Sept. 2, 2019
After the fire: cattle slaughter and beef prices
by Derrell S. Peel, Oklahoma State University Extension livestock marketing specialist
Cattle and beef markets continue to recover from the disruptions resulting from the Tyson packing plant fire in Finney County, Kansas on Aug. 9, 2019. Data is slowly becoming available to provide more clarity to the aftermath of the fire and, in some cases, clear up some initial misperceptions. Lots of scrutiny and suspicions are being directed at cattle and beef markets.
Actual slaughter data is available from the Agricultural Marketing Service with a 2-week lag. Thus, on Aug. 29, data became available to compare the pre- and post-fire impact on cattle slaughter. Table 1 shows the actual daily steer and heifer slaughter for the week before and after the fire. Monday through Friday slaughter following the fire was down 22,158 head, 4.6 percent lower than the week before the fire. This reduction is close to the estimated capacity of the closed plant. However, by Saturday, the industry was able to increase steer and heifer slaughter by 21,156 head compared to the previous week. This resulted in a net slaughter decrease of 1,002 head the week after the fire.
Numerous early media reports indicated that estimated slaughter the week after the fire was up by 9,000 head. This was incorrect largely because it included a large estimated increase in cow and bull slaughter, and also because it was based on daily slaughter estimates. Actual slaughter data for the second week after the fire will be available later this week. The estimates currently available suggest that total steer and heifer slaughter 2 weeks after the fire may be up slightly compared to the week before the fire.
Table 1. Steer and heifer slaughter, head, USDA-AMS.
*Reflects impact of fire overnight on Aug. 9; Saturday slaughter on Aug. 3 was 28330 head.
The reduction in beef production resulting from the fire provoked a sharp response in cash prices for boxed beef with varied responses for the different beef primals. Table 2 shows the price levels the day of the fire (the fire occurred after business hours) and the percent change in prices since that time. All percent changes in Table 2 are daily negotiated prices compared to values on Aug. 9. The Choice cutout peaked on Aug. 20 and 21, up 11.7 percent from Aug. 9 levels. Cutout values have since decreased and are up 7.1 percent on Aug. 30 compared to Aug. 9.
In general, middle meat values spiked after the fire and have decreased sharply. Rib values peaked at 11.3 percent higher on Aug. 21 and have dropped back to levels up 2.4 percent above pre-fire levels. Loin values peaked at 13.3 percent higher on Aug. 20 and have dropped back to levels 4.8 percent above pre-fire levels by Aug. 30.
End meats are sustaining higher levels since the fire. Chuck values peaked at 13.5 percent higher on Aug. 22 and are still 9.6 percent higher on Aug. 30. Round values have maintained sharply higher levels with the Aug. 30 value the highest so far, up 14.5 percent from pre-fire levels. These patterns of value changes confirm the complexity of beef wholesale and retail markets and the product market contortions that have occurred as a result of the fire.
Table 2. Choice boxed beef and beef primal value changes since Aug. 9.
|Aug 9||Pre-Fire Value*||$216.37||$366.31||$168.40||$168.13||$294.24|
|Aug 12||% Change||1.0%||1.2%||1.6%||0.8%||0.8%|
|Aug 13||% Change||4.6%||5.1%||5.4%||3.5%||5.0%|
|Aug 14||% Change||7.4%||7.2%||9.1%||8.0%||7.6%|
|Aug 15||% Change||9.1%||8.3%||11.2%||9.8%||9.8%|
|Aug 16||% Change||10.3%||9.7%||11.4%||10.2%||11.4%|
|Aug 19||% Change||10.5%||8.8%||12.2%||11.2%||11.1%|
|Aug 20||% Change||11.7%||9.5%||11.9%||13.6%||13.3%|
|Aug 21||% Change||11.7%||11.3%||12.7%||12.3%||12.8%|
|Aug 22||% Change||10.6%||10.7%||13.5%||13.0%||8.4%|
|Aug 23||% Change||9.8%||10.2%||11.2%||13.3%||7.7%|
|Aug 26||% Change||10.0%||9.9%||10.6%||12.8%||8.9%|
|Aug 27||% Change||9.4%||7.8%||10.6%||13.7%||8.1%|
|Aug 28||% Change||7.7%||3.6%||10.6%||12.0%||5.9%|
|Aug 29||% Change||7.3%||2.9%||10.7%||12.6%||5.1%|
Actual slaughter data now available also includes carcass weights before and after the fire. Steer and heifer carcass weights were each up three pounds in the week after the fire. There is no indication that possible slaughter delays pushed carcass weights higher as a result of the fire. Carcass weights have been increasing about three pounds per week since the early June seasonal low. Steer and heifer carcass weights were lower year over year for the week after the fire and are down 5+ pounds for the entire year thus far. Analysis of the fire aftermath will continue in the coming days and weeks.
Proper cow culling is important to your business
by Glenn Selk, Oklahoma State University Emeritus Extension animal scientist
Cull cows represent approximately 20% of the gross income of any commercial cow operation. Cull beef cows represent 10% of the beef that is consumed in the United States. Therefore, ranchers need to make certain that cow culling is done properly and profitably. Selling cull cows when they will return the most income to the rancher requires knowledge about cull cow health and body condition. Proper cow culling will reduce the chance that a cow carcass is condemned at the packing plant and becomes a money drain for the entire beef industry.
Is she good for another year? At cow culling time, producers often face some tough decisions. Optimum culling of the herd seems to require a sharp crystal ball that could see into the future. Will she keep enough body condition through the winter to rebreed next year? How old is the cow? Is her mouth sound so that she can harvest forage and be nutritionally strong enough to reproduce and raise a big calf? At what age do cows usually start to become less productive?
There is great variability in the longevity of beef cows. Data from large ranches in Florida would indicate that cows are consistent in the rebreeding performance through about 8 years of age. A small decline was noted as cows aged from 8 to 10 years of age. However the most consistent decline in reproductive performance was noted after cows were 10 years of age. A steeper decline in reproductive performance was found as they became 12 years of age. In other words, start to watch for reasons to cull a cow at about age 8. By the time she is 10, look at her very closely and consider culling; as she reaches her 12th year, plan to cull her before she gets health problems or in very poor body condition.
Other reasons to cull cows:
Examine the eye health of the cows. One of the important causes of condemned beef carcasses is still “cancer-eye” cows. Although producers are doing a much better job in recent years of culling cows before “cancer-eye” takes its toll, every cow manager should watch the cows closely for potentially dangerous eye tumors. Watch for small pinkish growths on the upper, lower, or corner eye lids. Also notice growths on the eyeball in the region where the dark of the eye meets with the “white” of the eyeball. Small growths in any of these areas are very likely to become cancerous lesions if left unchecked. Likewise be aware of cows with heavy wart infestations around the eye socket. Many of these become cancerous over time. Culling these cows while the growth is still small, will allow the cow carcass to be utilized normally. If however, cancer engulfs the eyeball and gets into the lymph nodes around the head, the entire carcass will likely be condemned as not fit for human consumption.
Check the feet and legs. Beef cows must travel over pastures and fields to consume forages and reach water tanks and ponds. Cows with bad stifle joints, severe foot rot infections, or arthritic joints may be subject to substantial carcass trimming when they reach the packing plant. They will be poor producers if allowed to stay on the ranch while severely lame. They may lose body condition, weigh less, and be discounted at the livestock market by the packer buyers. Culling them soon after their injury will help reduce the loss of sale price that may be suffered later. If the cow has been treated for infection, be certain to market the cow AFTER the required withdrawal time of the medicine used to treat her infection.
Bad udders should be culled. One criteria that should be examined to cull cows is udder quality. Beef cattle producers are not as likely to think about udder health and shape as are dairy producers, but this attribute affects cow productivity and should be considered. OSU studied the effect that bad udders had on cow productivity. They found that cows with one or two dry quarters had calves with severely reduced weaning weights (50 – 60 pounds) compared to cows with no dry quarters. Plus, cows with bad udders tend to pass that trait along to daughters that may be kept as replacement heifers. Two key types of “bad” udders to cull include: the large funnel-shaped teats and weak udder suspension. The large funnel-shaped teats may be indicative of a previous case of mastitis and cause the quarter to be incapable of producing milk. In addition, large teats may be difficult for the newborn calf to get it’s mouth around and receive nourishment and colostrum very early in life. As some cows age, the ligament that separates the two sides of the udder becomes weakened and allows the entire udder to hang very near to the ground. Again it becomes difficult for the newborn calf to find a teat when the udder hangs too close to the ground. Select against these faults and over time your cow herd will improve its udder health.
Cull cows when in moderate body condition. Send older cows to market before they become too thin. Generally, severely emaciated cattle have lightly muscled carcasses with extremely small ribeyes and poor red-meat yield. This greatly lessens the salvage value of such animals. Just as importantly, emaciated cattle are most often those which “go down” in transit, as they lack sufficient energy to remain standing for long periods of time. Severe bruising, excessive carcass trim, increased condemnations, and even death are the net results of emaciation. Very thin cows have a low dressing percentage (weight of the carcass divided by the live weight). Because of these factors, cow buyers will pay less per pound for very thin, shelly, cull cows. In addition, thin cows will weigh less. As you combine these two factors (weight and price per pound), thin cull cows return many fewer dollars at sale time than if the cow was sold when in moderate body condition. If they are already too thin, a short (45 to 60 days) time in a drylot with a high quality feed will put condition back on the cows very efficiently. There is no need to put excess flesh or fat on cows. They become less efficient at converting feed to bodyweight after about 60 days and the market will not pay for excessive fatness on cows.
Cull any really wild cattle. They are hard on you, and your equipment, and they raise wild calves. Wild calves are poor performers in the feedlot and are more prone to producing dark cutting carcasses as they reach the packing plant. “Dark cutters” are discounted severely when priced on the rail.
Cull open cows. Why feed a cow all winter that will not have a calf next spring? Call your veterinarian, schedule a time for pregnancy checking and find which cows have not bred back. Cull them while they are in good body condition after summer pasture and before you spend $200 or more on the winter feed bill.