Nalivka: The Economics of Carcass Weights

The beef production equation includes both cattle numbers and carcass weights.  While we often talk about the economics of the cattle cycle and cattle numbers, carcass weights have their own economic drivers that are realized on the ranch and in the feedlot.  These include genetics, cattle health, and management which impact performance both on the ranch, in a backgrounding program, and in the feedlot.  But once the cattle are in the feedlot, decisions made according to cost of gain and the market leads to the final market weight of the cattle and ultimately, the carcass weight.   

There is the longer-term trend aspect of live cattle and carcass weights which is captured in the number of pounds of beef produced per cow. That trend in weights and beef production per cow is important in assessing the potential for growth in the total cattle inventory.  There are also the short-term economics of carcass weights that drive market decisions and production that are just as important.  These short-term economic drivers become critical to the market outlook.

For the better part of 2023, feedlot decisions based on the economics of high grain prices and record-high cost of gain became the driving force with regard to weights.    Carcass weights have been heavier than the previous year since the second-half of November with weekly steer weights setting new record highs each week since November 18.  For all of 2023, average steer weights were 908 pounds and the second highest on record.  From the long-term trend perspective, this compares to 1980 when steer carcasses averaged 708 pounds.  They rose to average 798 pounds by 2000 and 892 pounds in 2015.  Heifer weights followed the steers and ended the year the fourth highest on record at 828 pounds.

So, in the short term (January 2023 – October 2023), the economics of high grain prices became the driver and weights dropped sharply.  However, as grain prices fell at harvest, the economics shifted back to the longer trend of increasing weights as both cost of gain and steer prices both dropped in early November.  In addition, high breakeven prices could be partially countered by increased pounds per head produced with cheaper of cost of gain.  

Economics and the impact on weights – both longer-term and decisions based on short term factors will play an important part in determining beef production in 2024.  I expect steer carcass weights to average 12 lbs. above a year ago during the first quarter and 3 lbs. heavier during the second quarter.  As cattle numbers decline 3rd quarter and the short-term economics change, steer weights will drop as declining cattle numbers are pulled forward.  For the quarter, I expect an 8 lb. decline from a year earlier.  The final carcass weights may not be certain, but I believe that changing short term economics in 2024 that affect those weights will have an impact.