Beef Buzz News
Derrell Peel Foresees a Decrease in Beef Production for Remainder of 2022
Wed, 06 Jul 2022 19:36:23 CDT
Senior Farm and Ranch Broadcaster, Ron Hays visits with Oklahoma State University Extension Livestock Market Economist, Derrell Peel. Now that we are halfway through 2022, Peel says the first half of the year was challenging for our beef cattle producers.
Listen to Ron Hays and Derrell Peel on Projected Beef Inventory
"We started the year with having turned the corner from a cattle price standpoint," Peel said. "Prices have been above year ago levels."
Prices went up significantly towards the end of last year, Peel said, but we have been waiting for other pieces to fall into place in terms of feedlot production which leads into beef production. Because that hasn't happened yet, Peel added our annual expectation for beef production in 2022 is seen to be a decrease from 2021's record level.
"I still think it's going to turn," Peel said. "We have trimmed our forecast. We don't think beef production will be down as much because obviously, the first half wasn't down, but we still think there will be a decrease in beef production in the second half of the year."
In the second half of the year, Peel said a production decrease will mean that cattle slaughter will decrease.
"We are watching carcass weights too and they have come down to about equal to year-ago levels or following a seasonal pattern pretty close," Peel said.
Due to drought, Peel said cow slaughter continues to be elevated. Elevated slaughter numbers which started last year, will probably continue for the rest of the summer at some level, Peel added.
"We probably won't be as up as much on a percentage basis simply because we will be comparing to larger slaughter numbers from last year," Peel said. "The real key to this is going to be the fed steer and heifer slaughter."
Steer slaughter is down this year as expected, Peel said, but it has been offset by heifer slaughter, which remains elevated because of drought. In the second half of the year, Peel said, we will see if this pattern continues.
As we have seen before, Peel said, the drought has moved around regionally since 2020.
"The drought started in the southwest part of the U.S. and in 2021 it was really focused on the northern plains and the northern rocky mountain region," Peel said. "That has improved somewhat up there, but now it has rebuilt much more severely in Texas and part of the southern plains."
Drought impacts continue to affect cow slaughter, Peel said, due to the inability to produce forages such as hay and pasture in the drought regions.
"Supply chain issues are part of it," Peel said. "We have seen significantly higher prices across the board for inputs and that's had a big impact."
In areas that are not facing drought, Peel said forage production is down as well because of prices of fuel and fertilizer.
"We are going to see impacts outside of the drought regions in addition to the continuing drought impacts that we see, Peel said. "We are kind of waiting for the cattle numbers to catch up with the cyclical impacts."
Overall cattle numbers have been declining since they peaked in 2019, Peel said, yet we still have not pushed this last bit of numbers through the feedlot.
"As of June 1, we had a record for that date of feedlot numbers, and feedlot inventories and looking for that to turn the corner for several months," Peel said. "It will do it, but the timing has always been tricky because we continue to see these other impacts."
Click the LISTEN BAR below to listen to Ron Hays and Derrell Peel on an outlook for cow numbers and slaughter for the rest of 2022 and going into 2023.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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