and no heifer contracts were retendered at one. Twenty-five heifer contracts were retendered and reclaimed at two.
The CME Feeder Cattle Index for the seven days ended Wednesday was $155.42 per cwt up $0.18. This compares with Thursday’s Aug contract settlement of $158.27 per cwt, down $0.57.