Beef cow herd is decreasing due to drought, low profitability

Jeff Swenson

Prepared and written by Jeff Swenson, DATCP Livestock and Meat Specialist. The Market Update draws information from several sources, including trade publications, radio broadcasts, agricultural news services, individuals involved in the industry as well as USDA NASS and AMS reports.

Jeff Swenson

Cash cattle trade was steady this week as packers entered the market at mid-week. Bids in the Southern U.S. for beef breed steers were mostly $124.00/cwt and mostly $126.00 to $127.00/cwt in the Northern U.S.

The steady prices were also reflected at Wisconsin auction markets this week. Harvest numbers last week were estimated at 624,000 head, 27,000 head less than the previous week. The shortened week due to the Labor Day holiday will impact this week’s harvest numbers.

Kevin Good of CattleFax presented to the Wisconsin Beef Council Board of Directors on Wednesday, Sept. 9 and said the future favors the cow calf producer and feedlot operator.

While the U.S. dairy cow inventory is the largest since 1995, the beef cow herd is decreasing due to drought and low profitability. While beef demand is the highest in 30 years, lower cattle supplies during the next five years should give the farm sector more bargaining power. However, that does not mean the retail price of beef will necessarily increase as cash cattle prices increase.

Good also said that chicken consumption surged during the 1980’s, but beef has grown its market share from 40 to 48 percent since 1998.

Cash hog prices move higher

Cash hog prices moved higher at mid-week. However, cash hogs and wholesale pork prices have been moving lower overall. Wednesday’s pork cutout was reported at $110.40. While that was up $4.73 on the day, the value was $125.68 two weeks ago.

Pork production will finish lower in 2021 compared to the year before but is expected to increase by 1 percent in 2022. The USDA estimates pork production in China will decrease by 14 percent in 2022 due to African Swine Fever as will contraction due to low profitability. One estimate equates the 14 percent decrease of 1.8 million market hogs per week.

Last week’s harvest estimate in the U.S. was 2.398 million head. That is 40,000 less head than the previous week and 68,000 head lower than the same week a year ago.

Meat exports up

July was another good month for meat exports. It is important to note that many of the U.S. meat products that are exported are variety meats, which are typically non-muscle items like tongue, tripe, and other organs. These are often lumped in to the generalized categories of pork, beef, lamb, and poultry.

July pork exports were steady with last year at 221,809 metric tons (mt), but export value jumped 20 percent to $657.3 million. Pork variety meat exports were especially strong at 49,092 mt, 16 percent above July 2019. Variety meat export value was the second highest on record at $116.7 million. 

July pork export value equated to $67.13 per head slaughtered, up 37 percent from a year ago. U.S. beef exports set another new value record in July. July export value climbed 45 percent from a year ago to $939.1 million, while volume was the third largest of the post-BSE era at 122,743 mt, up 14 percent year-over-year.

July beef export value equated to $425.68 per head of fed slaughter, up 52 percent from a year ago. Lower demand in Mexico, the leading market, pushed July lamb exports 27 percent below last year in volume (1,166 mt) and 7 percent lower in value ($1.7 million). Through July, exports were still 13 percent above last year’s pace at 7,982 mt, with value up 10 percent to $10.8 million.

Markets mostly steady

Choice beef breed steers and heifers at Wisconsin and surrounding state auction markets were mostly steady. High-yielding, high-grading cattle brought $109.00 to $127.00/cwt with highs to $130.00/cwt and some above.

Choice and Prime Holstein steers were mostly steady, bringing $92.00 to $115.00/cwt. There were some packages of Holstein steers selling to $122.00/cwt. Silage fed, under finished, or heavy dairy breed steers brought $70.00 to $92.00/cwt. Dairy x beef steers were mostly $90.00 to $124.00/cwt.

Cows were lower at $35.00 to $55.00/cwt. Blemish free cows in fleshier condition were selling to the upper $70.00s/cwt. Doubtful health and thin cows were bringing $39.00/cwt and down. Dairy breed bull calves were steady to higher at $30.00 to $90.00/cwt with heavier, well cared for calves up to $130.00/cwt.  Beef and beef cross calves brought up to $290.00/cwt. Market lambs sold to $235.00/cwt.