Mexico has become one of the major beef import sources for the U.S. as beef trade evolved from simply supplementing deficit beef production in Mexico to bilateral, product specific trade between the two countries.
Lean beef trimmings, a key component of ground beef production, have rallied significantly, with the price of 90% lean trimmings quoted over $317 per cwt. the first week of March, an all-time record dating back to 1978.
The set of products included in total by-product values is quite varied and includes edible offals, inedible offals, meat. bone and blood meal, edible and inedible tallow, hides, and pharmaceutical products.
The feedlot inventory as a percentage of the total inventory has increased over time, and the declining number of feeder cattle means there are not sufficient feeder cattle to maintain feedlot inventories this year.
Statistically, impulse heifer breeding is about 80 percent more variable than planned heifer breeding. Therefore, impulse heifer breeding plays an important role in the dynamics of cattle cycles.
The January 1, 2024, beef cow herd inventory was 28.22 million head, down 2.5 percent year over year and a decrease of 3.47 million head or 10.9 percent lower, from the cyclical peak in 2019.
January may seem early to start planning grazing for the coming growing season but the ability to minimize non-grazing feed costs will depend on comprehensive grazing plans and management for the entire year.
January often provides challenging cattle marketing prospects and this year offered multiple winter storms disrupting feeder and fed cattle markets, as well as boxed beef markets.
U.S. hay production in 2023 was 6.3% higher than the drought year of 2022, but remains 7.8% lower than the 10-year average. Hay stocks were higher in eight of the ten states, with decreases only in Kansas and Kentucky.
Cattle markets are encouraging more aggressive production. Individually, cattle producers may be able to respond immediately or may be forced to remain on the defensive due to physical or financial reasons.
Although it appears producers took advantage of strong prices to market both steer and heifer calves last fall, it is possible decisions about whether heifers on wheat will be feeders or replacements have not been made.
Under current market conditions beef exports are expected to decrease and beef imports should increase...exactly the outcome observed thus far in 2023, says economist Derrell Peel.
A combination of factors has contributed to increasing feedlot placements the past two months, including drought and increasing imports. But biggest factor is likely that producers are taking advantage of strong prices.
Reported national feeder cattle volumes (auction, direct and video/internet) are up 5.6% year-over-year since Labor Day, with the majority in September which contributed to the large September feedlot placements.
Beef demand has been remarkably robust through many shocks in recent years and continues to surprise and impress despite the nervousness of the industry to the challenges facing consumers.
The latest Crop Progress report shows that 71 percent of Oklahoma wheat is planted, two percent more than last year but less than the 75 percent 5-year average.
Despite ever smaller feeder cattle supplies, feedlot inventories have temporarily halted the slow decline of the last year with the September surge in placements.
Ground beef is the inexpensive alternative consumers turn to when prices rise. However, the overall decline in beef production means that ground beef supplies will be smaller and prices higher going forward.
There can be little doubt that the biggest issue in the cattle industry right now is the question of when herd rebuilding will begin. The challenge of herd rebuilding can be summed up with three questions.
Fall calf runs typically mean auction volumes increase and prices decrease to seasonal lows. This year is quite different with feeder cattle and calf prices sharply higher than one year ago while volumes are much lower.
The latest Cattle on Feed report puts inventories down 2.2% from last year, and up slightly from the August summer low, which was the lowest monthly on-feed total since September 2019.
Higher slaughter cow prices are the result of strong lean beef markets and the related growth in breeding demand for cows. The current price of 90 percent lean beef is 17.3 percent higher year over year.
Live cattle trade is part of the integrated markets for beef and cattle in North America. Canada and Mexico account for 100 percent of U.S. cattle imports and 95 percent of cattle exports.
Although drought persists north and south of Oklahoma, forage conditions have improved greatly in the state this summer. July was the seventh wettest July on record in Oklahoma.
Dynamic cattle and grain market conditions mean that producers will need to carefully and frequently evaluate stocker budget prospects this fall prior to stocker purchase.
Despite sharply higher cattle prices, there is no data to suggest heifer retention or enough decrease in beef cow slaughter to initiate herd expansion, although the most recent weekly slaughter data are encouraging.
The most recent USDA cattle inventory reports reveal herd numbers continue to shrink, the 2023 mid-year beef cow inventory the lowest in the data set dating back to 1973. Feeder supplies will likely shrink through 2024.
The sharp increase in feeder cattle prices this year represents a growing market incentive for the beef cattle industry to transition from liquidation to expansion, but it does not appear the industry is responding yet.
July's cattle inventory report will show continued declines to the beef cow herd. While beef cow slaughter is down thus far, the current pace suggests a herd culling rate over 12 percent for the year.
Beef imports will continue to be supported by higher domestic beef prices and the reduction in U.S. processing beef supplies due to reduced cow slaughter.
Prices are higher as tighter numbers and beef supplies push markets toward record levels. The biggest question now is the extent herd rebuilding begins with increased heifer retention and reductions in cow slaughter.
The arrival of El Niño likely means that additional drought impacts will be minimal and herd expansion may begin. The July Cattle inventory report may be the first sign showing an increase of beef replacement heifers.
Increasingly tight cattle supplies suggest that margins at all levels above the cow-calf sector will be squeezed in the coming months. The severity of the squeeze and the timing will vary across beef industry segments.
For the second time in a decade, drought has pushed cattle numbers in the U.S. lower than planned and lower than needed to meet the demands of the market.
Persistent drought in major beef cattle production regions continues to have a significant impact on the cattle industry despite improvements in drought conditions in other parts of the country.
With the grilling season set to kick off, lots of attention is focused on beef demand as the tightening of beef supplies will increase the pressure for higher wholesale and retail beef prices.
Global macroeconomic concerns continue to keep beef markets nervous. Slowdowns in some markets have had some impact and, yet global beef markets continue to be resilient and demonstrate continued growth.
Last week, a group from Oklahoma visited Florida to learn about cattle and agricultural production in an environment unlike anywhere else in the country.
In a steady market, fed prices would typically peak seasonally about now and move lower through the third quarter before increasing to year end, but there is good reason to expect the uptrend will continue in 2023.
Given growing expectations that drought conditions will moderate through the coming months, bred cow and heifer values are likely to increase sharply by this fall.
Over the past four weeks beef production has averaged 6.4% lower than last year. Production is expected to drop more sharply the remainder of the year.
Feedlot inventories are at their lowest point in 29 months and placements have been lower in 10 of the past 12 months. Here's what historical data shows about how the trend may evolve in the coming months.