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Fall Bull & Female Sale

October 21, 2023 * 12 noon

Joplin Regional Stockyards, Carthage, MO fact, heifer slaughter thus far in 2023 is fractionally higher than last year’s elevated level. Of course, the reduced heifer feedlot placement that follows increased heifer retention will show up as lower heifer slaughter only after several months. The July Cattle inventory report may be the first sign that shows an increased inventory of beef replacement heifers. Heifer slaughter is expected to start declining in the second half of the year.”

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In the meantime, Peel noted the low inventory (Jan. 1) of replacement heifers—bred heifers calving this year and heifer calves to breed for calves in 2024.

“The bred heifer inventory is the lowest since 2011 and the inventory of replacement heifer calves is the lowest in the 23 years of data available,” according to Peel. “The number of replacement heifers is not enough to prevent more herd liquidation this year and likely not enough to do more than stabilize the beef cow herd in 2024. The big push for heifer retention will likely begin with weaning heifers this fall. These heifers will be bred in 2024, calve in 2025 and begin to increase beef production in 2026. It doesn’t seem possible to speed up the timeline.”

As herd expansion takes hold, reduced beef cow slaughter and in- creased heifer retention will pull beef production lower for a time.

“In the last herd expansion that began in 2014, total cattle slaughter in 2015 dropped to the lowest levels since 1963, resulting in the lowest beef production since 1993,” Peel explained. “We can expect analogous reductions in cattle slaughter and beef production in 2024 and 2025 at least. Increased heifer retention will pull feedlot inventories down sharply and keep them low for the expected three years of heifer retention that will be needed for the next herd expansion. With drought seemingly on its heels, the process of herd rebuilding is poised to begin.”

Peel noted markets in the second half of this year revolve around the extent to which herd rebuilding begins.

Expansion

Timing Unclear

Increasing economic incentive has lots of folks thinking about expansion, but Mom nature continues to cap the prospects for many.

On the one hand, drought encompassed less of the nation the first week of July than the same time a year earlier. According to the U.S. Drought Monitor, 26.9% of the continental United States was experiencing drought, compared to 49.4% a year

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earlier. For the week, 41% of cattle were in areas affected by drought versus 52% the previous year.

At the same time, drought lingered in some parts if the nation and expanded in others, hampering the opportunity to rebuild hay supplies severely depleted by drought.

El Niño’s arrival in June suggests eventual above-normal moisture in the Southeast, along the Gulf Coast and in the southern High Plains. If it’s strong enough, California and the Southwest may receive similar benefit. Typically, the opposite is true in the northern part of the nation.

Expanding drought in the Midwest cast doubts about corn yield, although USDA surprised markets with an estimated 94.1 million corn acres in the June Acreage report. That was 5.52 million acres more (+6%) than last year, and 2.1 million acres more than the March Prospective Plantings report. Corn acres would be the third highest planted acreage in the United States since 1944. Projected area harvested for grain of 86.3 million acres would be 9% more than last year.

USDA estimated the season-average farm price for corn received by producers at $4.80 per bushel in the June WASDE, which came out before the Acreage report.

“Once you start saving heifers for a herd expansion, you got to save heifers for at least three years before you slow down the rate of heifer retention enough, and the numbers have grown enough to allow more heifers to go back into the feedlot,” Peel explained at the cattlemen’s Conference. “So, as we tighten this thing up over the next year to 15 months, it’s going to be a while from that point before things can change.”

Consumers Keep Buying Beef

“The boxed beef composite value has rallied to almost $340/cwt., whereas it spent all of 2022 below $295 and much of that year between $255-$275,” Koontz explained. “There is clearly strong beef demand supporting the market. We also see this in a seasonally strong Choice-Select spread.”

Many meat and food item prices continue to increase but at a more moderate pace than last year, according to the latest Food Price Outlook from USDA’s Economic Research Service.

For instance, food at home prices were 0.1% higher month to month in May and 5.8% higher year over year. Year-to-date prices were 4.7% more than the same time last year when food at home prices were 11.4% more year over year.

More specifically, beef and veal prices increased 1.5% month to month in May and 1.0% year over year. Year-to-date prices were 0.1% less than the same time last year when prices were 5.3% higher year over year.

By way of contrast, pork prices were 0.1% higher month to month but 2.9% lower year over year. Yearto-date, pork prices were down 1.9%. Poultry prices were 0.2% higher. month to month and 2.1% higher year over year. Year-to-date poultry prices were up 2.2%

“The Choice beef price (May) topped $8.08 per pound while the allfresh beef retail price exceeded $7.50 per pound,” said Andrew P. Griffith, agricultural economist at the University of Tennessee in his late-June market comments. “The Choice beef price is a historic high and represents a $0.23 per pound increase from April. The all-fresh beef retail price for May was $0.18 per pound higher than April and the third highest monthly price on record and the highest it has been since November 2021.”

Although U.S. beef exports this year are less than last year’s record levels, international consumers continue to underpin demand.

April beef export value per head of fed slaughter was $441.70, the highest since last July, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

However, April beef exports were 10% below last year at 111,416 metric tons, while value fell 18% to $859.5 million.

Through the first four months of 2023, beef exports were down 8% in volume (437,910 mt) and were 21% lower in value ($3.21 billion) compared to last year’s record pace.

“With U.S. beef supplies tightening, it’s difficult to keep pace with the remarkable export totals posted in the first half of 2022, but exports continue to account for a similar share of production as last year’s record,” says Dan Halstrom, USMEF President and CEO. “The rebound in travel and tourism – which is now gaining momentum in Asia – and related foodservice opportunities continue to support beef demand. In some countries we have also seen a recent easing of the inflationary pressure on consumers’ discretionary income.”

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