Cow Slaughter Rates Affecting Beef Production

Improving drought conditions expected to limit cow slaughter in coming months.

Published on: May 3, 2013

Both beef production and slaughter have been larger in recent weeks, helping to make the decrease in the year-to-date total less than many analysts expected, said Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist.

Total beef production for the year to date has decreased 1.3% and total slaughter is down 2.1% compared to the same period last year.

"A significant part of the total slaughter number is the result of increased cow slaughter," Peel said. "Year-to-date slaughter of steers, heifers and bulls are all down from last year. Only cow slaughter is up, at 1.2% so far this year."

Improving drought conditions expected to limit cow slaughter in coming months.
Improving drought conditions expected to limit cow slaughter in coming months.

Peel believes the numbers are the result of several factors, most notably unexpected beef herd liquidation and structural change in the North American dairy industry.

For example, the closure of a major cow slaughter plant in Quebec, Canada, last year has had an effect on U.S. cow slaughter, as well as the trade flow of cattle and beef between the United States and Canada.

"A significant part of the 4.4% increase in dairy cow slaughter this year is likely due to increased imports of Canadian dairy cows," Peel said. "Previously, these cows were slaughtered in Canada and much of the processing beef shipped to the United States."

Though the data are incomplete, there are indications that the flow of processing beef – such as trimming for ground beef – has reversed with Canada, which is 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," Peel said. "However, 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 United States decreased only 2.1% for the year to date. Unexpected beef herd liquidation is implied by the fact that beef cow slaughter has increased nearly 14% year over year for the last five weeks.

"Basically, it appears that winter has been just too much for some producers," Peel said. "Hay is extremely expensive and in short supply, and apparently beyond the reach of some cattle producers, especially in more recent weeks."

With improvement in drought conditions in many regions, the combination of warm weather and the beginning of forage growth – thereby providing producers with more affordable cattle feeding options – should result in beef cow slaughter declining sharply in the coming weeks. Unfortunately, Peel said 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, may have already erased any chances of avoiding additional beef cow herd liquidation this year," he said.

Cattle producers should be looking closely at beef cow slaughter rates the next few weeks and the mid-year heifer on feed inventory, as these may provide clues about herd inventory changes and subsequent market effects. However, complete data will not be available until next year.

Source: OSU