Weather negatively affects US cattle markets

by Meat&Poultry Staff
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WASHINGTON – Inclement weather has recently affected livestock and meat production at all levels, according to the May 17 edition of the Livestock, Dairy, and Poultry Outlook from the US Department of Agriculture’s Economic Research Service.

Floods and wet, cold spring weather in the North Central region and mid-Mississippi River drainage areas have stymied corn planting and other field activities, raising concerns about availability and prices of feed grains in 2012. This cold weather has also negatively affected meat demand for outdoor grilling.

The continuing drought throughout the South and Southwest has affected pastures and is at least partially responsible for an increase in beef cow slaughter. Fueled by high winds, fires have also destroyed some southern rangelands.

As a result of these weather-related events affecting beef cow herds and after a brief pause, weekly federally inspected total cow slaughter has increased once more at rates generally 1 to 2 percent above rates for the corresponding weeks in 2010, for at least the five weeks through April 23. For the week ending April 30, slaughter was down by almost 3 percent. These slaughter rates likely reflect an about-face with respect to any plans for cow herd expansion in the southern tier of states most affected by the drought.

The Northern Plains and Rocky Mountain regions are beginning to exhibit signs of heifer retention for cow herd expansion. Weekly federally inspected dairy cow slaughter, on the other hand, has continued its relatively high ongoing rate in the 2-to-5-percent range.

Five area steer prices, all grades, have declined almost 7 percent from their weekly high of $123.16 for the week ending April 9. Wholesale Choice beef cutout values have also declined 6 percent from their weekly peak during the week ending April 9. Meatpackers have been challenged with shrinking and erratic margins due to the recent high prices they have had to pay for fed cattle and to declining retail demand. This has been especially true for middle-cut meats. As a result, kill levels have tended to bounce around. Relatively high byproduct values have bolstered packer margins.

Demand for middle cuts at retail has declined, likely due to the dampening effect the cool weather has had on outdoor grilling and the effects of escalating fuel prices on household budgets. The dampening effect of cool wet weather so far this spring is likely a factor in the decline in demand for beef in general, but especially for steaks and higher-end cuts. Demand for ground products has also softened, in part due to the decline in grilling demand. If fuel prices increase much above current levels, household budgets are likely to be reevaluated, and demand for high-priced meat cuts could suffer further as a result.
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