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CME: Total Cattle Slaughter in October Higher Than a Year Ago

25 November 2019

US - USDA-NASS published the official October livestock production statistics and the data confirmed what we had gleaned from the various daily and weekly reports - big gains in pork production but only a marginal increase in the supply of beef coming to market, according to Steiner Consulting Group, DLR Division, Inc.

Below are key numbers from this latest update. Please note that there were no calendar differences between 19 Oct and 18 Oct, which makes for a more straightforward supply growth comparison.

Total cattle slaughter in October was 2.976 million head, 0.6 percent higher than a year ago. More cows coming to market offset the reduction in fed slaughter. Steer and heifer slaughter in October was 2.281 million head, 0.4 percent lower than a year ago.

Analysts polled ahead of the USDA Cattle on Feed report also expected, on average, feedlot marketings in October to be down 0.4 percent from last year. In the last three months (Aug-Oct), fed cattle slaughter was 0.3 percent lower than a year ago and this was entirely due to fewer steers coming to market.

During this period, steer slaughter declined by some 205,000 head or 4.8 percent from the same period a year ago. On the other hand, heifer slaughter during this three month period was 184,200 head or 7.6 percent higher than the previous year.

In the last three years producers have consistently sent more heifers to market, reflecting the deteriorating margin picture for cow-calf operators. What is a bit more puzzling is that steer heifer has declined in the last couple of years despite an increase in the overall calf crop.

So far this year steer slaughter is down 2.3 percent compared to a year ago and in 2018 steer slaughter was down 0.8 percent from 2017 levels. Commercial beef production in October was 2.438 billion pounds, 0.3 percent higher than last year.

Fed beef production, however, declined due to a reduction in the number of fed cattle coming to market and average fed cattle weights. We calculate that steer/heifer production in October was 1.992 billion pounds, 0.4 percent lower than last year.

The increase in cow slaughter and cow meat production has done little to offset the shortfall in imported beef supply, something that is evident when we look at the counterseasonal increase in 90CL boneless beef prices (see DLR discussion yesterday for more on this).

Cow slaughter in October was 594,100 head, 4.7 percent higher than a year ago and cow meat production was estimated at 373.1 million pounds, 16.2 million pounds or 4.5 percent higher than last year.

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