Carcass Weights: Part of my email traffic during the past week involved some discussion about carcass trends – namely, the sharp uptick in this year’s weights. That was especially time given that steer carcass weights marked a new all-time high (945 lb) for the week ending September 14 (see USDA’s weekly “Actual Slaughter Under Federal Inspection” report (AMS_3658).
For some perspective, last year’s steer carcass weights peaked at 941 lb. in December (weights usually peak in the third quarter). During the past six months steer carcasses have run ~28 lb ahead of last year. It’s possible steer carcass weights industry will be hovering around 970 lb in the coming weeks and months.
While this year’s jump is sizeable, the trend is nothing out of the ordinary. Bigger cattle over time long been a regular part of the business. Carcass weights have been on a steady march higher during the past forty years (see Chart 1).
That reality provides a little different perspective on declining beef cow inventory. That is, as described here, “cow inventory, adjusted for carcass weight gains, has actually increased since 1980.”
Days On Feed: The carcass weight inherently leads to the other part of this business equation: days on feed. I explained in the July/August print issue of Drovers that cattle feeders are increasingly challenged by the tightening supply of feeder cattle. However, “feedyard managers are adapting according to that reality.” That is, the feeding period keeps getting extended.
The best evidence of that is derived from Kansas State University’s Focus on Feedlots program. The feeding period was traditionally ~150 days – not surpassing 160 days until the fall of 2017. From there, the industry jumped to a new plateau – mostly 175-to-180 days between mid-2019 through the middle of 2023. However, feedyards participating in the program have now surpassed 200 days with the 12-month average being 191 days). (see Chart 2)
Longer feeding periods are beneficial to cattle feeders via:
1. Enhanced labor management (new placements require more labor),
2. Reduced health risk management (new arrivals represent new risk),
3. Improved grid quality premiums (maximizing genetic potential of slaughter mix – see Chart 3)
4. Better working capital management (each swap in an upward trending market requires additional access to capital and subsequent financial risk).
As a side note, any discussion and/or consideration of 120-day inventories derived from USDA’s monthly cattle-on-feed reports don’t really hold much merit; it’s the 150-day number that really matters in the current business environment.
Beef Forging Ahead With Consumers: All the while, the industry has gotten better and making sharp gains with consumers. As noted here, “the product continues to get better.” For example, the 2022 National Beef Quality Audit asked industry participants, “What are the strengths of the steer and heifer industry?” Across all segments (packer, retail, food service, further processor and, gov’t and trade organizations), respondents repeatedly highlighted product quality and consistency. That’s a sharp contrast to twenty years ago.
Business: The engine that’s enabled those extra days, heavier carcasses, and improved quality starts at the ranch. But therein lies the tension. Is the industry overdoing it – pushing too far against biological limits and/or inefficiencies? That’s a reasonable question.
However, it’s one that endures forever; there’s always resistance to change – regardless of how incremental it may be. But none of that change is ever driven by ideology – that doesn’t pay the bills. It’s always in response to what the business demands.
And given how deeply entrenched the trends are over time, it’s not likely to change and/or reverse any time soon. The genie’s out of the bottle. Sure, market conditions (fed cattle and corn) might cause it to moderate some, but once productivity and quality gains occur, it’s hard to ever go back. Transformation, whether we like it or not, is part of the business.
