Agricultural News
Adverse Winter Weather Puts Hardship on Individual Operations, But Positively Impacting Beef Prices
Mon, 08 Apr 2019 14:10:39 CDT
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 Dr. Glenn Selk. Today, Dr. Peel reports on the impact weather has had on the performance of feedlots in recent months.
"USDA-AMS estimates U.S. beef production for the year to date to be down 1.0 percent year over year. Total cattle slaughter is up 0.7 percent so far this year over last year. Daily slaughter totals for the year to date show steer slaughter down 3.9 percent; heifer slaughter up 7.6 percent; dairy cow slaughter up 5.0 percent; beef cow slaughter up 1.1 percent and bull slaughter down 8.8 percent all compared to the same period last year. Adverse weather has likely slowed cattle finishing somewhat but the slaughter totals across classes mostly reflect underlying herd dynamics.
"Weather impacts are more evident in cattle carcass weights. Carcass weights are declining seasonally thus far but are well below year ago levels. In the latest weekly data, steer carcass weights are 12 pounds below one year ago; heifer carcasses are down 11 pounds; and cow carcasses are 18 pounds lighter year over year. Lighter cow carcass weights are particularly surprising given that dairy cows are making up a bigger proportion of cow slaughter and are typically heavier than beef cows. For the year to date, steer carcass weights have averaged 866 pounds, down 7.3 pounds year over year; heifer carcasses are at 804 pounds,11.7 pounds lighter compared to last year and cow carcasses are averaging 645 pounds, 14.3 pounds lighter year over year.
"Feedlot survey data from Kansas show the weather impacts in more detail. For the month of February, closed-out steer pens averaged 3.43 pounds per day of gain (ADG), down slightly from 3.48 ADG one year ago. Feed conversion was sharply higher at 7.08 pounds of feed per pound of gain (F/G) compared to 6.22 F/G last year. This indicates the additional feed required to support animal maintenance and growth; meaning that cattle are much less efficient in adverse weather. Steer death loss was higher as well at 1.68 percent compared to 1.59 percent last year. Cost of gain (COG) is higher now compared to last year, partly as a result of these impacts but may also reflect changes in feed costs. February 2019 steer COG is reported at $85.26/cwt. compared to $79.73/cwt. one year ago.
"The impact on feedlot heifers may be even more apparent. February heifer ADG was 3.18 pounds per day, compared to 3.34 ADG in February last year. Feed conversion was 7.31 F/G compared to 6.40 F/G one year ago. Heifer death loss was 1.53 percent in February compared to 1.29 last year. Heifer COG for February was $89.17/cwt. versus $80.56/cwt. last year.
"As in often the case, adverse weather is largely a management headache with significant economic impacts mostly borne by individual operations. However, there are no doubt some market level impacts given the lengthy and widespread period of poor cattle production conditions experienced this winter. Impacts reported above are likely even worse in more northern regions compared to Kansas. Reduced beef production appears to have supported boxed beef prices, reducing supplies somewhat so far this year compared to earlier expectations. Fed cattle prices have likely been supported as well, though the weather impacts have not been as obvious as some had expected. Fed cattle prices may have peaked seasonally but continued weather impacts and the onset of summer beef demand should provide continued support for a few more weeks and possibly another chance for a spring price peak."
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