The 12 months kicked off with a cattle stock estimated to be down 2%, because of a 2021 calf crop down 2.3% from the earlier 12 months, due largely to the pressures introduced on by drought and excessive enter prices for feed, gas, fertilizer and labor. This Market Intel gives farmers and ranchers with a snapshot of what’s taking place to the U.S. cattle herd as we head towards the end line of 2022.
Drought & Enter Prices
Drought and excessive enter prices are impacting the advertising and processing of cattle. Drought had a major affect on pasture and rangeland this summer time, particularly within the West and the Southern Plains. When drought causes pasture circumstances to say no, heifers (feminine cattle that haven’t borne a calf) that may usually be saved as breeding replacements are as an alternative positioned into feedlots for eventual slaughter. Excessive enter prices have been one other impediment to farm profitability and have incentivized cattle producers to market extra cattle.
Rain has improved pasture and rangeland circumstances in some areas in latest days. Pasture and rangeland circumstances for the week ending Sept. 25, 2022, improved barely week over week, with 57% of acres in 48 states in honest to wonderful situation, a couple of 3% enchancment from this time final 12 months. This could present incentive for some farmers and ranchers to carry onto calves for replacements. Nonetheless, it is very important observe that pasture circumstances will take a while to get well to pre-drought circumstances.
Manufacturing
Beef manufacturing in August 2022 was a document 2.51 billion kilos, 6% above the identical time final 12 months. Cattle slaughter totaled 3.08 million head, up 7% from August 2021. Complete cattle slaughter for 2022 got here in at 22.49 million head, 1.8% forward of 2021. Heifer slaughter accounts for over 30% of the entire at 905,000 head, 9.3% greater than August 2021 and 6.2% above the five-year common. Cow (feminine cattle which have had multiple calf) slaughter is estimated to be 6.8 million head, 6% forward of final 12 months. Cow and heifer slaughter are notably vital as a result of these feminine cattle are accountable for the long run calf crop. Cow and heifer slaughter mixed account for practically 51% of all cattle processed between January and August 2022. The expansion in price of cow and heifer slaughter is resulting in a smaller calf crop and decrease future cattle provides. As a result of time it takes for a calf to succeed in market weight (18-22 months), fewer calves can imply a smaller cattle stock for years to return.
Chilly Storage & Meals Costs
Excessive beef manufacturing has led to an increase in beef in chilly storage. Within the September Chilly Storage report, USDA estimates that beef in freezers was a document 515.67 million kilos, rising by 1% in August. That is 24% better than the identical time in 2021. The U.S. Bureau of Labor and Statistics launched the August 2022 Shopper Worth Index on Sept. 13. The Shopper Worth Index for all meals elevated 0.8% between July and August 2022 and all meals costs have been 11.4% greater than August 2021. Whereas meals inflation is continuous, document ranges of beef in chilly storage will assist mood retail beef costs within the days forward.
Exports
Complete beef export gross sales as of Sept. 15, 2022, have been 682,600 metric tons, up 1.8% from final 12 months. Estimated at 35,800 metric tons, beef exports to China sky-rocketed throughout this week. U.S. beef exports to China complete 116,000 metric tons, 6.7% greater than this time final 12 months. Beef has been China’s largest imported meat since 2021, with document ranges of beef getting into the nation over a number of weeks.
Whereas exports are barely above final 12 months, they might start to gradual. One of many causes for that is power within the U.S. greenback. The U.S. Federal Reserve elevated base rates of interest by 75 foundation factors on Sept. 21 and signaled extra will increase by the tip of the 12 months. This information induced the U.S. greenback worth to strengthen compared to different foreign currency such because the euro, Canadian greenback, or Japanese yen. This makes it extra pricey for nations to buy beef and different merchandise from america and should incentivize our export prospects to look elsewhere for a greater deal.
Cattle On Feed
USDA’s September Cattle On Feed report, launched on September 23, 2022, confirmed cattle and calves on feed on Sept. 1 totaled 11.3 million. That is up solely barely from final month however is the second highest month on document because the report started in 1996. Placements of cattle into feedlots in August was barely better than final month at 2.11 million head. Marketings are the most important story of this month’s report, coming in at 2 million head, 6% above this time in 2021. Continued excessive inventories of cattle in feedlots paired with excessive ranges of marketed fed cattle shall be an element within the total cattle stock and calf crop when USDA’s Nationwide Agricultural Statistics Service releases the biannual cattle stock close to the tip of January 2023.
Abstract and Conclusions
August 2022 proved to be a record-setting month for beef. File month-to-month manufacturing pushed by a rising slaughter tempo resulted in a document quantity of beef in chilly storage. Slaughter throughout August 2022 got here in 7% above the identical time in 2021. USDA is forecasting complete cattle slaughter for 2022 1.8% above 2021. Fourth-quarter manufacturing is predicted to gradual however will probably be offset by higher-than-expected manufacturing within the first three quarters of 2023. Cow and heifer slaughter has continued to develop from stress brought on by drought and excessive prices for provides equivalent to feed and fertilizer. This continued progress of feminine cattle being positioned on feed for processing will lead to tighter cattle inventories for years to return. It is a robust indicator that the cattle trade is continuous within the contraction section of the cattle cycle.
Supply: American Farm Bureau Federation, who’s solely accountable for the data offered and is wholly owned by the supply. Informa Enterprise Media and all its subsidiaries aren’t accountable for any of the content material contained on this data asset.
