Fed Cattle: Supply and Outlook

U.S. Federally Inspected steer and heifer slaughter for 2018’s first quarter was nearly 1% above a year ago. That was a modest increase. Still, it was the largest for the quarter since 2012’s. According to the Cattle on Feed report released on April 20th by USDA’s National Agricultural Statistics Service, as of April 1, there were 7.4% (810,000 head) more cattle in U.S. feedlots with 1,000 head or more capacity than a year ago. That was the biggest April 1 count since 2006.

U.S. commercial beef production in the first quarter was 6.5 billion pounds (largest for that quarter since 2000), rising 2.6% year-over-year. It was bolstered by heavier cattle weights and increased cow slaughter. Supported by strong beef exports and interest in featuring beef by retailers and restaurants, wholesale beef prices remained strong (the comprehensive beef cutout value was 7.1% above 2016’s first quarter). The 5-market average negotiated live steer price for this year’s first quarter was $125.61 per cwt., up 2.1% compared to a year ago.

LMIC forecasts that commercial beef production will be more than 7% year-over-year in the Spring quarter (April-June) and more than 6% higher this Summer. Beginning in April, fed cattle prices are expected to decline month-over-month into the summer quarter (July-September). On a quarterly basis, in 2017 April-June averaged $132.67 per cwt., July-September was $112.47, and October-December came in at $117.88. LMIC forecasts that compared to 2017’s, this year’s second quarter price will be down 12% to 13%, and the final two quarters of the year may drop by 4% to 8%.