Markets
April. However, the slaughter pace, and beef production, picked up substantially during May and June as daily slaughter volume rose 5 to 6 percent above a year earlier. Heavier weights pushed beef production up even more than slaughter volume would indicate as daily beef production rose 6.6 percent during May and 5.7 percent during June.
The percentage of females in the slaughter mix has been increasing, providing additional evidence that cattle herd growth could be coming to an end according to Mintert. Cow and heifer slaughter expressed as a percentage of steer slaughter averaged nearly 83 percent during May and June, up from 75 percent compared to the same two months in 2017. During January-June this ratio averaged 90 percent compared to 83 percent last year.
“ The rise in the female-tosteer slaughter ratio is not large enough to suggest any liquidation is taking place, but it is indicative of waning interest in herd expansion,” he says.“ Additionally, drought and tight forage supplies this year in two key cow-calf producing states,
Texas and Missouri, could help bring expansion to a halt.”
One unknown hanging over all meat markets is the impact of rising tariffs on meat exports.
“ Meat exports have been a bright spot for meat demand in recent years as growing consumer incomes in importing countries has supported increasing exports of U. S. produced beef, poultry, and especially, pork.
“ The impact of rising tariffs on U. S. meat exports will be felt even more strongly in the second half of the year as tariffs on many products exported to China, Mexico, and Canada increased again in early July,” Mintert explains.
During 2017, 11 percent of U. S. beef production was exported to all destinations. The largest U. S. beef customer in 2017 was Japan followed by South Korea( 17 percent), Mexico( 15 percent), Hong Kong( 12 percent), and Canada( 11 percent). Three of those top five destinations will be impacted by increases in tariffs on beef products from the U. S.
Mintert also adds that fed cattle prices started the year off stronger than in early 2017 and remained above year-earlier levels through early March.
However, since early March, fed steer and heifer prices have consistently fallen below levels observed a year earlier as fed steer prices in the Southern Plains averaged $ 116 per cwt. during the April-June quarter, 12 percent lower than during 2017’ s spring quarter. Prices during the first three weeks of July averaged about $ 112 per cwt., 6 percent lower than a year ago as large meat supplies continued to depress prices.
In contrast to fed cattle, prices for steer calves in the eastern Corn Belt started the year off much stronger than in 2017, primarily because prices in 2017 were very weak. Prices for 500-600 pound steer calves in Kentucky averaged $ 159 per cwt. during the January- March quarter, 17 percent higher than a year earlier before declining slightly during the second quarter to average $ 156 per cwt., 1 percent lower than during April-June 2017.
“ Declines in corn prices have been supportive of prices for both calves and feeder weight steers this summer and are expected to remain supportive this fall.
“ Looking ahead, fed cattle prices are expected to remain below a year ago this summer and fall as large meat supplies continue to exert downward pressure on
24 | SEPTEMBER 2018