Author: David Anderson

Nestled down in the bowels of the Consumer Price Index (CPI) data that is released each month is the retail price of beef, pork, and chicken.  Each have reached record highs at some point in the last couple of years adding to overall food price inflation.  The latest CPI data for meats indicated some stabilization or decline in meat prices.  

First off, it’s worth remembering what this data represents.  It is the price of various cuts of beef, pork, and chicken reported from grocery stores during the second week of the month.  The data does not include special features, sales, in store coupons, or customer loyalty card discounts.  As a grocery store price, it does not include meat prices at restaurants. 

Meat prices (and production for that matter) exhibit a considerable amount of seasonality.  Both supply and demand factors contribute to price seasonality.  For example, on the supply side, pork production tends to peak in the Fall after hitting its seasonal lows in Summer.  Tighter supplies in the Summer would suggest that prices should peak in Summer.  But, on the demand side, individual cuts may peak at different times of the year, for example, hams at the holidays or grilling season favorites.  Economists often compare the most current price to those of last year at the same time, simply to account for normal seasonality of prices.  But, for many consumers thinking about inflation a more useful comparison might be to last month or the last couple of months to account for the trend in prices.

The latest data represents June prices across the U.S.  The Choice beef price in June was $8.119 per pound, less than 1 cent per pound higher than May.  So far this year, Choice beef prices peaked in April at $8.151 per pound.  Compared to a year ago, beef prices were about 2 cents lower per pound.  Pork prices totaled $4.88 per pound in June compared to $4.919 per pound in May and $4.684 per pound in June of last year.  Chicken prices are reported in two ways: as a whole, fresh bird retail price or as a composite price made up of various cuts.  The composite retail price was $2.403 per pound in June compared to $2.44 in May and $2.504 in June 2023.  

On the whole, the latest retail meat price data indicates some easing of meat price inflation in June.  Some recent falling cutout values for beef and pork related to more production of both relative to last year could be part of the reason for lower prices.  Some consumer push back against high prices could have pressured prices lower as well.  Retail prices the rest of the year will be affected by reduced beef supplies and more pork and poultry.

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Anderson, David. “Retail Meat Prices Ease a Little.” Southern Ag Today 4(29.2). July 16, 2024. Permalink

The fed cattle market hit some new record highs last week with fed steers pushing $200 per cwt in Northern Plains markets.  The weekly average fed steer price for the week ending June 30^th was $198.09 per cwt.  This price represented a negotiated, live, weighted average price across quality grades.  The comparable price in the Texas-Oklahoma market last week was lower at $190.19 per cwt.  

Beyond the record high fed cattle price, the widening price difference between the Southern and Northern fed cattle markets is very interesting.  Last week’s Northern-Southern price spread was $7.90 per cwt.  It was $10.11 per cwt two weeks ago, the largest difference of the year.  This large price spread has really developed over the last couple of years.  The price difference has a large seasonal component with the price difference peaking in the May-July time period.  Prior to 2022, a price difference greater than $4 per cwt was rare.  The average price difference from 2015 through 2021 was $0.20 per cwt.  That average has grown to $0.96 during 2022-2024.  The range of price differences has grown from about $6 per cwt to over $12 per cwt.

Several factors likely contribute to larger swings in regional price differences.  One may be simply varying relative supplies versus packer needs in each region.  Another contributor is the mathematical calculation of the average price across grades.  The Southern Plains average price includes head in lots 35-65 percent Choice compared to no lots with cattle in that category for the Nebraska prices which pulls down the Texas-Oklahoma average price.  So, there may be a USDA quality grade component to the price difference.  

Record high fed cattle prices are supporting calf and feeder prices across the South.  As fed cattle supplies further tighten, new record high prices will be recorded.  The widening price difference regionally in fed cattle may have some implications for Southern feeder cattle and calf markets.  Many of our cattle in the mid-South go to feedlots in Nebraska while feeders from the deep South often head to Texas or Oklahoma yards.  Regional calf and feeder prices may begin to be affected by changing premiums in the regional fed market.

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Anderson, David. “New Record High Cattle Prices.” Southern Ag Today 4(27.2). July 2, 2024. Permalink

USDA’s next cattle on feed report is to be released on Friday, June 21^st.  This one is coming out against a backdrop of rising fed cattle prices, higher Choice beef cutout values, and beef production that is slightly larger than last year.  It’s going to be an interesting report because it should continue to show declining numbers of cattle in feedlots and indicate falling beef supplies in coming months.

Market analysts who publish pre-report estimates generally expect May feedlot placements to be smaller than those last May.  The range of estimates runs from placements down 5 percent to up 1 percent (I’m the analyst who is down 5 percent on placements).  USDA reports that the number of feeder cattle going through auctions, video and internet sales, and direct sales were down 4.8 percent compared to those last May.  The number of feeder cattle in May reported as part of the CME feeder cattle index was down 19.5 percent compared to a year ago.  Contrasting those data points, feeder cattle imports from Mexico were about 30,000 head larger than last year.  

Feedlot marketings should be about even with a year ago.  Daily steer and heifer slaughter during May was 100.4 percent of last May, with the same number of work days in the month.  Continued near record dressed weights of those cattle marketed, largely due to longer feeding periods, is adding to beef production.  

Combining placements and marketings should leave the number of cattle in feedlots on June 1 about 1.7 percent smaller than last year.  June 1 should mark the second straight month of smaller cattle inventories.  The number of cattle on feed for longer than 120 days should continue to decline, as well.  Shrinking cattle inventories will begin to cut into beef production in coming months limiting the impact of heavier weights on supplies.  On balance, fewer cattle on feed will keep pressure on for higher cattle and calf prices.

Anderson, David. “A Cattle On Feed Preview.” Southern Ag Today 4(25.2). June 18, 2024. Permalink

USDA released their May cattle on feed report on Friday, May 24^th.  For the first time in 8 months the total number of cattle on feed declined below last year’s level.  The 11.5 million cattle on feed were the fewest since September 2023.  The number of cattle in feedlots has been pumped up by placing more heifers, some pulling of feeder cattle ahead, and a few more cattle from Mexico compared to the year before.

Due to when holidays fell this Spring and weekends there were 2 fewer slaughter days in March compared to last year and 2 extra days in April.  This large swing in days has not happened since the mid-1990s.  The 2 extra days in April meant that feedyard marketings were more than 10 percent larger than April last year.  Placements were almost 6 percent fewer than last year and were the smallest since 2020.  

The combination of large marketings and light placement numbers pulled down cattle on feed below a year ago.  There are still more cattle on feed for more than 90 days and 120 days than a year ago so that should keep dressed weights high.  

The wholesale beef market, as measured by the Choice beef cutout, has jumped more than $16 per cwt in the last 2 weeks.  Remember that the cattle on feed report is a little bit backward looking.  It contains marketings and placements in April and the number of cattle on feed on May 1.  In the ensuing couple of weeks prices have jumped higher.  Whether that increase reflects some packer cut back in processing to try to boost prices, some Memorial Day summer bump in buying, or fewer cattle on feed, or a combination of all three (most likely) the end result is higher wholesale beef prices.  Fed cattle prices are increasing also.  Fewer cattle on feed promises to cut beef supplies that have actually been larger than last year over the last 8 weeks.  Tighter supplies will work to boost prices for calves, feeders, and feds.

Anderson, David . “Fewer Cattle on Feed, Higher Prices.” Southern Ag Today 4(22.2). May 28, 2024. Permalink

USDA, National Agricultural Statistics Service (NASS) has recently proposed to eliminate some data reports.  Reports for both livestock and crop sectors would be impacted.  Livestock and meat economists would consider some of the affected reports to be particularly important to market efficiency.  The article looks at a few of those and describes how they are used and why they are important to farmers and ranchers.  

July Cattle Inventory

USDA conducts two cattle inventory surveys per year.  The January report is the most comprehensive and includes state level cattle numbers.  The July report is smaller (it does not breakout numbers by state), but it provides a few valuable pieces of supply information: number of beef cows, heifers held for replacement, and calf crop.  One of the biggest questions in the cattle market today is when will the cattle cycle turn and expansion begin.  The beginning of herd expansion will drive calf prices even higher, will signal how long high prices will last, and how long until beef production begins to grow.  

This report will be very valuable over the next several years.  If this report had to be discontinued, now is the worst time to do it.

Cattle Inventory (January)

The proposed changes include dropping beef cow inventory in a number of states.  Total, or all, cattle would still be reported. The proposed discontinued states include Louisiana, Mississippi, North and South Carolina, and Virginia.  The South is cow-calf country and is a major supplier of feeder cattle to feedlots across the Plains.  

The number of beef cows in these states is critical to the estimation of feeder cattle supplies and the projection of prices to use in planning.

County Estimates

USDA’s announcement included the elimination of the annual county estimates of beef cows and cattle.  These county estimates allow for the analysis of natural disaster impacts on agriculture such as the recent Panhandle wildfires, hurricanes, and drought in Texas.  Following hurricane Harvey, the county level data allowed us to know with some certainty that there were 1.1 million beef cows at risk in the impacted counties.  From there, upper bounds on lost cattle and grazing losses could be estimated.  This Spring, wildfires across the Texas Panhandle, including the Smokehouse Creek Fire, burned more than 1 million acres.  The county level beef cow estimates allowed for the estimation and validation of estimated cattle losses due to the fires.  

Other Livestock Data

Some other changes proposed including dropping Virginia and Maryland from state level estimates in the Chickens and Eggs report.  This state level data is important in doing research on the impact of animal diseases and the effectiveness of alternative disease controls.  Virginia and Maryland remain important poultry producing states as part of the Delmarva (Delaware, Maryland, and Virginia) region.

On Balance…

We all know USDA often faces budget cuts and they must judiciously use taxpayer resources. It is also true that USDA reports are valuable to market participants and reducing the available information will result in varying degrees of negative impacts on market efficiency.   The reports mentioned here, – including the July Cattle, County Estimates, and state level breakouts of beef cow inventory in the South – have tangible benefits to farmers and ranchers.  A good argument can be made that these reports should be kept.  If you are interested in providing comments to USDA on these, or other reports, contact your NASS State Statistician.

Anderson, David, and Josh Maples. “Data Delivers Market Transparency, For Now.” Southern Ag Today 4(16.2). April 16, 2024. Permalink