June 22, 2020
Third quarter beef recovery
By Derrell S. Peel, Oklahoma State University Extension livestock marketing specialist
Cattle slaughter continues to recover from COVID-19 disruptions in April and May. Estimated cattle slaughter for the week ending June 20, 2020, was 656 thousand head, 98.2% of year earlier levels. This is based on estimated slaughter. The latest actual slaughter data for the week ending June 6, 2020, shows weekly total cattle slaughter of 627.7 thousand head, 94.4% of the previous year.
Steer and heifer carcass weights have been heavier year over year all year but the gap has widened considerably with the delays in marketing fed cattle since early April. For the year to date, steer and heifer carcass weights have averaged 27.4 pounds heavier year-over-year. However, for the first quarter of the year, carcass weights were up 20.4 pounds year-over-year, while average carcass weights in the ten weeks from April 1- June 6, were 36.7 pounds heavier year-over-year.
Year-to-date beef production through June 19 is estimated at 12.05 billion pounds, down 3.8% year-over-year. Beef production in the first quarter of 2020 was up 8.0% year-over-year. Second quarter beef production is projected to be down 14.0% from one year ago. The combination of recovered slaughter and higher carcass weights resulted in weekly beef production in mid-June estimated to be above year-earlier levels for the first time in 10 weeks. Weekly beef production is likely to exceed year-earlier levels for the third quarter and perhaps for the balance of the year. Third quarter beef production is forecast to be nearly 6% higher year-over-year. Annual beef production for 2020 is forecast to be slightly higher year-over-year and a new record level at 27.3 billion pounds.
The June Cattle on Feed report shows the slow return to something like normal for feedlots, along with the challenges that remain. The June 1 on-feed inventory of 11.67 million head, 99.5% of last year. One month ago, the May 1 on-feed inventory was 94.9% of one year ago. The slow pace of May marketings, combined with rebounding placements, pushed the on-feed total up sharply in May. The June 1 feedlot total includes an estimated 5.18 million head of cattle on feed more than 120 days, up 22.9% year-over-year. The backlog of fed cattle will continue to plague feedlots and fed cattle markets for many weeks.
May marketings were down 27.5% year-over-year, a low total even after adjusting for the two less business days for the month compared to last year. May placements were just 1.3% below one year ago, following April placements down 22% and March placements down 23% year-over-year. It appears that feedlot placements and marketings will return to more typical seasonal levels from June forward through the second half of the year.
With beef supplies increasing in the second half of the year, beef demand will be critical. Retail grocery will transition from limited beef supplies in recent weeks to ample supplies at the same time that food service demand is slowly building. Wholesale boxed beef prices have dropped nearly back to pre-COVID-19 levels and may go lower into mid-summer as abundant third cattle beef production could highlight potential recessionary demand weakness.
Keep shortened breeding seasons to produce more uniform calf crops
By Glenn Selk, Oklahoma State University Emeritus Extension animal scientist
In low-margin businesses such as cow-calf ranching, taking advantage of every profit-enhancing tool in the tool box is important to long term success and survival.
Well-defined 60-day breeding and calving seasons will pay off in heavier, and more uniform groups of calves to sell at marketing time. If a small cow operation can market a sizeable number of calves together in one lot, they will realize a greater price per pound (on the average) than similar calves sold in singles or small lots. Proof of this concept has been reported in at least five different states. Studies in Kentucky, Arkansas, Texas, Oklahoma and Arizona have shown advantages in sale price for uniform lots of calves compared to singles and small lots (five or less).
Usable data were collected on 15,473 lots of feeder cattle sold at auction in eastern Oklahoma and Oklahoma City. Data were collected at 14 locations during October 1997. The number of head in a sale had a significant positive effect on sale price. Lots with 10 or more steers sold for 7.14/cwt over the price of steers sold as singles. The premium for multiple head sale lots held for heifers but held at about $4.00/cwt. Multiple head lots that were not uniform sold for approximately $2.00/cwt less than uniform lots for steers and heifers. Although this data is now 23 years old, the concept remains just as important in 2020 as it did in 1997.
Results from OQBN (Oklahoma Quality Beef Network) sales in 2010 illustrated that the advantage may be on the increase. Lots of 10 calves averaged about $8.00/cwt more than similar calves sold one head at a time. This advantage increases up to truck-load size lots of 40 – 60 head where sale price increases were noted as much as $12 – $13 dollars/cwt as compared to similar cattle sold as singles.
A premium for uniform, multiple head lots is generally attributed to the convenience of filling orders for cattle of a specified description on the part of an order buyer. Also, larger, uniform lots may indicate a single point of origin for the cattle leading to less stress and fewer health problems as may be associated with pen of cattle put together.
Small cow-calf operations can take advantage of these price differentials by achieving 60-day breeding seasons so that the calves are born in a short period of time and are of similar age and weight at sale time. This stresses the need for cows in good body condition at calving and fertile bulls used only in short breeding seasons.
Cow-Calf Corner is a weekly newsletter by the Oklahoma Cooperative Extension Agency.