Author: David Anderson

The U.S. hit “peak meat” production in 2022 totaling 107 billion pounds, a record for meat production that includes beef, pork, chicken, turkey, lamb, and veal.  Even though there are cycles in beef production and seasonal patterns in demand and supply, meat production has trended upward over the long-term.  However, meat production should decline in 2023 and again in 2024 due mostly to supply challenges.  

Record meat production last year was driven by increases in beef and chicken production while pork and turkey declined.  The beef production increase was due to reduced heifer retention and increased beef cow culling brought on by drought and cost increases relative to cattle prices.  Broiler production surged as high chicken prices fueled profits.  Pork production declined about 2.5 percent to 27 billion pounds brought on by animal disease pressures and sow productivity issues.  Turkey production was reduced by Highly Pathogenic Avian Influenza (HPAI). 

While each species has its own circumstances that affected production, there are some common reasons for less production.  First is feed costs.  High feed costs reduce profits for producers and that leads to less production.  Other production costs like fuel, building costs, and higher interest rates also lead to less production.  Drought conditions have hurt cattle and beef production.

In 2023, total meat production is expected to decline about 1 percent, to about 105.9 billion pounds.  Beef production is expected to fall by about 5 percent.  Pork production is expected to decline slightly (less than 1 percent).  Broiler production may show a small increase over 2022.  Turkey production is likely to increase by close to 3 percent as it recovers from HPAI and high prices should deliver some profits.  Total meat production is likely to decline again in 2024 as increases in broiler production are not enough to offset declining beef production.  

So, was last year the peak of meat production for many years to come?  Not likely.  Drought recovery, declining feed prices, and easing disease pressures will boost meat profits and production in the future.

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Anderson, David. “Peak Meat.” Southern Ag Today 3(9.2). February 28, 2023. Permalink

USDA reports cold storage supplies of meat (and other agricultural commodities) each month.  In December 2022 there were 544 million pounds of beef in cold storage facilities.  That was the largest amount of beef in storage since December 2016.  It also was the second largest amount of beef in storage on record, at least going back to 1973.  What does this mean, if anything?

Cold storage stocks of meat are much different than grains or cotton.  Meat is not storable for very long, compared to grains.  It should be thought of as a flow stock, or product in the system, or cold chain, that is in movement eventually to its final destination.  The meat is often frozen which causes a price discount compared to fresh.  We often think about a buildup of stocks as an indicator of a demand problem.  But, it can often reflect more production moving through the system, or that we have more imports and exports reflecting growing trade or even meat company strategies to stock up on items due to favorable prices for example in pork bellies.  

Cold storage stocks of beef tend to peak in December-January and reach a low in June-July.  The seasonal decline in stocks has been, on average, about 82 million pounds over the last 5 years.  In 2022, there was very little seasonal decline and supplies grew to 544 million pounds by the end of the year.  

Why are stocks so large?  One factor is that beef production was a record large 28.3 billion pounds in 2022.  U.S. total beef trade, exports plus imports, was also a record large 6.78 billion pounds in 2022.  Beef exports were a record large 3.43 billion pounds and imports, 3.35 billion pounds, the most since 2015.  That’s a lot of beef moving in, out, and around the country.  The beef in storage is reported as boneless (mostly for ground beef) and cuts (think of steaks and other cuts).  Of the 544 million pounds in storage, 498 million pounds are boneless beef, and that was 6.5 percent more than in December 2021.  This beef is likely related to the large number of cows that were culled in 2022.  The remaining 45.7 million pounds are beef cuts. Another way to put this in context is that 544 million pounds is about 1.6 pounds per person, which is not a lot different than per capita stocks over the last several decades.  Per capita cold storage stocks were over 2 pounds back in the early to mid-1970s when the U.S hit peak cattle numbers and beef demand began to decline. 

While the amount of beef in cold storage is curious, it’s not likely a sign of weakening demand yet.  The next USDA cold storage report will be released on Friday afternoon and should add more context to this curious statistic.  

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Anderson, David. “An Interesting Curiosity, for Now.” Southern Ag Today 3(8.2). February 21, 2023. Permalink

Photo by Dana Sredojevic: https://www.pexels.com/photo/a-butcher-holding-a-slab-of-steak-13279400/

Calf prices bounced around in the first month of the year, but they rebounded significantly higher in the last couple of weeks.  Higher fed cattle prices, hitting $160 per cwt last week, and tighter supplies of calves and feeders are fueling this price run.  

In the Southern Plains, 5-600 pound steers have increased from $203 per cwt to $214 in the last two weeks.  During the same period, the same weight calves in Georgia bounced from $181 to $188 per cwt.  Heavier feeders, (7-800 pounds) saw more modest gains in the Southern Plains, up about $4 per cwt to $182.  In Georgia, those heavier calves actually dropped about $2 per cwt to $163.  Calf prices tend to be lower the further South and East from feedlots in the Plains and Corn Belt.  Prices in both the Plains and Georgia were about $26 per cwt higher than last year.

Fed cattle prices hit $160 in several markets last week.  Higher prices for fed cattle certainly boosted calf prices.  Fewer available feeder cattle are also working to boost prices.  Calculating feeder cattle supplies from information in USDA’s cattle inventory report indicated that 25.3 million head were outside of feedlots, about 270,000 head fewer than the prior year.  That is the fewest since the 24.6 million available in 2015.  

Tight supplies of calves will keep prices higher than a year ago.  But, there is likely to be some volatility as feed prices and demand for cattle move throughout the year.  Prices for lighter weight calves and feeders tend to increase seasonally into March and April.  Heavier feeders are often pressured by winter pasture cattle coming to market in the Spring.

Author: David Anderson

Professor and Extension Economist Livestock and Food Products Marketing, Dairy, Policy

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Anderson, David. “Calf Prices Jump.” Southern Ag Today 3(7.2). February 14, 2023. Permalink

Plenty has been written on USDA’s Cattle inventory report released on January 31^st.  In today’s writeup we are going to focus on some observations by a few of our Southern Ag Today livestock economists from around the South.

Andrew Griffith, University of Tennessee.  Despite the bullishness of the cattle inventory report, beef cattle herd expansion will not be able to begin until the fall calf crop is ready to hit the ground, and it will only start if ample supplies of hay are harvested in 2023 and fall grazing looks promising. This means most of the heifers in the 2022 calf crop will be entering feedlots. It will be the 2023 calf crop where there is opportunity for heifers to be retained for beef cow replacements. The issue with the 2023 calf crop is that it will likely be 900,000 head smaller than the 2022 calf crop, which means 450,000 fewer heifers to choose from. The majority of the room for expansion will be in the Plains from Texas to Nebraska and the Mid-South (i.e. Kentucky, Tennessee).

Kenny Burdine, University of Kentucky.  The Kentucky beef cow herd was estimated to be down by 7% year-over-year. I have to go back to 1967 to find a beef cow inventory that small for the Commonwealth – over 50 years!  After many years of decreasing dairy cow inventory, Kentucky saw an increase in dairy cow numbers during 2022. This is significant and may speak to a reversal of that long-run trend.

On a little less Kentucky oriented note, monthly on-feed numbers finally moved below year-ago levels this fall. The 4% decrease from 2022 levels in this report really speaks to lower 2023 beef production. This will be our first year-over-year decrease in beef production since 2015. Last year was not a good year for wheat grazing in the Southern Plains due to dry weather and high wheat prices. The fact that the January 2023 Inventory report showed an additional 5% decrease in the number of cattle grazing on small grains in that region is significant. Winter wheat grazing represents a significant opportunity for spring born calves that move through markets in late fall / early winter and Southern calf markets feel these impacts when winter grazing demand is not there.

Max Runge and Ken Kelley, Auburn University.  Alabama’s beef cow herd for January 1, 2023 was virtually unchanged from the inventory of January 2022. There was a one percent increase for beef cows that have calved, but when combined with a smaller number of heifers over 500 lbs. held as beef replacement heifers and a smaller number of milk cows that have calved (-33% YOY), the difference in reproductive females only equates to a 5,000 head increase in 2023- or less than 1%. The number of steers and bull over 500 lbs. remained the same with the only difference being the percentage of steers versus bulls. In 2022, there were 4,000 more steers than bulls but in 2023, bulls totaled 4,000 head more than steers. Calves less than 500 lbs., totaled 10,000 more in 2023. Overall, the beef cattle numbers were less than ½ percent less in 2023.

David Anderson, Texas A&M University.  The number of beef cows in Texas declined by 125,000 head or, 2.8 percent, to 4.3 million head.  That was the fewest since 2016.  It is interesting to note that USDA revised the 2022 beef cow numbers down 50,000 head.  That decline might have been a little smaller than expected given the large increase in beef cow slaughter in the region which includes Texas, New Mexico, Oklahoma, Arkansas, and Louisiana.  Those states saw a 325,000 head decline in beef cow inventory, closer to in line with the increase in the regional beef cow slaughter data.  Heifers held for beef cow replacement were down 9.9 percent, well more than the beef cows.  The ratio of heifers to beef cows is consistent with a cow herd continuing to decline.  Also of note is the Texas dairy herd.  Dairy cows increased another 25,000 head to 650,000 head, the most since 1959 and speaks to the continued rapid growth in the Texas Panhandle.  The growth in beef on dairy breeding will continue to expand a steady new supply of feeder cattle to High Plains feeders.

I think the most interesting number in USDA’s latest Cattle on Feed report (released Friday January 20^th) was the quarterly number of heifers on feed.  The report indicated 4.65 million heifers were on feed on January 1, down 25,000 head from January 1, 2022.  The quarterly data breaks out the number of heifers and steers on feed and is released in January, April, July, and October.  When comparing to the same quarter of the prior year, it was the first quarter since July 1, 2021 that registered a decline in the number of heifers in feedlots.  That slightly fewer heifers are on feed than last year does not indicate a movement toward herd rebuilding, but it may indicate that there are fewer heifers to place as total cattle numbers decline.  Compared to January 1, 2022, steers on feed were down 4.5 percent compared to the 0.5 percent decline in heifers.  

Of the total cattle inventory on feed, 39.8 percent were heifers, the largest percentage since 2001.  Heifers as a percent of cattle on feed exceeded 40 percent in 2000 and 2001 which was another period of cow herd contraction.  This quarterly data began in 1996.

The headline numbers were not much different than expected.  Marketings were down 6.1 percent, placements down 8 percent, and total cattle on feed were down 2.9 percent.  

Author: David Anderson

Professor and Extension Economist Livestock and Food Products Marketing, Dairy, Policy

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Anderson, David. “The Interesting Part of the Cattle on Feed Report.” Southern Ag Today 3(4.2). January 24, 2023. Permalink