“The real problem is demand.”
U. S. cattle have been gaining weight instead of earning money for producers these days, but beef sales should speed up during the spring grilling season.
The average weight of steers and heifers set monthly records in January, and February, and remained large in March, according to the Livestock Marketing Information Center (LMIC).
The larger cattle are producing about 25 pounds (lbs.) more beef per animal than a year ago and about 40 lbs. more than during the fiveyear period from 2003 to 2007, said Jim Robb, LMIC livestock economist.
But excess supply “is not the big issue facing the industry,” James Mintert, livestock economist at Kansas State University, said of the heavier cattle. “The real problem is demand. If we had a stronger demand structure, the weights would probably be in better shape.”
The beef industry has been working hard to sell the excess beef. The National Cattlemen’s Beef Association said last week choice-grade steaks, the kind often served in restaurants, were selling as low as $5 per lb. in grocery stores, down sharply from $7 to $9 a year ago.
While consumers are enjoying low-priced beef, they are not snapping it up fast enough for cattle producers, who cannot sell cattle fast enough or at profitable prices.
Slow cattle sales are linked to slow beef sales as the recession has had consumers eating less, particularly at restaurants where about half of the U. S. beef is sold.
More beef per animal prevents prices from rising to levels that would provide cattle producers a profit on sales to beef plants.
The number of cattle slaughtered last week was down 4.5 per cent from a year ago at 615,000 head, according to USDA estimates. However, U. S. beef production then was down 2.1 per cent at 486.1 million lbs., because the heavier cattle produced more beef.
BETTER DEMAND NEEDED
“I don’t think it is a big problem. I don’t sense that we are seriously backed up,” said Derrell Peel, livestock economist at Oklahoma State University.
In the past, heavier cattle have signalled backlogs of animals in feedlots, which pushed down cattle prices as producers worked to reduce the excess supplies.
“If demand would pick up, it would correct fairly quickly,” Peel said of the heavier cattle.
Beef sales should improve in the weeks ahead as warmer weather has cookout enthusiasts buying steaks and hamburgers for outdoor grills.
MILD WINTER, EXPENSIVE FEED
There are several reasons for the heavier cattle. Young cattle entered feedlots last year at much heavier weights because high feed prices encouraged ranchers to keep the cattle on pastures longer.
Once in the feedlots, where they were fed grain and nutrients, these cattle gained weight a little faster than normal because of a relatively mild winter in Nebraska, Kansas, Oklahoma and Texas.
Then cattle sales slowed due to a combination of feedlots resisting unprofitable bids by beef plants and to beef plants trimming production because beef was not selling well during the recession.
“In the big picture, if demand improves, we can work our way out of this,” LMIC’s Robb said.