Strong beef demand and year-over-year decreases in beef production in the third and fourth quarters is expected to continue supporting wholesale beef values for the remainder of the year.
Barring some new disruption, feedlot inventories should drop below 2020 (and 2019) levels in the next month or two and remain there going forward. The drought could become a disruption if feedlot placements increase.
Beef imports were up 1.5% year-over-year in April but are down 7% for the January-to-April period compared to last year. Year-to-date beef imports are down 4% compared to the same period in 2019.
Beef exports represent a wide range of product types and qualities exported to various markets and augment domestic beef demand by providing markets for products less desired in the U.S.
Black swan events are always possible, but with a little luck, cattle markets will settle back into more typical dynamics and we can get a break from the action-adventure roller coaster of the past two years.
Wholesale prices for specific meat products are at record levels, exceeding the levels provoked by the pandemic disruptions one year ago; and unlike last year, lack of supply is not the issue.
The feedlot situation is improving but it will take additional time to process current feedlot supplies and the stress and challenges at the packing level will slow the process for at least several more weeks.
USDA reports pasture and range conditions from May-October and the initial reports this year show U.S. pasture conditions are the worst ever for May back to 1995 with 44% of pastures in poor to very poor condition.
The cyclical expansion in cattle numbers from 2014 to 2019 has now pushed cattle slaughter beyond packing industry capacity. It is estimated that annual average slaughter has exceeded capacity since 2016.
Ample supplies of fed cattle continue to hang over the market as feedlots struggle to get more current. Beef packers have very large margins and appear to be trying to push kills in the face of limited capacity.
