Author: David Anderson

USDA released its Hogs and Pigs report at the end of December.  In addition to breeding and market hog inventories and farrowing intentions for early 2024 the report includes data on pigs per litter and litters per breeding animal.  The pork industry has experienced tremendous productivity gains over the last several decades.  Among those gains are nutrition and genetics, feed efficiency, dressed weights, but also those related to the sow productivity, like litters per year and pigs per litter.  Last week’s SAT mentioned dressed weights as a source of beef production efficiency gains.  This week’s will examine pigs per litter and its contribution to production and prices for the coming year.  

In 1998, the average litter of pigs included 8.7 pigs.  A boom in productivity followed with the latest Hogs and Pigs report indicating pigs per litter at 11.7 pigs.  The rapid growth through the early 2010’s was halted by porcine epidemic diarrhea virus (PEDv) that cut pigs per litter by about 0.75 head, or 7.6 percent.  Growth began again after the worst effects of PEDv passed but at a lower plane for several years.  Pig per litter growth remained fairly flat from about 2019 through 2022 but, jumped rapidly in 2023.  A variety of disease factors combined to limit growth but as those pressures have lessened pigs per litter has spiked higher.

So, what does this mean for the hog market over the next few months?  Estimated farrow-to-finish returns have been mired in large losses for 10 of the last 12 months.  In fact, hog producers have been losing money and reducing herds worldwide for some months.  The U.S. breeding herd was estimated to be 5.999 million head, the fewest since December 1, 2014.  Farrowing intentions for the December through May period are expected to be the fewest since 2015.  But, the increase in pigs per litter is large enough to keep projected commercial hog slaughter and pork production above a year ago in 2024.  More pork production will keep the pressure on hog prices and may limit upside potential.

Anderson, David. “More Pigs.” Southern Ag Today 4(2.2). January 9, 2024. Permalink

The title of this article is not meant to incite regret over our holiday excesses but, instead, to take a look at cattle dressed weights in late 2023 that set new record highs.  Heavier weights contributed to more beef production than expected helping to pressure prices late in the year.  

Fed cattle weights have a distinct seasonal pattern through the year.  They usually hit their seasonal lows in May-June and their highs late in the year.  Days on feed, placement weights, weather, and prices all effect dressed weights.  Dressed weights were below 2022 until early May contributing to some tighter beef supplies.  Steer dressed weights climbed seasonally, about equal to the year before until late in the year when they climbed to a record 940 pounds.  The increase in steer dressed weights contributed an additional more than 3 million pounds of beef per week in November and December.  

Record high dressed weights should not be a surprise to long-term participants in the cattle market.  The steady growth in weights over time has been one of the remarkable achievements in productivity growth of the industry.  In 1964, steer dressed weights averaged 662 pounds per head.  In 2023, steer dressed weights were an estimated 907 pounds per head.  Weights in 2022 hit an annual record high of 910 pounds.  The 3 pound annual decline in 2023 is largely due to lower weights in early 2023.  Bigger cattle, feeding efficiency gains, and economics have driven this long-term trend of heavier weights.

What’s to come in 2024?  We should expect the seasonal pattern to continue.  But, the seasonal pattern will be impacted by days on feed.  We entered December 2023 with more cattle on feed over 120 days than the year before, likely meaning some heavier weights are ahead at least early in the year.  Lower feed costs than the year before implies some heavier weights.  Winter weather will be important in coming months.  A series of severe storms would pull down weights.  Beef demand will be a major factor in weights.  A boost in consumer demand resulting in higher cutout values, boosting margins and fed cattle prices would speed up fed cattle marketings and pull down weights.  Fed cattle weights will be something interesting to watch in the coming year.  

Happy New Year!

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Anderson, David. “Weight Gain.” Southern Ag Today 4(1.2). January 2, 2024. Permalink

Beef cow culling normally peaks in the Fall and this year has been no exception to that.  The big surprise is just how big culling has been this Fall given a smaller cow herd.  Several reasons are probably combining to keep culling high.  Drought in many areas, including the South, high cull cow prices, and high hay costs.  Grabbing the high cull cow price today looks better than the future net returns from keeping her for another calf.  

For the year, U.S. beef cow slaughter is 11.6 percent, or 424,000 head, smaller than last year.  But, over the last 6 weeks beef cow slaughter has only been 2.4 percent below last year.  Culling for the week ending November 18^th, at 83,200 head, was actually larger than the same week the year before and was the largest week in 2023.  Any week with slaughter over 80,000 head is a big week.  

The national slaughter data masks some regional differences over the last few weeks.  Beef cow slaughter in the South, Region 4 in the federally inspected slaughter data, was 2.6 percent larger than the year before. Drought is likely a factor in culling in this region.  Region 6 slaughter, which includes Texas, Oklahoma, Arkansas, and Louisiana, was 8.5 percent smaller than last year over the same period.  Much of the Corn Belt region also had cow culling above a year ago. 

Reduced dairy cow slaughter has kept total slaughter well below last year over the last few weeks which has worked to boost cull cow prices.  The normal Fall decline in price appears to be over with auction prices increasing from about $70 per cwt to $87 per cwt into mid-December.  

The next weeks will be shortened due to the Christmas and New Year’s holidays.  Early in January cow slaughter tends to jump higher led by more dairy culling.  Overall, culling should continue to shrink in 2024 with higher cull cow prices.

Merry Christmas from the livestock economist gang at SAT!  

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Anderson, David, and Josh Maples. “Large Cow Culling Continues.” Southern Ag Today 3(51.2). December 19, 2023. Permalink

We might not think much about turkey prices and production much of the year, until now.  Thanksgiving is when turkey gets all the center of the plate attention.  Record high turkey prices raised a lot of eyebrows last year.  High Pathogenic Avian Influenza (HPAI) cut supplies leading to higher prices.  The unexpected HPAI impact was on top of reduced production driven by a lack of profitable production.  

Those record high prices spurred production increases in 2023.  Halfway through November, turkey production is 5.5 billion pounds, up 4 percent from the same period last year.  It’s worth pointing out that while production is higher than last year, third quarter production is the smallest since 2015 (not counting last year) which was the last time we had a major HPAI outbreak.  Production for 2023 will be higher than last year but is still likely to be the second smallest production year since 2000.

Prices have responded to increased production by falling dramatically.  Frozen tom turkeys weighing 16-24 pounds were $0.88 per pound, 50 percent lower than last year in mid-November.  Smaller frozen hens were 44 percent lower than last year.  Fresh whole birds are normally higher priced than frozen birds.  Fresh hens were $1.47 per pound in mid-November compared to $1.88 last year. 

USDA reports retail turkey prices featured or on special at more than 29,000 retail, grocery stores around the country.  Turkey item specials normally ramp up right before Thanksgiving and this year is the same with 72.5 percent of stores reporting some feature on a turkey item.  That is compared to 56.3 percent of stores last week.  Featuring is a little slower than last year when 86 percent of stores had some feature.  USDA defines specials as a sale with some kind of “no price” or a buy one, get one free special.  Twelve percent of stores had a special advertised this year compared to only 4 percent last year.  So, while there are slightly fewer features, there are more buy one, get one free specials this year.  Grocery stores often use turkeys to boost sales throughout the store, so, you may pay a lot less for your turkey than quoted wholesale prices.  

Us livestock economists at SAT have a lot to be thankful for this year.  We hope you have a great Thanksgiving!

Anderson, David. “It’s Turkey Time!” Southern Ag Today 3(47.2). November 21, 2023. Permalink

Cow culling, as indicated by the weekly cow slaughter data, is starting to increase going into the last quarter of the year but cow slaughter normally peaks in the Fall because that’s when more beef cow culling decisions are made.  For the week ending September 23^rd, the last data available, 127,600 cows went to federally inspected plants, the largest week since the last week of June.  For the year, cow slaughter has totaled 4.8 million head, 5.6 percent less than last year. 

The total cow slaughter data masks the different seasonal patterns for beef cows and dairy cows.  Beef cow slaughter typically peaks in the Fall and is at its lowest around February-March.  Beef cow slaughter is down 13.4 percent compared to a year ago.  The data is reported by region with Region 6 including Texas, Oklahoma, Louisiana, and Arkansas.  The rest of the South (except Virginia) are reported in Region 4.  Beef cow slaughter in Regions 4 and 6 are 4.9 and 19.3 percent lower than last year, respectively.  Cow culling in the deep South has not fallen as much as the average across the country, while slaughter in the western part of the South has fallen faster than the average.  That may suggest some ability or willingness to try to expand herds in different parts of the region.

Dairy cow slaughter typically peaks in the January-March period.  Low milk prices and margins have triggered more culling this year with dairy cow slaughter 4.6 percent higher than last year.  Higher prices and improving margins over the last 3 weeks have finally pulled down dairy slaughter below a year ago.

Cull cow prices appear to have topped out seasonally and are starting to decline.  Southern Plains auction prices declined to $72 per cwt last week, their lowest since June.  While tight beef supplies are keeping prices high, the cull market loses the impact of grilling season demand once we are past Labor Day.  

What to Watch For?

Even though beef cow culling normally increases this time of the year, watch for weekly slaughter relative to last year and the 5-year average.  The opportunity to begin herd expansion may begin with a smaller Fall run of cows this year, maybe even with a couple of weeks below the 5-year average.  We most likely saw the biggest weekly beef cow slaughter of the year back in January.  On the dairy side, watch for slaughter to remain below the 5-year average in the coming weeks.  Have enough dairy cows been culled to support a path to profitable production?  Can some cows be profitably held over the winter to take advantage of seasonal price increases next year with the added bonus of improved weight and quality along with, maybe, a calf to sell too?

Anderson, David. “Cow Culling Climbing Seasonally.” Southern Ag Today 3(41.2). October 10, 2023. Permalink