Beef Buzz News
Dr. Glenn Tonsor Expects Fewer Cattle Being Slaughtered And More Leverage For Feedlots Going Into The Third Quarter
Wed, 07 Jul 2021 09:51:43 CDT
Before the Fourth of July, livestock market economist Dr. Derrell Peel said we were on the cusp of being current in feedlot country.
Kansas State University agricultural economics professor, Glynn Tonsor, believes we are just about there.
For the third quarter, the forecast is 2.5% lower slaughter than we had in 2020, Tonsor said. This corresponds to a $1.18 cash prices, compared to the $1.24 we are currently at.
Looking ahead to the fourth quarter, Tonsor said he expects nearly 4% fewer cattle slaughtered compared to 2021.
Tonsor said we are on pace for reductions in slaughter numbers, and he anticipates fewer cattle going through the system as 2021 progresses.
There is a big “if” to this, he said. It all depends on if strong beef demand is maintained. This is often signaled by robust cutout prices, he added.
“There is certainly room for live fed cattle prices to come up with that if fewer cattle enter the system,” Tonsor said. “That is where my words of caution come in. I would like to see us retain strong cutout price which would enable those fewer head to be worth more.”
He said his best guess today is that is what we will see, and he hopes we can confirm that in the weeks ahead.
Tonsor added he is optimistic about where we were are going in this second half of 2021, relative to cattle prices and wholesale boxed beef prices.
Much of that is due to solid beef demand, Tonsor said.
While he cannot provide any numbers from his latest Meat Demand Monitor report yet, Tonsor said we can expect to favor those numbers.
“For June and the first six months of 2021, meat demand has been robust,” Tonsor said. “That is good!”
Tonsor added that in he is currently working on a multi-month report, released every half year in his Meat Demand Monitor project, that helps document trends.
The punchline, he said, is beef demand has been quite strong via all market channels. It is the core reason we have had higher cutout prices and believed to be the core reason behind higher fed cattle prices, he added.
Tonsor also said the numbers reported prior to the Fourth of July, moving through the pipeline, are very encouraging.
“We do have higher volumes in fed cattle moving, and the processing volumes remain strong,” Tonsor said. “So, initial estimates including Saturday are 623,000 head, up notably from the 581,00 the prior year.”
It feels like we have steady footing going with processing, Tonsor said.
While we are not to the levels we were prior to 2019, we are working our way through fed cattle inventories, and there is reason for optimism in getting more current, he said.
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