December 17, 2004

Fed Beef Supplies Remain Tight in US

Fourth-quarter beef production is expected to remain unchanged from the very low levels of last year when the US industry was still adjusting to the loss of Canadian slaughter cattle and processing beef from cattle over 30 months of age.

Fed cattle slaughter was being pulled forward to meet strong demand. The end result was record cattle and beef prices as cattle were marketed at lighter weights. Last fall cattle slaughter was down 9 percent, but beef production was down 12 percent as commercial dressed carcass weights were 26 pounds below a year earlier.

With this fall, commercial slaughter weights are about 2 pounds above the record set in fourth quarter 2002. However, slaughter is down about 4 percent from a year ago resulting in another fourth quarter with production below 6 billion pounds. Poor feedlot conditions in many areas in late November to early December raised concerns for maintaining production in the first half of 2005. The sharpest year-to-year declines are in cow slaughter, with steer and heifer slaughter about unchanged from a year earlier.

Although increasing seasonally, fall cow slaughter is still expected to run 15 percent below a year earlier. Both dairy and beef cow slaughter are being held down as prospects for additional heifers calving and entering the herd in 2005, particularly for beef heifers, appear limited. The number of heifers calving and entering the herd in the first-half of 2004 was below a year earlier and the number of heifers on feed October 1 was above a year earlier. Cull utility cow prices remain well above levels of a year earlier.