US beef production in decline – CoBank

Production not falling as fast as once projected

US beef production is in decline as expected for this year, but it is not falling as fast as once projected, according to the most recent CoBank quarterly report. Over the past three months, feeder cattle have stayed in feedlots for longer and put on more weight. However, these heavier weights are counter seasonal.

Throughout the second quarter of 2024, weekly dressed cattle weights were up 3% -than year-ago levels at about 850 pounds per head (Exhibit 5). Cattle on feed is up 4% year-to-date at 70.5 million head, with no changes year-over-year in June.

With feed costs softening and improved weather conditions, cattle have performed well and have transferred more money into producers’ pockets. As beef markets have softened, cattle prices have increased and thereby are reducing packer incentives and shortening kill schedules. At the end of June 2024, packers were losing $79 per head and feeders were profiting $499 per head to widen the margin spread to $578 per head.

This correlates with year-to-date federally inspected cattle slaughter being down 4.4%.

These heavier beef cattle have caused the beef 50s trim supply to jump significantly and are hindering the 50s trim price (Exhibit 6). Fewer beef cows are being processed resulting in lower supply of beef 90s trim. Changes in supply have caused the price spread between beef 50s and 90s to hit a record wide spread of $282.08/cwt. in mid-June. If weights stay up and slaughter numbers remain down, we expect these spreads to continue widening.