June 22, 2007

High rates of US cow slaughter remain

US cow slaughter between January and April was 16 percent higher than year ago levels despite easing drought, according to the latest pasture and range report of the United States Department of Agriculture (USDA).

Fifty percent of US pastures were rated as being in good or excellent compared to year ago where only 38 percent of these pastures earned these ratings, according to the USDA. While the national picture looks bright, worsening drought conditions are occurring in the southeastern and western regions of the US wherein cow slaughter is aggressively taking place.

Corn prices are also pushing cow slaughter rates up despite a rebound of calf prices from a sharp decline in late 2006 and early 2007. Many cow-calf producers are still apprehensive on the uncertainly about corn prices with calf prices consequently going forward. In some cases, producers are opting to liquidate their cows.

The continuous high rate of cow slaughter could reduce US beef production in the coming years, USDA said.

Remarkably, the higher slaughter has coincided with strong cow and 90CL (chemical lean) cow beef prices. This unexpected trend has arisen due to strong ground beef demand.