Source: Rita Jane Gabbett, MEATINGPLACE, 7/24/15


USDA reduced the second-quarter beef production forecast due to lighter than expected steer and heifer slaughter during May and June.

Third-quarter 2015 beef production is forecast to reach 6.250 million pounds, approximately 1 percent higher than a year ago. Fourth-quarter production is expected to be 6.025 million pounds, about even with fourth-quarter 2014. Total commercial beef production for 2015 is projected to reach 23.824 billion pounds, down 1.8 percent relative to 2014, according to USDA’s latest Livestock, Dairy and Poultry Outlook report. 

Heavier cattle
Cattle feeders have partially offset reductions in steer and heifer slaughter by feeding live cattle to heavier weights. The combination of heavier cattle entering feedlots due to favorable pasture conditions, extended periods of cattle on feed, and a larger proportion of steers in the slaughter mix as opposed to heifers has resulted in heavier average dressed cattle weights.
Despite the recent setbacks in the live cattle markets, cattlemen remain motivated to raise cattle to heavier weights as a result of moderate feed prices and historically strong cattle prices.

Dressed weights typically reach their seasonal lows in the second quarter before trending heavier the last half of the calendar year. However, this year, dressed cattle weights have not exhibited a normal seasonal decline and have remained relatively steady at 814 pounds during the second quarter.

Third- and fourth-quarter average dressed weights are expected to be record-heavy at 824 pounds and 829 pounds, respectively. The annual average dressed weight for live cattle in 2015 is expected to reach 820 pounds, approximately 17 pounds heavier than the previous year.

Prices, margins
Wholesale beef prices rebounded in early July, albeit modestly, after experiencing sharp declines in late May and early June. The modest advance in beef prices is more than likely tied to strong buying interest for processing beef and popular grilling items prior to the July 4th holiday, combined with smaller than expected weekly fed cattle slaughter numbers. However, wholesale beef prices declined sharply following the July 4th holiday.

Packers’ margins have been squeezed, and packers are expected to remain prudent when considering the number of animals they are willing to process each week as the year continues. Wholesale beef prices are expected to moderate through the remainder of July as interest in processing loses momentum after the July 4th holiday and consumers consider eating more affordably priced pork and chicken products.

Packers are expected to remain diligent in holding weekly kills at relatively low levels in order to underpin wholesale beef prices, USDA predicted.

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