March 27, 2023
As has been anticipated for several months, beef production is decreasing in 2023. In the last four weeks, beef production has averaged 6.4 percent lower compared to the same period last year. Lower beef production is the result of decreases in both cattle slaughter and carcass weights.
Steer slaughter is down 5.3 percent year over year in the last month and steer carcass weights have averaged 903 pounds, down 16 pounds from one year ago. Heifer slaughter has finally begun to decrease and is down 1.6 percent in the past month, with heifer carcass weights at 830 pounds, down 20 pounds year over year. Cow slaughter is down 6.8 percent year over year in the last four weeks, including a 0.9 percent increase in dairy cow slaughter and a 13.6 percent year over year decrease in beef cow slaughter. Cow carcass weights have averaged 646 pounds the last month, 11 pounds lower than the same period last year. Bull slaughter is down 14.6 percent from one year ago. Bull carcass weights have averaged 854 pounds in the last four weeks, down 26 pounds compared to one year ago.
Choice boxed beef cutout values have averaged $285.13/cwt. the last month, up 11.0 percent year over year. Boxed beef prices are led by higher middle meat values, with rib primals up 21.4 percent and loin primals up 15.5 percent year over year. Chuck primal values have averaged 8.5 percent higher with round primals up 1.3 percent year over year. Short plate primals are 13.5 percent higher with flank primals up 16.4 percent year over year in the last month. Only the brisket primal is down, 8.5 percent lower compared to last year. Select beef cutout and primal values are higher by similar amounts. The Choice-Select spread continues to inch lower to a seasonal low. The Choice-Select spread typically reaches a seasonal low in February. The current spread of $10.39/cwt. is the lowest weekly level so far this year, about a month later than the usual low and still looking for a seasonal low.
Beef production is expected to drop more sharply for the remainder of the year, adding even more supply pressure to support prices. Current estimates for 2023 have beef production decreasing in a range from 4.5 to 6 percent lower year over year. The decrease will depend, in part on whether continued drought causes additional herd liquidation and temporarily moderates declining beef production and resulting in a smaller decrease.
The ground beef market is responding to lower beef production as well. Decreasing cow slaughter is already pushing 90 percent lean trimmings prices higher and decreased fed slaughter is pushing 50 percent lean trimmings prices higher as well. The latest Cold Storage report showed seasonally lower beef in cold storage, down 5.9 percent year over year, likely mostly reflecting the seasonal drawdown in beef trimmings. This contrasts with last year, when cold storage inventories remained high all year due to large cow slaughter.
As the calendar turns to April, seasonal grilling demand typically adds additional support for some beef cuts and the ground beef market. Wholesale beef market values typical begin to reflect summer grilling demand in April in preparation for the Memorial Day kickoff to summer beef demand.
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