Call the Market

Every month, USDA releases its World Agricultural Supply and Demand Estimates (WASDE) report, which forecasts beef demand, quarterly steer prices, imports, exports, and much more. But on Monday, Aug. 12, when the report came out, I began reading the livestock portion and quickly became skeptical. The report stated, "Beef production is raised on higher steer and heifer and cow slaughter, which more than offsets lighter dressed weights."

I struggle with that sentence and the context because cow slaughter speeds have drastically declined from years past as producers have already culled their cow herds extensively and carcass weights are far heavier than what they've been. But don't take my word for it; look at the data yourself.

Point No. 1

Based on USDA's Weekly Cow Slaughter Under Federal Inspection, thus far through 2024 the weekly beef cow slaughter in the U.S. has averaged 55,650 head. At this time a year ago, the weekly beef cow slaughter was averaging 66,269 head; and in 2022, the weekly beef cow slaughter was averaging 75,637 head. The market's five-year average weekly beef cow slaughter is 65,590 head -- exactly 9,940 head more each week than what the market is currently processing. The data is clear -- we are processing fewer beef cows this year than compared to years past when liquidation pressures were greater with severe drought conditions, expensive feed prices, and weaker feeder cattle prices. But now in 2024, we have the lowest beef cow inventory ever recorded and I personally don't foresee a reality in which our processing speeds increase and go beyond seasonal norms. It's likely the market could see beef cow slaughter speeds increase slightly this fall as more cull cows will seasonally be marketed after pregnancy checking. But again, with the total number of beef cows depleted in the countryside, it's very unlikely producers cull dramatically again, given that feed prices are more affordable and feeder cattle prices are strong.

Point No. 2

Dressed steer weights have dramatically outpaced those of years past as, genetically, cattle are being bred to be bigger and feedlot managers are keeping cattle on feed longer than they historically have as feed prices are more affordable. Based on the USDA's Actual Slaughter Data Under Federal Inspection, thus far through 2024 dressed steer weights have averaged 919 pounds. In 2023 dressed steer weights averaged 896 pounds and the industry's three-year average for steer dressed weights is 900 pounds. The trend of increasing carcass weights isn't likely to change anytime soon as cheap feed prices incentivize feedlot managers to feed cattle for longer.

I recently wrote on the matter of increasing carcass weights in my Call the Market piece, "Are Bigger Carcass Weights Really What the Industry Needs?" Click here to read the full article: https://www.dtnpf.com/….

In conclusion, I respect and find value in USDA's WASDE reports, but I struggle with this recent conclusion, as it's highly unlikely beef cow slaughter increases with the nation being at a historical low in inventory and dressed carcass weights are increasing, not decreasing.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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