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CME: Total Commercial Cattle Slaughter in June Up 5.6%

24 July 2017

US - On Thursday, USDA released its monthly tabulation of livestock statistics for June and the data contained some interesting insights, reports Steiner Consulting Group, DLR Division, Inc.

Total US commercial cattle slaughter in June was 2.858 million head, 5.6 per cent higher than a year ago. There was the same number of marketing days as a year ago so the rate of growth was the same when calculated on an average daily basis.

The last time monthly slaughter surpassed 2.8 million head was in October 2013, but with one extra marketing day back then. More female cattle in the slaughter mix have bolstered slaughter numbers in recent months.

Fed cattle prices declined sharply in the fall of 2016, causing producers to send more heifers into feedlots rather than hold them back for herd rebuilding. As we noted in our previous report, this may have not been enough to turn the expansion cycle but it has certainly slowed it down.

There were 151,800 more cattle slaughtered in June 2017 compared to a year ago. Out of this total net increase, there were 82,000 more heifers (+13.4 per cent) and 45,700 cows (10.3 per cent). Steer slaughter for the month was up only 15,600 head (+1 per cent) compared to a year ago.

The change in the slaughter mix likely impacted the average weight of cattle and overall production levels for the month. Total commercial beef production in June was 2.279 billion pounds, 3.9 per cent higher than a year ago.

Slaughter numbers have increased by an average of almost 6 per cent in the last three months (adjusted for marketing days) but beef production during this period has increased by 3.5 per cent. When we account for the significantly larger exports and lower imports, the net beef availability in the US market during the last three months has been only modestly higher than a year ago.

Following our letter, one of our readers highlighted the potential impact on beef cow slaughter from the extreme drought conditions in parts of North and South Dakota. It’s a fair point and our guess was that the drought likely has contributed to the recent increase in the national cow slaughter.

USDA slaughter data (which is only through 8 July) tells a different story. USDA does not disclose cow slaughter numbers for Region 5 (which includes the Dakotas) due to confidentiality concerns. But we can calculate the change in slaughter for other regions and imply the impact that region 5 may have.

Below, we have shown our calculations but basically since June the main contributor to the increase in national beef cow slaughter have been region 6 (Southern Plains) and region 9. At least through early July, the drought in the Dakotas did not seem to impact cow slaughter but it may have pushed more feeders into feedlots early.

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

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