Feedlots and Packers Act on Incentives to Produce Heavier Carcasses

Listen to Ron Hays talk with Derrell Peel about incentives for packers and feedlots to produce heavier weights.

Senior Farm and Ranch Broadcaster, Ron Hays, is talking with Oklahoma State University Livestock Market Economist, Derrell Peel about feedlots and packers working towards heavier carcass weights to offset low cattle numbers.

According to Peel, there are plenty of incentives for the feedlot industry and the packers to hold cattle a little longer and see those heavier carcass weights.

“Coming into this year, we were expecting beef production to be down around 5 percent, plus or minus, on top of the 4.7 percent decrease last year,” Peel said. “Cattle slaughter is down for the year. We have less cattle, and we know we are going to continue with tighter numbers there.”

Due to the economics of replacing cattle in the feedlot and lower cost of gain, Peel said feedlots have more of a reason to feed cattle longer than usual. Peel said carcass weights went up counter seasonally in March and April, equating to about 27 pounds heavier per carcass on average for steers and heifers compared to a year ago.

“Seasonally, these carcass weights should be coming down to a low around the end of May or the first of June, then they typically go back up in the last part of the year,” Peel said. “I do think we will see some more seasonal decrease in them, but they are decreasing from a higher level. I think we are going to continue to see these carcass weights running well above a year ago.”

Peel said higher carcass weights have helped to offset the decline in slaughter rates, as beef is down for the year. Peel said there are many positives for both feeders and packers for feeding cattle to heavier weights and therefore producing a heavier carcass.

“If you slow down the turnover in the feedlot, you are not producing more beef and you are actually producing fewer cattle over time, but you can keep them in the feedlot longer, slow down the turnover rate, and keep the feedlot full, which is the motivation at least in the short run for the feedlots is to keep feeding and to keep the feedlot full from a feeding standpoint,” Peel said. “That leads to this incentive to essentially hang onto cattle longer, and push the weights higher, potentially to overfeeding these cattle.”

When there are not enough cattle to utilize the full packing capacity, Peel said packers offset this by bringing in more pounds from each carcass. There is a point when these cattle may become too heavy, Peel said, as the limit continues to be pushed.

“The other part of it is that physically, cattle can get too big,” Peel said. “Most packers have an upper weight limit of around 1050 for carcasses, and again, both feedlots and packers have the incentive to push up against that limit, and in some cases, we may go over.”

If steers and heifers do become too heavy, Peel said they will have to be slaughtered in different facilities made for cows and bulls. Peel adds this has happened before.

The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Ag Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR at the top of the story 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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