Cow-Calf Corner | July 5, 2021
Summer Beef Demand Sizzles
Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist
Wholesale beef prices typically increase in the spring, led by middle meat demand. Spring restaurant demand reflects several holidays, including Valentine’s Day, Mother’s Day and Father’s Day at the same time as summer grilling demand ramps up, led by Memorial Day and Independence Day. The seasonal increase in boxed beef cutout prices was stronger than usual this year. Weekly average Choice boxed beef prices increased 63.8 percent from early January to early June. Among the four major beef primals values were higher across the board, led by the loin (up 93.0 percent), rib (up 60.0 percent), round (43.8 percent) and chuck (up 39.0). The smaller primals were also up strongly with increases for brisket (up 99.3 percent), short plate (up 107.5 percent) and flank (up 85.7 percent). Exceptionally strong wholesale beef price increases in the first five months of the year reflect several demand factors including typical seasonal beef demand strength; strong export demand; and food service inventory rebuilding, all underpinned by generally strong domestic protein demand.
Boxed beef prices have declined since the early June peak but remain up since the beginning of the year. The latest weekly average Choice boxed beef prices were $290.83/cwt., up 40.7 percent since early January and down from the weekly peak of $338.56 four weeks ago. All primal values are up for the year to date ranging from a 17.0 percent increase in rib value to 110.8 percent increase in short plate values. The June decline in wholesale beef values does not indicate generally weakening beef demand but rather the fact that food service pipelines have mostly replenished and Independence Day beef buying was largely completed by early June. Beef demand typically moderates after July 4 through the mid-summer doldrums until another spurt of buying ahead of Labor Day.
Beef loins consist of two primary products, strip loins and tenderloins, each with very different seasonal patterns. Tenderloin demand is usually strongest in the winter, driven by white tablecloth restaurant demand but this year continued reopening and pent-up steak demand has pushed tenderloin prices to record high levels in June. Strip loins are popular retail grocery steaks that typically peak ahead of summer grilling and have followed seasonal but stronger than usual increase thus far this year. Ribeyes have broad-based demand in food service, retail grocery and export markets. Rib primals typically have a spring seasonal peak and another in the fall. Ribeye values shot up to record levels in early June but have dropped more sharply than other middle meats in the past month. Strong brisket values this year reflect rebounding barbeque restaurant demand.
Chuck and round primals typically decline into the summer and are seasonally strongest in the fall and winter months. However, both chuck and round primal values are up through the first half of the year on broad-based food service and further processing demand, ground beef demand and strong exports. Continued increases in short plate values through June is most likely driven by strong export demand for short ribs.
Domestic beef demand looks to continue strong in the second half of the year and beef exports are expected to increase as well. Strong beef demand and year over year decreases in beef production in the third and fourth quarters is expected to continue supporting wholesale beef values for the remainder of the year.
Dr. Derrell Peel discusses beef demand and per capita consumption of beef on SunupTV from 6/12/2021. Livestock Marketing (6/12/21) - YouTube and beef production Livestock Marketing (5/29/21) - YouTube
Management Practices to Add Value – Part 2
Mark Z. Johnson, Oklahoma State University Extension Beef Cattle Breeding Specialist
Paul Beck, Oklahoma State University Extension Beef Cattle Nutrition Specialist
As we continue to deal with high feed, fertilizer and fuel costs, this week we focus on additional management practices to add value to beef calves. As discussed last week, good management adds value. This value can be captured through marketing preconditioned weaned calves or retained ownership past weaning. Along with weaning at least 45 days, preconditioning includes several practices that add value to cattle for the buyer and seller. Beyond this, additional weight gain can be added by growth implants, adding further value to your calves.
- Bovine respiratory disease is the biggest issue for stocker operators and feedlots, through death loss, antibiotic cost, reduced performance and increased labor. Fully vaccinated and preconditioned calves have been shown to have reduce sick pulls in the receiving pens by 90% and decrease chronics by over 70%.
- Castrated steers bring $5-10/cwt more than bulls, and as they get bigger discounts for bulls increase. Intact bull calves are 1.5 to 2.5 times more likely to get sick, and total gain during receiving is reduced, affecting total performance for the entire ownership period.
- Dehorning adds value to horned cattle. Often discounts for horned cattle can match or exceed discounts for bull calves.
- Discounts for horned bulls can reach up to $25/cwt compared to dehorned or polled steer calves.
- Implants can increase gains by 10 to 20%. For the cost of $2 or less, the 18 pounds of added weight at sale can be worth over $25.
- Producers often think they can leave bull calves intact and increase weaning weights due to natural testosterone. Testosterone production is very low until puberty, so weaning weights are not heavier for intact bulls compared to steers. Weaning weights of implanted steers are often much heavier than intact bull calves.
USDA Verified Programs
Verifying management practices through a USDA verified program is another possibility for adding value to calves. Many of these programs exist and are driven by consumer demand. USDA verified programs exist to meet any number of verifiable management claims by a producer. Typically the claims are defined so consumers can make purchasing decisions at the retail level. Source and Age Verification for beef has two components. Source verification is the ability to trace beef back to the farm or ranch where the cattle were born. Age verification is the ability to document and verify the age of the animal throughout the production chain and at slaughter. Natural verification is the ability to document that no antibiotics, growth implants or other additives have been given to animals. Producers must keep detailed calving records and be willing to share those records with the verifying authority. Production records alone do not qualify cattle to be sold as verified. Verified claims have to be validated either through a USDA Process Verified Program (PVP) or a USDA Quality System Assessment (QSA) program. Both programs require quality management systems where specific production processes and/or attributes are documented in a way that makes them verifiable through required systematic audits. PVP and QSA programs have similarities, but can be quite different. PVPs provide the opportunity to make marketing claims about beef attributes beyond age and source verification (which nearly all PVPs include), including specific genetics, feeding practices, animal welfare, environmental production aspects and other claims that are otherwise difficult to verify by visual inspection. QSA defines the type of USDA program that has a narrower scope and is less complex than PVP programs. QSAs were initially developed primarily to qualify beef for export. The only beef attributes verifiable through a QSA program are age, source and non-hormone treated cattle (NHTC).
Local access to these programs is likely through an approved feed yard, breed association, livestock market or major packer. Interested producers should begin by exploring individual PVPs to determine if they are already producing cattle with the potential to capture additional value beyond source and age verification. For more detailed information on QSA and PVP programs visit Minding Your Cattle P’s and Q’s: Basic Facts on Source, Age, and other Claim Verification through PVP and QSA Programs | Oklahoma State University.
Marketing cattle through PVP or QSA programs does not guarantee increased profitability since there is a cost associated with qualifying cattle for these programs (ear tags, audit expense, products required specific to the program, potential cash outlay for participation, etc.). As well, the loss of production from not using growth implant technologies in specific programs must be evaluated. That being said, getting paid for the management practices you already have in place (or could effectively implement) is a good idea in a time of high production costs.
Dr Mark Johnson discusses preconditioning to add value to cattle on Sunup TV from 7/3/2021. Cow-Calf Corner - Preconditioning Part 1 7/3/21 — SUNUP TV
A series of videos on management and marketing of preconditioned cattle is available.