As is evident in recent federally inspected weekly cow slaughter estimates, total August 2013 monthly commercial cow slaughter will likely show a sharp decline from the August 2012 level. Thus far, the decline appears sharper for beef cows than dairy cows. However, if the “flash drought” in the Central United States persists, it could result in more cows going to slaughter and could temper any expansionary plans to retain beef cows or replacement heifers through the winter, as well as slowing or even reversing the decline in cow slaughter.

In August 2013, dressed weights for 5-area steers (based on LM_CT180) were about 11 pounds below August 2012 levels. While dressed weights of cattle traditionally increase from April-May lows to a peak in October, steer weights did not begin to decline until after December 2012. The seasonal rate of gain in slaughter weights this year appears to be moderating from the rapid rise that occurred from May to June.

One factor affecting average dressed weights of all cattle, and thus of beef production, is the relative share of cows, bull, steers, and heifers in the slaughter mix. Up until the end of July, beef cows accounted for more than half of total federally inspected cow slaughter. As beef cows are generally somewhat lighter than dairy cows, the relatively sharper decline in beef-cow slaughter will likely result in a slight increase in dressed cow weights for the near term. Reinforcing the overall effect of this potential increase, the recent declines in cow-slaughter share of total slaughter, combined with the heavier weights of fed steers and fed heifers, will likely result in heavier dressed weights for all cattle for the near term.

With most of the year-over-year increase in July steer and heifer slaughter due to 1 more slaughter day in July, with two-thirds of likely year-over-year decline in August slaughter and one extra slaughter day in September, third-quarter slaughter is expected to be above third-quarter 2012. This could be due to the combined contribution of feeder cattle placed at “normal” weights and the larger year-over-year placements of heavyweight feeder cattle since March 2013. Combined with increased production of pork and poultry, greater beef production could dampen any increases in wholesale cutout out values and fed-cattle prices for most of the rest of 2013.

 

Monthly Retail beef prices set successive new records in July and August. August retail Choice beef prices reached $5.39 per pound, and All-fresh beef reached $4.97 Although beef prices are lending some support to pork and poultry prices, pork and poultry are in such abundant supply that they are likely to dampen continued upward movement in beef prices, especially with the seasonal decline in summer grilling demand. Despite the price-dampening pressure from competing meats, generally declining year-over-year beef supplies will result in retail beef prices that are likely to remain near current levels for some time.