The Beef Cattle Slaughter Mix
Review reasons for changes in the beef cattle slaughter mix.
A handy and dependable source for information on livestock and meat markets is the "Current Situation and Analysis" section on the home page of the Livestock Marketing Information Center (LMIC) (www.lmic.info). The center is located in the Denver suburb of Lakewood and is a cooperative effort of 28 state extension services, six USDA agencies and 11 associate institutions, one of which is CME Group. LMIC provides a number of data and analysis services for its members, but does make some information available to the public on a regular basis. The weekly "Current Situation and Analysis" is one such information piece.
The LMIC homepage also provides "Prices and Production" (which serve as the basis of our "Weekly Price and Production Summary" table), "Key Graphs" and links to a number of market reports. We think you will find it worthy of a browser bookmark.
Last week's "Current Situation and Analysis" section included a timely discussion of changes in the beef cattle slaughter mix. The main points were:
- The reduction of total cattle slaughter so far this year has amounted to about 40,000 head per week, or 6%, vs. one year ago. Poor packer margins — and the resulting slowing of slaughter plant chain speeds — are a primary reason for the reduction. We would add that a very important result of this slowdown is sharply higher slaughter weights as cattle have backed up in feedlots. Average dressed weights last week were 791 pounds (lb.), up 2.3% from last year's 773 lb. in the same week.
- The reduction of slaughter, though, is far from consistent across classes of cattle. Most notable, heifer slaughter so far in 2012 is more than 9% lower than last year. As can be seen in Fig. 1, this year-on-year decline in heifer slaughter began in earnest last October and has continued this year.
- Steer slaughter has been lower this year, too, but not nearly as much as has heifer slaughter. The two weeks before the LMIC summary, steer slaughter was nearly 8% lower than last year. The week of March 3 (the last data available) it was down only 3.3% from 2011. Year-to-date steer slaughter is down 5.8%. It is interesting to note in Fig. 2 that steer slaughter is far more seasonal than heifer slaughter. It more closely matches the seasonal pattern of calving, as there aren't many alternatives to beef as uses for steers. There is no pronounced pattern, however, for heifers, as they tend to move in an out of the feeder cattle supply depending on the need for replacements. Note that, while the numbers on the vertical axes differ between the two charts, they are roughly the same scale, since the multiple from minimum to maximum is almost exactly the same for both.
- Cow slaughter rates have declined sharply so far this year with most of that decline being in the beef cow category. Beef cow slaughter was down 8% in the two weeks ending March 3 vs. 2011 and is down 0.8% year to date. Dairy cow slaughter is down 2.4% year to date. Beef cow slaughter is expected to drop vs. year-ago levels as long as drought conditions in Texas and Oklahoma continue to improve, but it will take ample spring rains to put pastures in good enough condition that producers will begin to lay back significant numbers of heifers. Only four states (California, Missouri, Nebraska and Tennessee) were holding 20,000 or greater additional beef cow replacement heifers on Jan. 1, 2012, than on Jan. 1, 2011. Nine, including major cow states Texas, Oklahoma, South Dakota, Wyoming, North Dakota, Kansas, Iowa and Idaho, had ≥20,000 fewer beef cow replacement heifers than one year earlier on Jan. 1. That's a pretty big hole to fill.
- Finally, calf slaughter (primarily for veal) has averaged 13% or 2,000 head per week fewer so far in 2012 than in 2011. Calf slaughter amounted to more than 60,000 per week as recently as 1986, but now numbers only 15,000 or so in most weeks. Better methods for feeding dairy steers for beef and lower beef calf numbers have led to dairy calves frequently having higher value as feeder animals. We suspect that lower veal demand has hurt, as well.
Editor's Note: The Daily Livestock Report is published by Steve Meyer and Len Steiner. To subscribe, visit www.dailylivestockreport.com.
