Volatility likely in cattle, beef prices
By John Maday
| Tuesday, November 17, 2009
Slow development of wheat pasture has suppressed demand and stifled prices for stocker cattle, while aggressive feedyard placements and dairy buyouts have contributed to volatility in cattle markets. According to this month’s Livestock, Dairy and Poultry Outlook report from USDA, that volatility is likely to continue into 2010.
Key points from the report include:
- Winter wheat seeding and emergence are behind schedule in several key wheat-grazing areas, delaying turnout of stocker cattle.
- Improving weather conditions could make more wheat grazing available and improve demand for stocker cattle.
- A third round of Cooperatives Working together dairy herd buyouts was
- announced on October 1, 2009.
- According to the CWT, 175,153, cows were removed from herds in the first 2 retirements of 2009 and an additional 26,000 cows were included in bids accepted in the most recent round.
- It is likely that a higher than normal percentage of cows would have gone to slaughter even in the absence of the CWT.
- As a result, the additional slaughter of dairy cows removed or expected to be removed due to the CWT programs is not likely to offset reduced beef cow slaughter in 2009, and will likely leave 2009 total commercial cow slaughter even with or slightly below 2008 slaughter.
- Cumulative commercial cow slaughter through the end of third-quarter 2009 was half-a-percent below slaughter for the same period 2008.
- For the 7-week period ending November 14, 2009, federally inspected calf slaughter declined by 6 percent compared with the same period in 2008. However, due to increases in dressed weights,
- veal production for the same period was down by just over 1percent.
- Net placements of cattle in feedlots during September 2009, at 2.341 million head, were large by recent standards.
- Placements for the third quarter of 2009, at 6.364 million head, were 6 percent above the 2008 level and almost 4 percent above the 5-year (2004-08) average of 6.17 million head.
- September placements of 800-pound-plus cattle were 35.8 percent of total placements, only slightly smaller than September 2008’s 38.6 percent, and well above the 2004-08 average of 30.6 percent.
- Placements of 800-pound-plus feeder cattle for both the second and third quarters of 2009 made up a third of total placements (31.2 and 34.7 percent).
- These placements of heavy feeder cattle imply that steer and heifer slaughter over the next two quarters could remain somewhat burdensome relative to demand and that dressed weights could continue to be heavier year-over-year through the first half of 2010.
- Placements during May and June were the second lowest since the series began in 1996, which could lead to some supply relief and price support during November and December.
- Reductions in imports of market-ready fed cattle from
- Feedyard inventories as of October 1, at 5 percent above last year, left supplies of feeder cattle outside feedlots 2 percent below last year’s level.
- Reduced supplies of feeder cattle will likely lead to reduced placements in the months to come and the potential for reduced year-over-year beef production for at least part of 2010.
- The high number of heifers on feed, at 38.5 percent, indicates a lack of potential for any near-term cow inventory expansion.
- Live cattle imports have been lower in 2009 due to weak
- Imports from
- Beef exports are expected to decrease 3 percent in 2009, but strong sales to Asian countries have helped totals.
- Beef imports are estimated to be 7 percent higher this year.
Read the full report from USDA.
