WOOSTER, Ohio – It was a roller-coaster ride in the cattle business the first half of 2010, but one positive trend remains a constant – the trend toward higher-quality beef, according to Paul Dykstra, beef cattle specialist with the Certified Angus Beef brand.
Dykstra tracks variations in U.S. Department of Agriculture harvest and grading reports in the weekly e-newsletter column, Rearview Mirror on Quality.
“Relatively attractive prices for cull cows and bulls beefed up overall supplies since last winter, the number of all cattle harvested being up 1.8% over 2009,” Dykstra said. “That’s ironic, considering the U.S. cowherd is still shrinking at an annual rate of about 2%. It also means we are likely to see fewer of these culls on the market the rest of this year.”
The heifer share of federally inspected harvest was up 1.7% in the first half of 2010, compared to 2009. The fed cattle side shows a similar increase in head harvested, up nearly 1% for that first half. But Dykstra says there’s a lot going on behind that number.
“Carcass weights for fed cattle were down by a large gap compared to the prior year,” he said. Steer carcasses fell back 18 lbs. on average to 821 lbs.; the heifers, at 758 lbs., were 17 lbs. off the 2009 mark.
“Winter hit the U.S. feeding belt with particular force,” he explained. “Cold, wet conditions persisted, leaving most feedlots with daily gains and feed conversions in dire condition. Pens were sent to market early or well below target weights just to get it over with and stop the expense meter.”
For much of this year packers have seen profits, and feedlots in the top-five states had a nice run since the mid-March mid-$90s to a six-week sustained average above $98 per hundredweight (cwt.), Mr. Dykstra said. “Both were willing to keep the harvest chains full at those prices, so the bottom line is that it took more cattle to reach the packers’ sales-volume targets.”
As a result, there is a 1.2% decrease in tonnage of fed cattle carcass beef, despite the higher head count.
On the other side of the coin is the continued uptrend in available Choice and Prime grade beef. This trend started in 2008 when the share of Choice beef moved up from 52% to 55.4%, followed by a similar jump to 58.9% Choice in 2009.
“The first-half 2010 share of Choice is 62.5%, with another 3.1% Prime – a 10 percentage-point increase in the share of Choice cattle in the mix since 2007, and more than a point gain in the share of Prime means that grade volume is up by a third in less than three years,” Mr. Dykstra said. “Maybe the rough winter this year boosted quality grade. Research indicates greater feed intake in cold weather tends to improve marbling.”