By-products such as cattle hides have increased in value dramatically over the past 13 months. Steer hides, which represent nearly one-third of by-product value, were 115% higher in August than last year.
Imports of Mexican cattle the the U.S. are down 18.7% through the first seven months of the year compared to 2020. However, the fourth quarter of the year typically sees increased Mexican imports.
The average culling rate the past two years, since the cyclical peak in 2019, has been 10.25%. Over the past 35 years, across cycles of expansion and liquidation, the average herd culling rate has been 9.65% annually.
Cattle markets seem poised to break out from the constraints of the first half of the year as we move into the last part of the third quarter. Calf and stocker prices have moved counter-seasonally higher in July-August.
Most components of fall and winter stocker budgets are uncertain at this point but it’s not too early to begin to pencil out possibilities, evaluating risk and perhaps taking actions to lock in some budget components.
Total beef exports for the January – June period in 2021 are up 21.5% over the first six months of 2020. This includes a 46.2% year-over-year increase for the month of June over the low point last year.
Labor challenges for packers are particularly acute on Mondays, which have the lowest daily average slaughter in 2021. Carcass weights will rise seasonally the rest of the year but will remain lower year over year.
The latest cattle on feed report confirms that the feedlot situation continues to improve relative to the slaughter capacity constraints that plagued fed cattle markets in early 2021.
Higher feed prices reflect how cattle may be produced. Typically, cattle are grown to heavier weights before they are placed in a feedyard reducing the price slide for feeder cattle as weight increases.
Cattle trade between the U.S., Mexico and Canada is part of the increasingly integrated North American market and exports and imports among the three countries consists mostly of feeder and slaughter cattle.
