Weekly US beef production is drifting lower in relation to last year and the 2017-21 average, and with a declining herd size, it looks to remain subdued.
Last week, beef production was reported by the USDA at 509.2 million pounds, down 2.4 million, or 0.47%, from 511.6 million a week earlier, down 27.9 million, or 5.19%, from 537.1 million in the same week last year and down 13.04 million, or 2.50%, from the previous five-year average of 522.24 million.
NOT THE WHOLE STORY
But just looking at those numbers doesn’t tell the whole story. Weekly 2023 beef production has been less than the same week in 2022 for all but two weeks, resulting in a year-to-date total beef production of 14.799 billion pounds down 4.7% from 15.535 billion last year during the same period.
Compared with the 2017-2021 average, this year’s weekly beef production has been below the average in all but 18 weeks. However, when graphed, it’s easy to see that the latest trend is toward staying below the average trend.
If that assumption proves true, 2023 beef production will come up short of last year and the previous five-year average and support wholesale and retail product prices.
ANOTHER POINT
But there is another aspect of beef production that is interesting. Choice beef production as a percentage of all beef produced is not showing a midsummer increase like it usually does.
Prior to the last few weeks of June, the percentage of choice beef produced has been well above average while trending lower seasonally. But it didn’t bottom in May or rise in June.
Choice beef production as a percent of beef graded appears to have begun a summer increase, although it is a bit late when compared with the 2017-2021 average. Now is about the time when the percentage of choice beef produced out of the total should be peaking. If this is the peak at 73%, then the summer production increase will fizzle in comparison with other years.
The percentage of choice beef versus not choice beef produced usually hits a seasonal bottom in late April or early May before beginning it midsummer increase. Sometime in August it turns downward again until a late October annual bottom.
Last year, the percentage of choice beef produced had a sharp midsummer rally in early July but tapered into a late-September low, followed by a rally into late December.
So, total beef production is near to slightly below average, but the percentage of choice beef produced is declining. Now the question is whether consumers will chase choice beef?
They may be buying less choice, but it would be hard to tell since less of it is being produced.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $179.20 per cwt to $190.48, compared with last week’s range of $178.00 to $188.83 per cwt. FOB dressed steers, and heifers went for $284.31 per cwt to $292.45, compared with $280.35 to $289.99.
The USDA choice cutout Thursday was down $0.48 per cwt at $302.86 while select was down $0.05 at $279.76. The choice/select spread narrowed to $23.10 from $23.53 with 95 loads of fabricated product and 19 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 at $1.90 to $2.05 a bushel over the Sep corn contract, which settled at $5.33 1/4 a bushel, down $0.07.
The CME Feeder Cattle Index for the seven days ended Wednesday was $242.29 per cwt, up $0.28. This compares with Thursday’s Aug contract settlement of $244.65 per cwt, up $0.45 and Sep’s $248.27, up $0.82.