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CME: Beef-cow Slaughter Lower than a Year Ago

27 August 2009

US - We don’t follow the US Drought Monitor map published by the National Oceanic and Atmospheric Administration (NOAA) every week, so this statement has to be qualified a bit but we don’t recall ever seeing an August map of the US showing the kind of positive moisture conditions that exist this year, write Len Steiner and Steve Meyer.

The reason for talk of record corn yields is clear: Virtually the entire major corn producing region of the US is without drought conditions of any kind. Another drought index published by NOAA does indicate continuing wet conditions in Nebraska and South Dakota, a belt through northern Missouri-southern Iowa-western Illinois and most of Michigan but wet conditions in August are hardly ever a problem and are even rarer in the far western Cornbelt.

Rainfall and resulting range and pasture conditions have the greatest impact in the short run on the beef sector and, in particular, on cow-calf and stocker operations. The name “cow-calf operations” is pretty self-explanatory. Stocker operations are farms/ranches that run light calves on pasture until they reach feeder weight and move to feedyards. These light calves can be placed in yards early if grass is scarce but there isn’t a good alternative to grass for cows, especially with today’s high feed costs.

There are two shortages that drive contraction in the beef cow herd — shortages of profits and grass. Cow-calf profits fell steadily from April through early July but have rebounded some in recent weeks as calf prices have climbed. Lower cow-calf profits coincided, though, with a drop in slaughter cow prices as the dairy herd reduction program was finished in June. So, while profits may have been pushing cows to slaughter, both the prices received for those cows and good grazing conditions in much of the country worked against liquidation. The result? Beef cow slaughter that is down 9 per cent YTD and has been lower than in the corresponding week in 2008 every week since late February.

The only major exception to these excellent grass conditions is in southern and central Texas where drought conditions are severe and, as can be seen in the lower map, beef cows are usually plentiful. Cows have been moving from that area to slaughter or to better grazing conditions in other parts of the county most of the summer. As of 23 August, 20.7 per cent of the nation’s beef cows were in states that had 40 per cent or more of their pasture acres rated poor or very poor. That’s actually 0.6 per cent lower than the percentage at the same time last year. But 72 per cent of the cows are in state’s with 40 per cent or more of acres rated good or excellent this year. That number was only 48 per cent one year ago.


Daily Livestock Report - Copyright © 2008 CME. All rights reserved.


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