Even though prices have been exceptional for calves and feeder cattle, feedlot breakeven projections are rapidly moving higher, discouraging ranchers to consider retaining ownership.
Reviewing cattle placement in feedlots this year suggests that fewer fed cattle supplies expected in the fourth quarter along with much higher costs of gain will hold carcass weights below a year ago.
Fundamentals for fed cattle are steadily at odds so far this summer with very “green” fed cattle in the northern tier of the feeding region. Feeders are pushing show lists to take advantage of the summer high.
Consumer concerns with inflation are quite real and retail beef values closed out the first quarter 15% higher than last year. Even so, the end user beef market has gained a widening appreciation for Prime beef.
Carcass weights in the latest USDA report for the week of May 9th show a large seven pound drop for steers and 10 pounds lighter on the heifers. This suggests currentness has picked up in the fed-cattle sector.
The cattle placement pattern beginning in the fourth quarter of 2021 shows the finished cattle supply will start to swell in June and could become a 20,000 head surplus over a year ago.
The coming weeks should fuel interest in high-quality beef cuts for grilling. As the share of harvest-ready calf-feds grows in the fed cattle supply, we anticipate seasonally lower quality grade trends.
Cattle feeders have been more willing to sell finished cattle in recent weeks since corn prices have elevated the ration cost and feed conversion efficiency decreases at the end of the feeding period.
In 2019 Certified Angus Beef reported an aggregate packer CAB premium total of $92 million. By 2021 that total was nearly double, resulting in $182 million in CAB premiums.
Quality grades set record highs for combined Choice and Prime carcasses during the first five weeks of 2022, slightly higher than last year. Prime grades are down marginally from year-ago at 10% vs. 10.8% last year.
