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High prices and heavier weights bolster beef output

High prices and heavier weights bolster beef output
Expect higher average beef prices this year despite more competition from pork and chicken.

USDA forecasts the 2015 annual average five-area fed steer price in the $157 to $167 range, up from last year's $154.56 and almost 70% higher than the $98.35 average just five years ago in 2010.

Annual average 2015 Oklahoma City feeder steers are forecast in the $207 to $217 range, up from last year's $202.82 and nearly double the $109.31 average in 2010.

Price action from December onward suggests the ride will be anything but smooth. So hang onto your hats and consider taking advantage of pricing opportunities when they present themselves.

Expect higher average beef prices this year despite more competition from pork and chicken.

Heavier weights
Despite expected year-over-year lower total first-half 2015 net beef placements in 1,000-plus head feedlots, Ken Mathews, a USDA economist, expects second-half 2015 beef production to be near 2014 production for the same period because of longer feeding times for steers and heifers, heavier dressed weights for all cattle, and more steers and dairy cows in the slaughter mix.

Related: March 20 USDA Cattle on Feed

Those forces will hold expected 2015 domestic beef supply at 53.9 pounds per person, down just 0.3 pound from 2014. So beef supply will not be significantly tighter. However, per capita pork supply is projected at 49.2 pounds, up 2.8 pounds from last year.

Per capita broiler supply is projected at 87.2 pounds, up 3.8 pounds from last year. Per capita turkey supply is projected at 16.3 pounds, up 0.5 pound from last year. That means beef will face rising supplies of much lower-priced meat proteins.

Mean competition
The price spread between beef and pork and beef and chicken remains wide, and this could leave beef at a disadvantage in seasonal consumer purchasing patterns and the mix of retail features on a weekly basis. The popularity of ground beef remains intact despite ground beef prices above 2014 levels.

Continue reading after the jump >>

High prices and heavier weights bolster beef output


Lean processing beef prices eased in February, but remained well above the five-year average. Imports of lean processing beef from Australia and New Zealand remain robust and are alleviating some of the upward momentum in the spot lean-processing meat markets. Nonetheless, beef prices are not expected to undergo the large decline anticipated in the pork and poultry markets this year.

Cow herd rebuilding
USDA tallied January 2015 federally inspected heifer slaughter at 649,300 head, compared with 751,500 head in January 2014. Those figures represent 35% of total federally inspected steer and heifer slaughter of 1.858 million head in January 2015 and 37% of 2.051 million head in January 2014.

The reduction of heifer slaughter in the steer and heifer mix is likely a result of producers retaining some extra heifers for breeding purposes.

Catch more beef news, dairy news and livestock updates with Farm Progress!

Thus far in 2015, commercial cow slaughter appears to be largely of dairy cows, which, due to their larger size, results in higher average dressed weights. However, commercial beef cow slaughter was down by 24%, leaving total January commercial cow slaughter down by 11% year over year, still indicating efforts to rebuild the beef-cow herd.

January 2015 monthly commercial dairy cow slaughter was up 2% year over year. Weekly FI cow slaughter indicates a continuing pattern of relatively high dairy cow slaughter, with average dressed weights for all cows reaching a weekly record high of 663 pounds per carcass.

Otte is farm management editor for Farm Futures magazine.

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