Derrell Peel: Cattle Slaughter Dynamics
Cattle slaughter for the year-to-date through the week ending September 26, 2020, was down 3.6% year-over-year. This includes a 4.2% decrease in steer and heifer slaughter; a 1.2% decrease in total cow slaughter; and a 3.7% decrease in bull slaughter so far this year. Varying slaughter patterns across different cattle classes make it difficult to project where slaughter will end up as the year closes out.
The biggest component of cattle slaughter is steer slaughter, which is down 4.3% year-over-year through late September. Through March, prior to COVID-19 impacts, steer slaughter was up 5.1% year-over-year. By the end of May, the cumulative steer slaughter for the year to date was down 7.2% before slowly recovering through the summer and early fall. In the last eight weeks, steer slaughter in August and September has been up 2.2% year-over-year. Steer slaughter is projected to increase 3.0 - 3.5% year-over-year in the fourth quarter leading to an annual total down roughly 2.5% compared to last year.
In the first half of the year, cumulative heifer slaughter was down 5.1%. In the third quarter of the year, heifer slaughter was down 1.8% year-over-year leading to the current year-to-date decrease of 3.9% year-over-year. Heifer slaughter is projected to be down 2.0 – 2.5% year-over-year in the fourth quarter. This would result in an annual heifer slaughter total down roughly 3.5% compared to 2019.
Dairy cow slaughter has decreased sharply since June leading to a year to date decrease of 4.9% in late September. The year-over-year decrease in dairy cow slaughter since late May has been nearly 9%. The rate of decrease is expected to slow in the fourth quarter and may be down roughly three percent. Total annual dairy cow slaughter is expected to be down about 4.5% year-over-year.
Beef cow slaughter is up 2.7% for the year-to-date as of late September. At the end of the first quarter, cumulative beef cow slaughter was nearly 11% higher year-over-year. By the end of the second quarter, cumulative beef cow slaughter had decreased to roughly 3.5% higher than the previous year. The year-over-year increase slowed more in the third quarter with beef cow slaughter the past eight weeks unchanged from last year. Beef cow slaughter is projected to be roughly 2% above year ago levels in the fourth quarter leading to an annual total beef cow slaughter roughly 2.5% higher year-over-year.
There are many dynamics in cattle slaughter markets in the fourth quarter that will determine total slaughter for the year. Current estimates are for total annual 2020 cattle slaughter to be down roughly 2.5% year-over-year. Carcass weights for steers and heifers are expected to be record large in 2020, with steer carcasses exceeding 900 pounds for the first time. Lower cattle slaughter and larger carcass weights are projected to result in total beef production close to unchanged from last year. Total 2020 commercial beef production is projected to be 27.1 – 27.3 billion pounds.