Farm Talk

Livestock

May 7, 2013

Cow slaughter continues above last year

Parsons, Kansas — Total beef production for the year to date is down 1.3 percent and total slaughter is down 2.1 percent compared to the same period last year. Both beef production and slaughter have been larger in recent weeks and the year to date total is down less than expected. A significant part of larger than expected total slaughter is the result of increased cow slaughter. Year to date slaughter of steers, heifers and bulls are all down from last year. Only cow slaughter is up; 1.2 percent so far this year. Several factors are at work including unexpected beef herd liquidation and structural change in the North American dairy industry.

The closure of a major cow slaughter plant in Quebec, Canada last year has impacted U.S. cow slaughter and cattle and beef trade flows between the U.S. and Canada. A significant part of the 4.4 percent increase in dairy cow slaughter this year is likely due to increased imports of Canadian dairy cows. Previously these cows were slaughtered in Canada and much of the processing beef shipped to the U.S. Though the data are incomplete, there are indications that the flow of processing beef, i.e., trimming for ground beef, has reversed with Canada now deficit in processing beef. The incomplete nature of trade and domestic slaughter data make it difficult to assess what is happening to the U.S. dairy cow herd but it is clear that this structural change must be considered otherwise it would be easy to draw incorrect conclusions about changes in the U.S. dairy cow herd.

After five weeks of year over year increases, beef cow slaughter in the U.S. is only down 2.1 percent for the year to date. Unexpected beef herd liquidation is implied by the fact that beef cow slaughter has been up nearly 14 percent year over year for the last five weeks. It appears that winter has been just too much for some producers. Hay is extremely expensive and in short supply and apparently beyond the reach of some producers recently. With improvement in drought conditions in many regions recently, warm weather and the beginning of forage growth should result in beef cow slaughter falling sharply in the coming weeks. However, the damage may be done as far as herd inventory goes. Larger than expected beef cow slaughter so far this year, combined with indications that more heifers may have entered feedlots this spring (probably the result of the same liquidation) may have already erased any chances of avoiding additional beef cow herd liquidation this year. Beef cow slaughter rates the next few weeks and the mid-year heifer on feed inventory may provide some clues about herd inventory changes but complete data will not be available until next year. £

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