Earlier this year, USDA estimated that the Janucattle inventory increased by nearly 2% during 2016, driven in part by a 2016 calf crop that was almost 3% larger than in 2015. Another increase in slaughter numbers seems likely in 2018 as the industry is still in the expansion phase of the cattle cycle. What’s Ahead in 2018?Īnnual cattle slaughter volume bottomed out in 2015 at 29.2 million head and has been increasing since, reaching 32.7 million head in 2017. So, international trade in meat clearly benefit- ted U.S. The result was an increase in total meat (red meat plus poultry) supplies of about 1%. increased less than total meat production because imports declined by 1% and total meat exports increased by over 4%, both compared to the prior year. Likewise, total meat supplies at retail in the U.S. The result was only a 2% increase in per capita beef supplies for U.S. beef exports increased 10%, and beef imports actually declined about 2%. consumers, how- ever, did not increase as much as beef production because U.S. beef production increase to approximately 4% compared to 2016. The year-to-year reduction in cattle weights held the 2017 U.S. Cattle slaughter during 2017 rose nearly 6% above the prior year, but dressed carcass weights averaged 1.4% below 2016s. Both beef and total meat supplies were larger in 2017 than in 2016, putting some downward pressure on prices. Stronger feeder prices pushed cattle feeders’ breakevens up and, although slaughter cattle prices did strengthen seasonally from late summer lows into fall, they did not improve enough to offset the rise in feeder cattle placement costs.Ī key driver of beef and cattle prices is the supply of meat, especially beef, available to consumers. By this fall, however, cattle feeders were struggling to breakeven again. Feeding was especially profitable during the spring and early summer of 2017 when cattle feeders benefitted from marketing cattle that were placed on feed when calf and feeder cattle prices were near their lows and slaughter cattle prices were strengthening. This was a dramatic turnaround from 2016 when estimated losses averaged $111 per head for yearlings and $220 per head for calf-based programs. Yearling based and calf based feeding programs were very profitable in 2017 as returns averaged over $170 per head above estimated costs for both feeding programs. Iowa State simulates returns from a stylized feeding pro- gram where cattle are placed on feed every month and feed is purchased, and cattle sold, in the cash market with- out any risk management. In fact, Iowa State Extension’s estimate of cattle feeding returns rebounded dramatically during the year. The weakness in feeder and calf prices in late 2016 and early 2017 helped cattle feeders return to profit- ability during 2017, a welcome respite from the large losses many feeders experienced during the prior two years. The result was an annual average slaughter steer price of about $122 per cwt., virtually unchanged from 2016’s annual average. During January, Southern Plains slaughter steer prices averaged just over 10% below a year earlier, but by late November and early December slaughter steer prices averaged about 12% higher than 12 months prior. Prices for slaughter cattle during 2017 were not as volatile as calf and feeder prices, although they did fluctuate during the course of the year. For the year, prices for 700-800 pound steers in Kentucky averaged about $136, just a couple of percent lower than a year earlier. But by late November and early December, feeder steer prices recovered to the mid-$140s, yielding a fourth quarter average nearly 27% higher than a year earlier. Prices for heavier weight feeder steers followed a pattern similar to that of steer calves in 2017 with prices for 700- 800 pound steers in Kentucky during January averaging near $121 per cwt., more than 20% below January 2016. Despite the price recovery in late 2017, weakness early in the year led to an annual average price of $149 per cwt., which was about 3% lower than in 2016. However, by late November and early December 2017, prices for the same weight steers had recovered to average in the low $150s per cwt., more than 20% above a year earlier. During January prices for 500-600 pound Kentucky steers averaged just less than $130 per cwt., 27% below the January 2016 average. Examining prices for steer calves and feeder steers in the eastern Corn Belt helps illustrate how large the price swings were over the last 12 months. Prices for calves and feeder cattle started 2017 sharply lower than a year earlier but by year-end, prices were well above those of 12 months prior.
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