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Your Update from Ron Hays of RON
Tuesday, May 11, 2021
Dr. Derrell Peel on how Slaughter Capacity Limits Fed Cattle Markets
Mondays, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Mark Johnson. Today, Dr. Peel talks about the slaughter capacity limits in the fed cattle markets.

Most of the U.S. beef packing infrastructure was built in the 1980s. Cattle inventories in the decade of the 1980s averaged 108.3 million head, 15 percent greater than the 92.1 million head average of the past decade. The industry was characterized by excess capacity for many years as cattle inventories declined. Over many years, capacity slowly exited the industry. In 2000 a ConAgra plant in Garden City, KS burned and was not rebuilt; Tyson closed a plant in Emporia, KS in 2008; and in 2013 Cargill closed a plant in Plainview, TX.  The National plant in Brawley, CA closed in 2014 but reopened as One World Beef in 2017.

Dr. Peel compared the characteristics(a graphic with these numbers are available in our webstory) of current steer and heifer slaughter for 2020 and 2019 compared to 2012 and 2007. The COVID-19 pandemic caused unprecedented disruptions in beef packing in 2020 so 2019 is included as a more typical year although a single plant fire also caused disruptions that impacted operations in 2019; though the impacts were relatively short-lived. Despite dramatic weekly volatility within each year, the general characteristics of 2019 and 2020 steer and heifer slaughter over the year were not substantially different. These two years are compared to 2012, the year prior to the Cargill plant closing and to 2007, the year prior to the Emporia plant closing. Total steer and heifer slaughter in 2012 (25.43 million head) was less than 2019 (26.1 million head) and fractionally higher than 2020 (25.3 million head). Steer and heifer slaughter in 2007 was the largest in this comparison at 27.49 million head.

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