Beef Buzz News
Latest Cattle On Feed Report Shows Strong Beef Demand Offsetting Increased Beef Supply in 2017
Mon, 25 Sep 2017 11:13:20 CDT
The United Stated Department of Agriculture, on Friday, released the latest report for Cattle on Feed, as of September 1, 2017. Radio Oklahoma Ag Network Farm Director Ron Hays spoke with Oklahoma State University Extension Livestock Market Economist Dr. Derrell Peel for his analysis of the numbers included in this report.
Listen to OSU Economist Derrell Peel share his analysis of the latest On Feed Report with Ron Hays
“This report was pretty well anticipated- not a big surprise to me. I don’t know how the trade will react,” Peel remarked, summing up his reaction. “The placements came in a little bit higher than the average guess, but they weren’t really outside the range.”
"The September USDA Cattle on Feed report pegs the September 1 feedlot inventory at 10.504 million head, 103.6 percent of last year. August placements were 102.6 percent of year ago levels. Placements were larger than expected and may well provoke a bearish market response. What may be overlooked are the continued strong marketings pace. August marketings were close to pre-report expectations at 105.9 percent of last year. Marketings outpaced placements in August and pulled down the year over year increase in feedlot inventories, though not as much as expected. For the first eight months of the year, total placements are up 1.16 million head, an 8.4 percent year over year increase. However, total marketings were up 0.847 million head, 6.1 percent more than last year and largely offsetting the increased placements. As a result the September 1 on-feed inventory was up a modest 369 thousand head year over year," Peel wrote in an article for this week's edition of the Cow/Calf Corner newsletter.
"Higher feedlot throughput is reflected in the year to date increase in steer and heifer slaughter, up 5.9 percent year over year. Steer slaughter is up 3.3 percent while heifer slaughter is up 11.7 percent for the year to date. Additionally, beef cow slaughter is up 11.3 percent so far this year and rising dairy cow slaughter is up 3.9 percent for the year to date. Total bull slaughter is also up 13.1 percent year over year.
"Offsetting increased cattle slaughter are lighter carcass weights. While steer and heifer carcass weights are increasing seasonally, they remain below year earlier levels. In the most recent data, steer carcasses were 896 pounds, 7 pounds below one year earlier; heifer carcasses were 816 pounds, down 5 pounds from the same date last year. For the year to date, steers carcasses have averaged 14.1 pounds lower than last year while heifer carcasses are 12.3 pounds lighter.
"Total beef production for the first 36 weeks of the year is up 4.5 percent year over year. Annual beef production is projected at 26.3 billion pounds, up 4.4 percent year over year. Domestic beef consumption is projected at 56.6 pounds per capita, up 2.2 percent year over year. Despite the increase in domestic beef consumption, retail beef prices remain strong. August Choice beef price was $5.94/lb., down from $6.10/lb. in July but nearly one percent higher than August last year. The all-fresh beef retail price was $5.794/lb. in August, fractionally higher than one year ago.
"Beef production is expected to increase again in 2018, currently projected at 27.4 billion pounds. This would be a record level of U.S. beef production, exceeding the previous high of 2002 with 27.0 billion pounds. Increased beef production, combined with other meats, is projected to surpass 101 billion pounds of total meat production in 2018, a new record as well. Clearly the supply challenges will continue for the foreseeable future. However, 2017 has demonstrated very well that strong domestic and international demand for U.S. beef can mitigate much of the price pressure from growing beef production. Continued strong beef demand can limit 2018 cattle and beef price changes to modest declines."
You can listen to Dr. Peel offer his complete analysis of the September 1, 2017 Cattle on Feed report out last week from the USDA, with me, on today's Beef Buzz. To see the actual report for yourself, you can click here to jump to the report on the USDA website.
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