In the Cattle Markets
Cow prices remain strong.
All market classes of beef cattle are at record-high levels for this time of the year, but they are lower than the all-time record highs established in the last half of 2014. Slaughter-cow (85%-90% lean) prices in the Southern Plains peaked in August 2014 at an all-time record high of more than $131 per hundredweight (cwt.). Cow prices then declined seasonally to average about $115 per cwt. in fourth-quarter 2014. First-quarter-2015 cow prices have generally ranged above last year, from $103-$115 per cwt.
Support for cow prices has come from lower slaughter. Total cow slaughter in the first quarter was down about 5% from last year. Beef cow slaughter was down about 15% as herd rebuilding that began in 2014 continued. Dairy cow slaughter was more than 4% higher as milk prices have waned from last year’s record highs.
Even though slaughter numbers were lower, a number of fundamental factors combined are keeping cow prices in check. Increased production of competing meats, more lean beef imports, and lower byproduct values are all affecting cow prices. While total beef production was down about 3.5% in first-quarter 2015, pork production was up more than 6%, broiler production was up 5%, and total red meat and poultry production was up more than 3%. For the entire year, USDA is projecting an increase in pork production of 6.1%, broiler production up 3.8%, and a 3.4% increase in total meat production.
High U.S. beef prices, the strong value of the U.S. dollar, and a drought in Australia with forced cow liquidation are all contributing to a sharp increase in beef imports this year. Data are only available through February, but for the first two months of 2015, beef imports were up 56% over last year. Imports from Australia, our No. 1 supplier, were up 120% more than last year.
Current cow byproduct values are more than $2 per cwt. lower than last year’s record-high values. Export demand, especially to Southeast Asia, is very important to byproduct values. So the high value of the U.S. dollar and the West Coast port congestion problems the last several months have contributed to the lower byproduct values.
USDA Ag Marketing Service (AMS) publishes a weekly USDA By-Product Drop Value (cow) report. It is available at www.ams.usda.gov/mnreports/nw_ls444.txt. The report lists the quantity, price and value for important byproducts from a typical 1,100-pound cow. The April 10, 2015, report estimated the cow byproduct value at $14.42 per cwt., or $158.62 per cow. For the same week last year the value was $16.65 per cwt., or $183.15 per cow.
Cow prices in the second half of 2015 will likely come under seasonal pressure and could average below last year’s record levels. Cow slaughter the second half will be closer to last year and, of course, depends on weather-related pasture and range conditions. Extreme drought is still prevalent in the Southwest, parts of the Southern Plains also remain dry, and dry conditions have developed in parts of the Northern Plains.
Plus, the previously mentioned increases in competing meat production and beef imports will be factors to watch, as well.
Southern Plains, 85%-90% lean, weekly
Editor’s Note: Tim Petry is a livestock economist with North Dakota State University Extension Service.