It may seem counterintuitive given the hot summer sun of late July and early August, but feedlot steers and heifers have been piling on the weight like presidential candidates gobbling fried food at the Iowa State Fair. While economic daily gain is the name of the feeding game, when fed cattle surpass the upper limit of packer tolerance it can spell big trouble and big discounts.
Carcass size over the 4-week period from mid-July to mid-August has ballooned in a way not seen in more than 20 years. Specifically, steers exploded by 16 pounds, the largest surge for the period since before 1993, and 2.4 times greater than the 1993-2014 average.
At the same time, heifers inflated by 13 pounds, also the greatest swelling recorded since before 1993 and 1.9 times than the long-term average.
Of course, context is everything. While these readings constitute an impressive month's work at the feed bunk, they wouldn't receive mention outside of coffee shop small talk had it not been for the dangerously high level of carcass weights to begin with, dangerous enough to justify serious packing house discounts.
For the week ending August 15, steer carcass tipped the scale at no less than 900 pounds, 21 pounds greater than the previous year and 31 pounds heavier than the 2011-2014 average. Heifer tickets for the same week were stamped at 814 pounds, also 21 pounds bigger than 2014 and 22 pounds larger than the 3-year average.
Although these totals did not represent all-time records, such heft evident a full fortnight shy of Labor Day is enough to put the boys at Guinness on notice. After all, the seasonal weight chart easily promises an additional carcass growth of 10-15 pounds between late summer and early winter.
Some have suggested we are not likely to see continued carcass growth through the end of the year, at least not at the average rate. They argue that current packer discounting (e.g., some Northern cattle throwing carcasses 1,050 or better have been docked $10 to $15) will at least work to slow weight gain through the balance of the year.
But I think that's so much whistling in the dark. Carcasses are likely to stay large and get larger for two basic reasons: 1) Even with the fed market in the mid to upper $140s on a live basis, cost of gains as much as 25% less than what the cattle are selling for supports more days on feed and heavier weights; and 2) Margin-minded processors still struggling with limited fed numbers and overcapacity are not likely to accelerated chain speed capable of pulling down weights from the harvest end.
To be sure, packers could become increasingly aggressive in their discounting. But they still face the challenge of competing with one another to fill shackle space. I can remember a time when 900-pound carcasses were discounted. But those were days when a great feedlot population allowed them to be much, much choosier.