TOTAL U.S. cattle slaughter in 2024 is on track to be 1.3M head lower than the 2023 total. of 34.32M head. The total harvest for the year to the week ended October 18 was an estimated 1.005M head below the same period last year. At this rate, the annual harvest would decline by approximately 1.30M from 2023, says Andrew Gottschalk, HedgersEdge.com. The cow harvest for the year to October 5 was down 776,400 head on the same period last year. At this rate, the annual cow harvest would decline by approximately 1.028M head on 2023’s total. This would imply that the reduction in the annual cow harvest would comprise 83% of the reduction in this year’s total harvest. The balance belongs to steers and heifers, he says.
Fed steer slaughter thus far in 2024 is unchanged from one year ago, says Derrell Peel, Oklahoma State University. Heifer slaughter is down 1.6% year-over-year. Total fed slaughter is down 0.7% compared to last year, less than earlier expected. For the year to date, steer carcasses have averaged 25.5 lbs heavier than last year and heifer carcasses have averaged 22.6 lbs heavier than a year ago. The result of stronger than expected fed slaughter and heavier carcass weights has been a 1.9% increase in fed beef production year-over-year thus far in 2024. In fact, for the last 16 weeks, fed beef production has been 3.7% larger year-over-year. The increase in boxed beef prices is perhaps even more surprising in the face of increased fed beef production. Higher prices and increased quantities suggest that beef demand continues to be very robust, says Peel.
Non-Fed Production Is Much Lower
In contrast to fed beef production, non-fed beef production is sharply lower this year, down 12.8% year-over-year, says Peel. Total cow slaughter is down 15.3%, consisting of a 13.8% year-over-year decrease in dairy cow slaughter and a 16.8% decrease in beef cow slaughter. Bull slaughter is also down 8.1% compared to last year. Tighter supplies of lean trimmings have kept processing beef prices higher this year and the demand for lean has increased the demand for lean carcass cuts. For example, the current wholesale price of 90% lean trimmings is higher than wholesale prices for top inside rounds, bottom (gooseneck) rounds and outside rounds, he says.
As of October 18, the daily Choice boxed beef price was $320.65 per cwt, up from a recent low of $296.37 per cwt on September 26 and the highest price since July 15, says Peel. The weekly Choice boxed beef price was also at its highest level since July and has averaged 2.2% higher year-over-year and a record high for the year to date. Numerous wholesale cuts have moved higher recently, including the chuck arm roast (IMPS 114E), chuck roll (116A), chuck mock tender (116B) and chuck flap (116G). Wholesale round cuts have also moved higher, including round knuckle (167A), top inside round (169A), bottom (gooseneck) round (170), outside round (171B) and eye of round (171C). Middle meat prices from the loin and rib have also increased, including bottom sirloin flap (185A), sirloin tri-tip (185D), loin strip (180), and tenderloin (189A). Likewise, wholesale ribeye prices (112A) have increased recently and are showing an early seasonal demand for the holidays, says Peel.
Summer grilling demand in the fall gives way to seasonally stronger demand for roasts, crock pot cooking and increased middle meat demand by restaurants, says Peel. Wholesale ground beef prices have moderated recently as hamburger grilling demand slowed but prices remain well above year ago levels. Total beef production is down a scant 0.7% so far this year and may end the year equal to year ago levels. Despite this, wholesale and retail beef prices are higher thus far in 2024, says Peel.
USDA RAISES BEEF FORECAST
USDA raises its forecast for 2024 beef production to 27.000 billion lbs, up 205M lbs from its previous forecast. Third and fourth quarter 2024 production is forecast higher from last month, raising the annual forecast to just above 2023 production. So says USDA’s Economic Research Service (ERS) in its latest Livestock, Dairy and Poultry Outlook report. Its forecast is based on a faster expected pace of fed cattle marketings and cow slaughter for the rest of the year. In addition, carcass weights are heavier than previously expected. The outlook for 2025 production is raised to 25.925 billion lbs on a higher anticipated level of fed cattle marketings, as well as on heavier carcass weights. Cattle price forecasts are adjusted higher on recent price strength and the faster pace of marketings. Based on August trade data, U.S. beef imports are raised in late 2024 and in second-half 2025. However, beef exports in second-half 2024 are lowered from last month, says ERS.
Beef production in the third quarter is adjusted 80M lbs higher production in third-quarter 2024 is adjusted 80 million pounds higher to reflect official data through August and estimated slaughter data through the end of September, says ERS. The outlook for the fourth quarter is raised 125M lbs on a faster pace of cattle slaughter and heavier carcass weights. Weekly carcass weights in the third quarter averaged 30 lbs above the same quarter last year. In total, the 2024 beef production forecast is raised 205M from last month to 27.000 billion lbs, a slight increase over 2023. Beef production projections for next year reflect adjustments in feeder calf placements in the third quarter of 2024 and early 2025, which will mean higher anticipated fed cattle marketings in 2025. Further, the trend in average carcass weights will be carried over into next year, particularly as more fed cattle are expected to be marketed. As a result, the 2025 beef production forecast is raised 300M lbs from last month to 25.925 billion lbs, says ERS.
National comprehensive boxed beef cutout values steadily declined to $300.09 per cwt for the week ending October 4 from their summer peak of $324.47 per cwt in the week ending July 5, says ERS. However, prices remain above last year, and based on daily reports of boxed beef cutout values, prices are showing a typical pre-holiday season boost. This relative price strength is helping to support slaughter steer prices.
Sept Steer Prices Were Below Last Year
The September average price for slaughter steers in the 5-area marketing region was $183.56 per cwt, says ERS. The price declined for a second consecutive month and was $0.15 per cwt lower than September last year. Packer margins have been aided by improved boxed beef prices but will likely remain relatively constrained by slaughter cattle prices. Cattle prices are expected to decline through the end of the year, although less than previously anticipated. As a result, the slaughter steer price forecast for the fourth quarter is raised $3 per cwt to $186.00 per cwt. Recent price strength is carried through to early 2025 for an annual average price of $186.50 per cwt, says ERS.
Beef exports held steady at around 260M lbs from March through July this year, say ERS. However, August exports fell to 238M lbs, with monthly exports to nearly all major markets down year-over-year. Exports to Canada fell for two consecutive months after peaking in June and were 15% lower year-over-year in August. Exports to China were down 14% and exports to South Korea were down 13% year-over-year. Exports to Japan in August fell below year ago levels for the first time since March, while exports to Mexico were lower year-over-year for only the second time this year. Monthly exports to Taiwan were about 4% higher year-over-year but about 8% below their five-year average, says ERS.
Japan remains the largest export destination so far this year, with exports there through the end of August nearly even with the same period last year, says ERS. Exports to South Korea and China were 12% and 10% lower year-over-year, respectively. Exports to Mexico were up 11% and combined exports to smaller markets outside the top six were also 2% above the same period last year. Year-to-date (to the end of August) total exports were down about 4% from the same period last year, says ERS.
2024 Exports Will Decline 3%
ERS lowers its forecast for beef exports in the third quarter by 20M lbs to 730M lbs and lowers its forecast for fourth quarter exports by 15M lbs to 710M lbs. Its annual forecast for 2024 is now 2.955 billion lbs, a year-over-year decrease of almost 3%. But its beef export forecast for 2025 is unchanged from last month at 2.600 billion lbs, it says.
Meanwhile, beef exports in the week ended October 18 enjoyed their biggest volume for a long time. Exports represented 17.5% or 1322 loads of the total volume of 7570 loads of cuts, grinds and trim sold that week. Beef cutout values should score additional gains, benefiting from renewed export interest, says Andrew Gottschalk, HedgersEdge.com. Additional seasonal support for exports to Asia should be realized in the coming weeks, he says.
The national comprehensive boxed beef value that week averaged $310.98 per cwt, up $6.87 per cwt from the prior week. The advance was a result of the Choice cutout increasing by $10.32 per cwt to $312.38 per cwt. This was its highest level in eight weeks. Spot market sales that week represented 28.0% of the total volume, while formula sales represented 53.4% and forward sales represented 18.5%.
August Imports Were Record High
August was another record-setting month for beef imports, which were the highest ever for the month and the second largest monthly imports behind January 2024, says ERS. Australia continues to ship large amounts of beef to the U.S., with imports surpassing 100M lbs in a single month for the first time since 2016. Imports from Brazil were also very strong, suggesting that the continued high price of beef in the U.S. is enough to offset the higher out-of-quota tariffs that imports from Brazil and other countries without a specific quota or free trade agreement face until the end of the calendar year. ERS data shows that January-August imports from Australia totaled 635.7M lbs, up 262% on a year ago. Imports from Brazil totaled 496.2M lbs, up 146.5%. Imports from Canada totaled 658.8M lbs, up 20.3%.
Based on recent trade data and expected continued strong imports from Oceania and South America, ERS has raised its third quarter import forecast 35M lbs to 1.175 billion lbs and has raised its fourth quarter forecast 20M lbs to 1.000 billion lbs. Its annual forecast for 2024 is 4.383 billion lbs, which if realized would be a year-over-year increase of almost 18%. ERS has raised its annual 2025 forecast 90M lbs in the second half of the year, bringing the annual total to 4.425 billion lbs. The new seasonal pattern from the last two years is expected to continue, with larger imports in the first and third quarters, says ERS.
The substantial year-over-year growth in 2024 imports has been largely driven by higher imports from Australia, says ERS. This resulted from greater Australian beef production and increased exportable supplies. While total U.S. beef imports are expected to remain high in 2025, year-over-year growth is expected to be much slower. The current forecast anticipates a 1% year-over-year increase in imports in 2025, says ERS.
DEMAND HAS BEEN POSITIVE
CONSUMER demand for beef in August was very good compared to last year, says Kevin Grier, Kevin Grier Market Analysis and Consulting. The last 12 months of demand have been positive and supportive to the beef cutouts and live cattle prices. Grier makes several other points in his bi-weekly summary of the U.S. market. Live cattle futures have been steady. Cash pricing has been steady to higher. The fed cattle basis has returned to normal for this time of year, which is around zero. It is not likely to impact marketing decisions. Calf and yearling prices have been trending sideways. The cutout has been strong. Fed cattle kills should begin to fall below year ago levels in the last two months of the year Packers’ negotiated inventories are less than last year and less than average. Packer inventories are currently not large but packers look to have a decent number of contracts lined up in November, he says.
CUTOUTS’ SURGE COMES TO END
THE surge in boxed beef cutout values saw the Choice cutout increase by $13.90 per cwt in just two weeks. The cutout last week increased by another $3.31 per cwt Monday and Tuesday to reach $323.96 per cwt. But it declined by $2.79 per cwt the next two days, signaling that the surge is likely over for now. Analysts however expect to see another price rally as the market moves closer to the Christmas-New Year holiday period.
Another factor in the strength of the national weekly comprehensive cutout is that the price of domestic lean manufacturing beef (90CL) has remained strong because of smaller cow slaughter levels than last year. Slaughter has been down every week this year, averaging 19,410 head lower per week, says HedgersEdge.com. The price of 90CL has remained above $350 per cwt every week since the week ended May 18. It averaged $352.67 per cwt the week before last.
The strength of the cutouts, as Kevin Grier and other analysts have noted, has been supportive of cash and futures live cattle prices. The 5-area steer prices the week before last averaged $187.61 per cwt live or $296.21 per cwt dressed. These were up $0.40 per cwt and $0.29 per cwt, respectively, from the prior week. The live price has remained above $180 per cwt since the week ended February 5 this year. But prices are unlikely to break the record of $197.09 per cwt set the week ended July 7. The only cash trade through Wednesday last week was up north where 684 head sold in a range between $186 and $188 per cwt live or at $288 per cwt dressed in Nebraska and at $304 per cwt dressed in Iowa. Trade though turned active Thursday, with prices up north at $190-192 per cwt live or $298 per cwt dressed. Sales down south were at $188-190 per cwt live.
Carcass weights meanwhile in the latest reporting week (ended October 12) set a new record for heifers and equaled the prior week’s records for steers and overall weights. Heifer weights averaged 863 lbs, up 6 lbs from the week before and up 23 lbs on the same week last year. They broke their previous record of 857 lbs set the week before. Steer weights averaged 950 lbs, level with the prior week but up 23 lbs from the same week last year. Overall weights averaged 866 lbs, level with the prior week but up 33 lbs from the same week last year.
NCBA SLAMS DIETARY RECOMMENDATIONS
THE National Cattlemen’s Beef Assn (NCBA) slams what it calls the Dietary Guidelines Advisory Committee’s “unhinged” recommendations that propose replacing high quality proteins like beef with beans, peas and lentils. The preview meeting of the committee last week stands out as one of the most out-of-touch, impractical and elitist conversations in the history of this process, says NCBA’s Ethan Lane. After 22 months of public discussion and lip service to transparency, NCBA is disappointed by the number of chaotic new directions that were proposed at the last minute. NCBA would laugh at the suggestion that beans, peas and lentils are going to replace lean red meat and fill all the nutrient gaps Americans are facing if it weren’t such a dangerous and deceptive idea, he says.
The U.S. has had more than four decades of dietary guidelines advice, says NCBA. During that time, red meat consumption has declined yet obesity and chronic disease is on the rise. 70% of the calories in the U.S. diet are plant-based. Now the committee wants to reduce red meat intake even further, marginalizing the 80% of the population who identify themselves as meat eaters, says NCBA Executive Director of Nutrition Science and Registered Dietitian Shalene McNeill. These recommendations put some of the most vulnerable at risk for nutrient gaps, especially older Americans, adolescent girls and women of child-bearing age. Beef contributes only 5% of the calories in the American diet but more than 5% of essential nutrients like potassium, phosphorous, iron, B6, niacin, protein, zinc, choline and B12. It is baffling that people are trying to get Americans to cut out red meat when the evidence indicates nutrient deficiencies and chronic disease are increasing as red meat consumption declines, she says.