Holding animals on pasture and in feedlots longer is expected to impact the number of commercial cattle slaughtered for the remainder of the year. USDA lowered the commercial beef production forecast for third-quarter 2015 approximately 35 million pounds on expectations of lower cattle slaughter during the quarter. The commercial beef production forecast for the fourth quarter was unchanged, fractionally higher than fourth-quarter 2014. USDA’s current forecast for commercial beef production in 2015 is expected to be approximately 2 percent lower than the previous year. While the number of cattle heading to slaughter remains below the previous year, heavier average dressed weights have continued to be much higher than in 2014, helping to partially offset the lower number of cattle being processed. Average cattle dressed weights in the third quarter are projected to average above last year, but the increase in weights during the fourth quarter is expected to narrow. Commercial beef production in 2016 is projected to reach 24.8 billion pounds, which would be the first year-over-year increase since 2010.
As of the week ending August 14th, Agricultural Marketing Service (AMS) weekly Choice and Select cutout values were reported at $242.66/cwt and $234.55/cwt, respectively (http://www.ams.usda.gov/mnreports/lm_xb459.txt ). Weekly cutout values (both Choice and Select) have increased in recent weeks, mostly due to packers limiting the number of animals processed on a weekly basis, but the inability of wholesale beef prices to gain much upward traction has kept packer margins under pressure. Retail beef prices continue to hold at record levels, and the Economic Research Service’s monthly average retail Choice beef price in June was reported at $6.11 per pound (http://www.ers.usda.gov/data-products/meat-pricespreads.aspx). Retail prices are expected to remain above year-ago levels through the remainder of the year, but could decline below this year’s second quarter estimate due to the seasonal waning in demand for grilling items after Labor Day, which is considered to be the last grilling holiday of the year, along with increased resistance to high beef prices from consumers, seasonally larger beef production, and large supplies of pork and poultry through the remainder of 2015.