Cow-Calf Corner: Strong beef demand mostly offsetting increased beef supply in 2017; the "Positive Associative Effect" of high protein supplements

Sept. 25, 2017
Strong beef demand mostly offsetting increased beef supply in 2017
by Derrell S. Peel, Oklahoma State University Extension livestock marketing specialist
The September USDA Cattle on Feed report pegs the September 1 feedlot inventory at 10.504 million head, 103.6 percent of last year.  August placements were 102.6 percent of year ago levels.  Placements were larger than expected and may well provoke a bearish market response. What may be overlooked are the continued strong marketings pace.  August marketings were close to pre-report expectations at 105.9 percent of last year.  Marketings outpaced placements in August and pulled down the year over year increase in feedlot inventories, though not as much as expected.  For the first eight months of the year, total placements are up 1.16 million head, an 8.4 percent year over year increase.  However, total marketings were up 0.847 million head, 6.1 percent more than last year and largely offsetting the increased placements.  As a result the September 1 on-feed inventory was up a modest 369 thousand head year over year.
Higher feedlot throughput is reflected in the year to date increase in steer and heifer slaughter, up 5.9 percent year over year.  Steer slaughter is up 3.3 percent while heifer slaughter is up 11.7 percent for the year to date.  Additionally, beef cow slaughter is up 11.3 percent so far this year and rising dairy cow slaughter is up 3.9 percent for the year to date. Total bull slaughter is also up 13.1 percent year over year.
Offsetting increased cattle slaughter are lighter carcass weights.  While steer and heifer carcass weights are increasing seasonally, they remain below year earlier levels.  In the most recent data, steer carcasses were 896 pounds, 7 pounds below one year earlier; heifer carcasses were 816 pounds, down 5 pounds from the same date last year.  For the year to date, steers carcasses have averaged 14.1 pounds lower than last year while heifer carcasses are 12.3 pounds lighter.
Total beef production for the first 36 weeks of the year is up 4.5 percent year over year. Annual beef production is projected at 26.3 billion pounds, up 4.4 percent year over year.  Domestic beef consumption is projected at 56.6 pounds per capita, up 2.2 percent year over year.  Despite the increase in domestic beef consumption, retail beef prices remain strong.  August Choice beef price was $5.94/lb., down from $6.10/lb. in July but nearly one percent higher than August last year.  The all-fresh beef retail price was $5.794/lb. in August, fractionally higher than one year ago.
Beef production is expected to increase again in 2018, currently projected at 27.4 billion pounds.  This would be a record level of U.S. beef production, exceeding the previous high of 2002 with 27.0 billion pounds.  Increased beef production, combined with other meats, is projected to surpass 101 billion pounds of total meat production in 2018, a new record as well.  Clearly the supply challenges will continue for the foreseeable future.  However, 2017 has demonstrated very well that strong domestic and international demand for U.S. beef can mitigate much of the price pressure from growing beef production.  Continued strong beef demand can limit 2018 cattle and beef price changes to modest declines.

The “Positive Associative Effect” of high protein supplements
by Glenn Selk, Oklahoma State University Emertius Extension animal scientist
As you drive across much of Oklahoma this fall you see many big round bales of hay stored for winter feed. The quality of this hay will vary a great deal. Frankly, some of it will be low in protein content and therefore low in digestibility. The micro-organisms in the rumen of beef cows and replacement heifers require readily available protein to multiply and exist in large enough quantities to digest the cellulose in low quality roughages. Protein supplementation of low-quality, low protein forages results in a “positive associative effect.” This positive effect occurs as supplemental protein available to the “bugs” in the rumen allows them to grow, multiply, and digest the forage more completely and more rapidly.  Therefore the cow gets more out of the hay she consumes, she digests it more quickly and is ready to eat more hay in a shorter period of time.  Data from Oklahoma State University illustrates this (Table 1).
The prairie hay used in this study was less than 5 percent crude protein. When the ration was supplemented daily with 1.75 lbs of cottonseed meal (41 percent crude protein), retention time of the forage was reduced 32 percent, which resulted in an increase in feed intake of 27 percent. Because hay intake was increased, the animal has a better chance of meeting both the protein and energy requirement without supplementing other feeds. Because retention time was decreased, one could postulate the protein supplementation in this situation also increased digestibility of the hay.
Table 1. Effect of Cottonseed Meal Supplementation on Ruminal Retention Time and Intake of Low-Quality Prairie Hay
Daily Supplement of Cottonseed Meal

As producers prepare their winter supplement strategies, they can see the importance of providing enough protein in the diet of the cows to feed the “bugs” in the rumen. If the hay is low in protein (less than 8 percent crude protein), a small amount of supplemental protein such as cottonseed meal, soybean meal, or one of the higher protein by-product feeds, could increase the amount and digestibility of the hay being fed.
This strategy requires that ample forage is available to take advantage of the “positive associative effect.” As the table above illustrates, properly supplemented cows or replacement heifers will voluntarily consume about 27 percent more hay if they were provided adequate protein. As long as enough forage is available, this is a positive effect of a small amount of protein supplement.
Cow-Calf Corner is a newsletter from the Oklahoma Cooperative Extension Agency.