Beef supply and demand challenges continue
by Derrell S. Peel, Oklahoma State University Extension livestock marketing specialist
As expected, supply pressures continue to build in beef markets. Beef production so far this year is up 3.6 percent on larger cattle slaughter and increased carcass weights. Year-to-date cattle slaughter is up 3.8 percent driven by increases in female slaughter. Heifer slaughter is up 8.0 percent year over year and cow slaughter is up 8.1 percent so far this year. Beef cow slaughter is up 12.2 percent and dairy cow slaughter is 4.5 percent more than last year. Steer slaughter is up a scant 0.1 percent year over year.
Cattle carcass weights are up year over year after dropping sharply in 2017. Overall carcass weights are up about 5 pounds for the year. Steer carcass weights are up nearly 7 pounds while heifer carcass weights are up over 8 pounds year over year for the year to date. Cow carcass weights are also up nearly 8 pounds compared to last year. Steer and heifer carcass weights have bottomed seasonally and will increase to seasonal peaks in the fall but the question will be how much and how fast will the seasonal increase in carcass weights be compared to last year. Beef production is typically larger in the second half of the year and continued year over year growth in beef production is expected to contribute to annual beef production growth over 4 percent year over year in 2018.
In 2017, unexpectedly strong domestic and international beef demand provided extra support for cattle and beef prices in the face of growing beef supplies. To some extent that has continued in 2018, though not as pronounced as a year ago. After holding quite firm through May, boxed beef prices were under pressure into mid-June with Choice boxed beef price dropping about $5/cwt. last week. Large beef supplies are weighing on markets and the challenge may grow moving into the summer doldrums between July 4 and Labor Day. However, relative fed cattle supplies are expected to tighten in the third quarter.
Fed cattle prices have declined seasonally but are holding generally better than expected. Remember in early April when June Live Cattle futures dropped under $100/cwt. and have since traded as high as $110/cwt. and now are trading about $108. Of course June isn’t over and the next couple of weeks could have a big impact on commodity markets as the reality of a trade war settles on markets. Feeder cattle prices have declined seasonally from spring peaks but have remained quite robust thus far.
There are a variety of supply and demand factors to watch in the second half of the year. Beef production will be determined by slaughter rates but even more by carcass weights moving forward. Drought conditions do not appear to be causing significant herd liquidation at this time but the threat is still there. Further slowing of heifer retention and herd growth (in part due to drought conditions) continues to add to female slaughter and could continue through the end of the year.
The uncertainty, volatility and reality of a trade war will likely have greater negative impacts on beef and other markets in the second half of the year. Beef trade in early 2018 has been very supportive to cattle and beef markets but this could change going forward. Beef markets may be directly impacted in terms of exports but significant, if not bigger, impacts may be the indirect result, for example, of reduced pork exports and increased domestic supplies of competing meats. A multitude of markets are likely to be impacted and impacts will pulse through markets in a complex set of primary and secondary effects and more. The net effect is difficult to sort out though there is no doubt it is negative.
Mid to late summer supplementation for fall-born replacement heifers
by Glenn Selk, Oklahoma State University Emeritus Extension animal scientist
Fall born replacement heifers have been (or soon will be) weaned and will be at a very critical growing period. It is important that they grow at about 1.5 pounds per day from weaning until the start of the breeding season. Currently, summer pastures are green, growing, and adequate in protein content. However, warm season pastures such as native grass or bermudagrass can be expected to be declining in forage quality in the hot, dry days of July, August, and September. Also, these grasses will be reaching plant maturity which accelerates the decline in protein content.
To expect a very high percentage (greater than 90 percent) to be cycling at the start of the breeding season, the heifers need to be at least 60 percent of their mature weight. Therefore, the young heifers must receive supplemental protein to continue to grow at the necessary pace of 1.5 pounds per head per day going into their first breeding season. An economical solution would be to give these heifers 1.5 to 2 pounds per head per day of the protein supplement called Oklahoma Gold. This is an OSU-developed protein supplement scheme that consists of a high protein (38-45 percent) pellet that contains the label-recommended dosage of one of the ionophores. Ionophores are feed additives (monensin or lasalocid) that improve feed utilization, inhibit coccidiosis, and enhance the onset of puberty in growing heifers.
Research from Texas A&M in the 1970’s indicated that heifers receiving an ionophore reached puberty about 2 weeks earlier than counterparts that did not receive an ionophore. Inclusion of the ionophore in the growing program should cause a few more heifers to be cycling early in the breeding season.
The protein supplement will allow microbial digestion of the average quality late summer forage which in turn provides the energy needed to support the desired amount of gain. If forage quantity is very limited, the protein supplement alone will not produce adequate gains. In this scenario, a rancher first needs to decide if keeping more replacement heifers is really in his or her best interest.
Light-weight or young, weaned heifers that need an added boost while still on late summer pasture may benefit more from the Oklahoma Super Gold supplementation program. “Super Gold” consists of feeding 3 pounds per head per day of a 25 percent crude protein pellet. Once again, an ionophore is included at the proper dosage and will be beneficial to these young growing heifers. Plan ahead for late summer supplementation of fall-born replacement heifers.