Beef Today Editors
In today's edition of the CME Daily Livestock Report, Steve Meyer and Len Steiner with Paragon Economics, Inc., look high cow slaughter rates in spite of some of the best pasture conditions in 15 years:
"One of the factors that normally drives beef cow slaughter rates in the summer are pasture conditions. That has not been the case so far this year. As the chart to the right shows, pasture conditions remain some of the best in the last 15 years and still, beef cow slaughter since May has been up some 73,000 head or 17.2% compared to a year ago (period May 2 - June 19).
"It appears that that, for the moment, producers are content to take advantage of the relatively high prices for slaughter cows and grinding meat and converted some of their animals into much needed cash. As the summer heat starts to impact pastures and ranges in the southern plains, it remains to be seen if producers find new seasons to thin their herds. Hurricane Alex may have brought some much needed rain to Eastern and Southern Texas last week but overall pasture conditions actually declined a bit as higher temperatures begin to take their toll.
"The latest USDA report showed that for the week ending July 4, 65% of ranges and pastures were in good or excellent condition, 2 points lower than the previous week but still well above year ago and five year average levels. Overall cow and bull slaughter for the last two weeks appears to be near year ago levels. The official USDA weekly cow slaughter data is only through June 19 so we will have to wait a bit but the chart to the right shows implied cow and bull slaughter based on the daily slaughter plant reports.
"A big part of the reason for the recent slowdown in overall cow and bull slaughter is the fact that we are currently bringing fewer dairy cows to market compared to a year ago. It is kind of an odd situation since dairy prices are still too low to provide much of a margin in the business. Last year at this time producers were engaged in a significant herd retirement program so that skews the year over year comparisons. It is also possible that producers may be holding back a few cows as they wait to enroll them in yet another dairy herd retirement program. The bids for the new program have been closed and the results will be announced next week. We have no special insight as to how many dairy cows will come to market but have heard estimates raging from 30,000 - 60,000 head. It will be an interesting couple of months for grinding beef as dairy slaughter picks up, beef cow slaughter remains high and Australia ships a bit more beef than it did a year ago at this time. On the flip side, competing meat protein prices are notably higher than last year, which should help sustain demand in the dog days of summer."
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