June 27, 2002

Market Advisor: Record Meat Production Tallied in May

By Tim Petry, Livestock Economist
NDSU Extension Service

The latest USDA Livestock Slaughter report released June 21 indicated commercial red meat production for the United States totaled a record 4.02 billion pounds in May, up 4 percent from the 3.88 billion pounds produced in May 2001. January through May red meat production was 19.2 billion pounds, 4 percent above the previous year. Accumulated beef production was up 5 percent from last year, pork production was up 3 percent, and lamb and mutton production recorded a slight decrease of 1 percent. Furthermore, broiler and turkey production was also about 3 percent higher than a year earlier.

With cow herd numbers declining the last several years, how can beef production be increasing? As expected, cattle slaughter was down 2 percent from May, 2001. However, the average live weight of cattle slaughtered under federal inspection was 1,225 pounds, up 40 pounds from the 1185 pound average the previous May. Higher slaughter weights have plagued the industry since the Sept. 11 terrorist acts caused sharply lower prices and feedlots subsequently held cattle longer. Slaughter weights similar to last year would have resulted in lower beef production.

USDA is predicting record annual total red meat and poultry production for 2002 will be up 2 percent from 2001 and up 3 percent from 2000. These higher meat production figures have adversely affected prices producers receive for livestock. Market steer and heifer prices and feeder cattle prices are averaging $10 per hundredweight less than last year. Market steer prices are typically at a seasonal low in mid summer and rally into fall and winter. Last year prices actually fell contra seasonally after Sept. 11. This year prices are expected to return to a more normal seasonal pattern.

Feeder calf prices are usually lowest in the fall when the largest numbers come off grass and are weaned and sold. A big unknown for prices is how the extremely dry conditions in parts of the cattle-producing western states will affect the movement of calves to market. Earlier than normal selling would cause an earlier seasonal low. Auction markets in the dry areas are already reporting increasing numbers of cow-calf pairs being sold. A good Web site for monitoring drought conditions is www.drought.unl.edu/dm/monitor.html , which is updated every Thursday morning.

Record meat production is good news for consumers who will have ample meat supplies to choose from at bargain prices. USDA price data indicate that the composite price for all choice beef cuts was $3.34 in May, 2002, 10 cents lower than the $3.44 recorded in May 2001.

USDA’s latest predictions for fourth quarter, 2002, prices are for choice steers to average $70 to $76 per hundredweight and for 700- to 800-pound feeder steers to average $83 to $89. Predictions are not made for lighter weight feeder calves. However, based on other market classes, 500- to 600-pound steers should be in the mid to upper 90s. Boning utility cows are predicted to be in the $43 to $47 per hundredweight range. These prices are higher than current levels and are dependent on seasonally lower cattle slaughter this fall. Drought-induced, forced sales of significant numbers of cows would increase production and affect prices for all classes of cattle. Certainly, lower weights of market cattle from feedlots would help prices.

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Source: Tim Petry, (701) 231-7469, tpetry@ndsuext.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu