Cattle producers struggling to currently pencil a profit can expect the next 12 months to be even more challenging. USDA’s June Cattle on Feed report put cattle and calves on feed for the slaughter market at 11.6 million head, up 457,000 head, or 4 percent, over 2017 levels.
According to USDA, beef production, at 2.12 billion pounds, was 8 percent above the previous year. Cattle slaughter totaled 2.64 million head, up 7 percent from April 2017. The average live weight was up 9 pounds from the previous year, at 1,334 pounds.
While that’s the highest June cattle on feed inventory on record since the series first began in 1996, Michigan Farm Bureau Livestock Specialist, Ernie Birchmeier says the trend has been reflected in increasing slaughter numbers.
“Michigan figures for April month-end, showed red meat production in Michigan totaled 79.3 million pounds in April 2018, up 42.1 million pounds from April 2017 numbers,” Birchmeier said. “Nationwide, red meat production totaled 4.28 billion pounds in April, up 8 percent from the 3.97 billion pounds produced in April 2017.”
Birchmeier predicts it will take some time for those higher inventories to work through processors and retail channels, meaning cattle producers may be seeing red ink for quite some time. “The increase in cattle on feed is likely to continue to press fed-cattle prices and margins lower as producers look to move these cattle to slaughter over the next 12 months,” he said.
The USDA report predicts 2018 beef production to hit a record 27.1 million pounds, up 3.6 percent over prior-year levels. Looking to 2019, beef production is expected to be up another 2 percent, hitting a record-high 27.7 million pounds.
According to American Farm Bureau Federation’s Dr. John Newton, director of Market Intelligence, cattle on feed have increased over prior-year levels for 18 consecutive months and 26 out of the last 28 months.
“They have been above 11 million head for eight consecutive months,” Newton said. “The numbers were the highest in Texas, Nebraska and Kansas, where a combined 7.6 million cattle were on feed.”
Newton says the increase in the number of cattle on feed was not unanticipated. Pre-report trade estimates ranged from a low of 11.4 million head to a high of 11.6 million head and averaged 11.5 million head -- all above prior-year levels.
States with the largest expansion in cattle and calves on feed during May included Nebraska, California, Texas and Arizona, which added a combined 397,000 head. On a percentage basis, the expansion in cattle on feed was the greatest in Arizona and California, where cattle on feed were approximately 21 percent and 19 percent higher, respectively.
Idaho experienced the largest decline in cattle on feed, down 25,000 head, or 9 percent, from prior-year levels. Figure 2 shows the year-over-year percentage change in cattle on feed.