Carcass weights add price pressure

Wes Ishamel, Southern Livestock Reporter

May 15, 2024

Heavier fed cattle carcass weights continue to weigh on cash fed cattle prices and wholesale beef values.

March fed steer dressed weights were record large at 923 lbs., 9 lbs. heavier year over year, according to Josh Maples Extension livestock economist at Mississippi State University, in a recent issue of Cattle Market Notes Weekly. He notes carcass weights typically decline during the first half of the year.

For perspective, Maples explains in October last year USDA forecast beef production for 2024 to be 6.3% less year over year. By April of this year the forecast reduction was 1.9%. He explains increasing carcass weights are due in part to longer times on feed, larger placements in recent months and anemic wholesale beef prices.

“Compared to some expectations, producers continued to send more heifers to feedlots rather than holding them back for replacements,” Maples explains. “This contributed to larger feeder cattle supplies and larger beef production expectations for 2024 than would have occurred if those heifers were held back for breeding purposes. It sounds counterintuitive, but beef supplies will get really tight whenever herd expansion begins in full force because there will be fewer heifers and cows contributing to the beef totals.”

Heifers on feed April 1 0f 4.6 million head were 39% of the mix and 1% more than the same time last year, according to the April Cattle on Feed report.

Fed prices forecast higher

The weekly weighted average FOB five-area direct fed steer price at the end of April was $185.08/cwt., up $7.93 year over year. The dressed delivered steer price was $10.34 higher at $294.39.

USDA’s Economic Research Service (ERS) increased projected five-area direct average fed steer prices for the remainder of this year in the monthly World Agricultural Supply and Demand Estimates.

Compared to the previous month, based on recent data and expected strength in demand, forecast prices increased $2 in the second quarter to $185/cwt., $2 in the third quarter to $184 and $4 in the fourth quarter to $190. The annual average price increased $2 to $185.

That was with beef production estimated 130 million pounds more at 26.5 billion pounds. Forecast production was raised on heavier weights and increased slaughter. 

Wholesale beef values had yet to rise seasonally through the first week of May. Choice boxed beef cutout values started April at $305.74/cwt. and ended the month at $294.37.

Demand strong for calves and feeders

Along the way, cash calf and feeder cattle prices remain resilient in the face of volatile cattle futures tied to confirmation of Bovine Influenza A virus (BIAV) in dairy cows in several states. Subsequent testing of milk and ground beef samples in those states indicated no threat to the food supply. 

“Calf prices normally reach a seasonal peak at the end of the first quarter, so steer calf prices may not recover fully to the March highs,” Peel explains in his late-April weekly market comments. “However, the strong general uptrend in cattle markets likely means calf prices may move more sideways for a period before moving higher in the later part of the year. Concern about summer grazing conditions could temper stocker demand in the next month or so.”

There is an 85% chance that the current El Niño transitions to neutral by April to June, according to the Climate Prediction Center. There is a 60% chance of La Niña developing by June-August and an 85% chance of La Niña conditions in the northern hemisphere by this fall and early winter.

Peel notes heavyweight feeder cattle prices have bounced more than calf prices since BIAV applied pressure, buoyed by recovery in Feeder futures and seasonal tendencies for higher prices from now through the middle of the year.

“Despite the unexpected shocks that have impacted feeder markets, feeder prices are proving to be very resilient,” Peel says. “Feedlot demand is strong as feedlots chase limited feeder cattle supplies, spurred on by declining feedlot cost of gain. For all feeder cattle, both calves and big feeders, the highest prices of the year are expected in the fourth quarter.”

ERS raised the expected second-quarter feeder steer price by $3 to $250/cwt. in the latest monthly Livestock, Dairy and Poultry Outlook. The increase was based on recent price data and stronger first-quarter placements leaving fewer calves available for placement in the second quarter. 

Compared to the previous month, price expectations (basis 750-800 lbs., Oklahoma City) were little changed for the rest of this year: $261 in the third quarter and $267 in the fourth quarter for an annual average price of $254.46.

Beef exports steady

Although 10% less year over year, March U.S. beef exports were the most this year, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). March exports totaled 102,218 metric tons (mt). Export value was $889.9 million, down 0.3% from a year ago but the highest in nine months.

March beef export value equated to $454.62 per head of fed slaughter, the highest since mid-2022. 

Beef exports for the first quarter (Jan. through Mar.) totaled 311,865 mt, down 4% from the first quarter of last year. Export value increased 6% to $2.48 billion. 

“Beef demand in the Caribbean was outstanding in March, and we continued to see a strong rebound in the Middle East as well as some positive signs in Korea and Japan, where the foodservice recovery is making progress,” says Dan Halstrom USMEF president and CEO. “It’s a challenging situation in terms of supply availability, but the value U.S. beef commands internationally is very encouraging – as evidenced by March export value climbing to more than $450 per head.”

U.S. pork exports of 260,430 mt in March were 0.1% more than a year earlier. Pork export value was 2% higher year over year at $740.8 million.

Southern Livestock

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