The biggest question for the second half of the year in the cattle industry is the extent to which herd rebuilding begins with increased heifer retention and continued reductions in cow slaughter, said Derrell Peel, Oklahoma State University Livestock Marketing Specialist, in a market letter.
Producer expectations and remaining drought conditions will affect the timing of herd rebuilding efforts, Peel said. The upcoming July Cattle on Feed report (with quarterly steer and heifer feedlot inventories) and the July Cattle report may provide important clues as to how cattle market conditions may change in the second half of the year.
YEAR TO DATE SIGNIFICANT
The first half of 2023 has seen significant changes in cattle and beef markets, he said. Prices are higher across the board as tighter cattle numbers and declining beef supplies push markets toward, or beyond, record levels.
Remaining drought areas in the central and southern plains continue to shrink with continuing regional impacts but declining effect on national cattle markets.
Beef production in the first 24 weeks of 2023 is down 4.9% from the 2022 record pace, he said. In the last four weeks of data, beef production is down 5.3% from last year.
2023 yearling (steer + heifer) slaughter is down 3.0% from last year, with steer slaughter down 4.7% and heifer slaughter down 0.4%, Peel said. However, heifer slaughter is down 4.9% year over year in the last four weeks and combines with a 5.9% decrease in steer slaughter to reduce total yearling slaughter 5.5% in the most recent four weeks of data.
Total cow slaughter is down 4.4% for the year with a 12.1% year-over-year decrease in beef cow slaughter partially offset by a 5.5% year-to-date increase in dairy cow slaughter, he said. Bull slaughter is down 8.4%.
FEEDER MARKETS UP
Oklahoma auction prices for steer calves under 600 pounds averaged 41.9% higher year over year in June, Peel said. Feeder steers over 600 pounds averaged 39.7% higher.
The five-market fed cattle price averaged 30.3% higher year over year in the past four weeks, he said. The June Cattle on Feed report showed feedlot inventories have been lower for nine straight months. Feeder numbers will continue to decline as the reality of smaller cattle supplies builds.
Increased heifer retention likely will squeeze feeder supplies more sharply in the second half of the year, Peel said.
BEEF PRICES UP
Boxed beef prices in the last four weeks averaged 24.1% higher year over year, he said. Boxed beef prices moved sharply higher after Memorial Day with strong buying for the Independence Day holiday.
The follow up to July 4 (a four-day weekend for many) will provide good indications for beef demand for the remainder of summer, Peel said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $179.40 per cwt to $180.38, compared with last week’s range of $179.83 to $186.11 per cwt. FOB dressed steers, and heifers went for $283.24 per cwt to $284.38, compared with $284.16 to $289.29.
The USDA choice cutout Monday was up $0.62 per cwt at $328.34 while select was up $0.67 at $294.30. The choice/select spread narrowed to $34.04 from $34.09 with 57 loads of fabricated product and 14 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 $1.30 to $1.50 a bushel over the Jul corn contract, which settled at $5.57 1/4 a bushel, up $0.02 3/4.
The CME Feeder Cattle Index for the seven days ended Friday was $231.41 per cwt, down $1.34. This compares with Monday’s Aug contract settlement of $247.90 per cwt, up $0.32.