Cow-Calf Corner | March 27, 2023
Beef Production Decreasing; Prices Higher
Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist
As has been anticipated for several months, beef production is decreasing in 2023. In the last four weeks, beef production has averaged 6.4 percent lower compared to the same period last year. Lower beef production is the result of decreases in both cattle slaughter and carcass weights.
Steer slaughter is down 5.3 percent year over year in the last month and steer carcass weights have averaged 903 pounds, down 16 pounds from one year ago. Heifer slaughter has finally begun to decrease and is down 1.6 percent in the past month, with heifer carcass weights at 830 pounds, down 20 pounds year over year. Cow slaughter is down 6.8 percent year over year in the last four weeks, including a 0.9 percent increase in dairy cow slaughter and a 13.6 percent year over year decrease in beef cow slaughter. Cow carcass weights have averaged 646 pounds the last month, 11 pounds lower than the same period last year. Bull slaughter is down 14.6 percent from one year ago. Bull carcass weights have averaged 854 pounds in the last four weeks, down 26 pounds compared to one year ago.
Choice boxed beef cutout values have averaged $285.13/cwt. the last month, up 11.0 percent year over year. Boxed beef prices are led by higher middle meat values, with rib primals up 21.4 percent and loin primals up 15.5 percent year over year. Chuck primal values have averaged 8.5 percent higher with round primals up 1.3 percent year over year. Short plate primals are 13.5 percent higher with flank primals up 16.4 percent year over year in the last month. Only the brisket primal is down, 8.5 percent lower compared to last year. Select beef cutout and primal values are higher by similar amounts. The Choice-Select spread continues to inch lower to a seasonal low. The Choice-Select spread typically reaches a seasonal low in February. The current spread of $10.39/cwt. is the lowest weekly level so far this year, about a month later than the usual low and still looking for a seasonal low.
Beef production is expected to drop more sharply for the remainder of the year, adding even more supply pressure to support prices. Current estimates for 2023 have beef production decreasing in a range from 4.5 to 6 percent lower year over year. The decrease will depend, in part on whether continued drought causes additional herd liquidation and temporarily moderates declining beef production and resulting in a smaller decrease.
The ground beef market is responding to lower beef production as well. Decreasing cow slaughter is already pushing 90 percent lean trimmings prices higher and decreased fed slaughter is pushing 50 percent lean trimmings prices higher as well. The latest Cold Storage report showed seasonally lower beef in cold storage, down 5.9 percent year over year, likely mostly reflecting the seasonal drawdown in beef trimmings. This contrasts with last year, when cold storage inventories remained high all year due to large cow slaughter.
As the calendar turns to April, seasonal grilling demand typically adds additional support for some beef cuts and the ground beef market. Wholesale beef market values typical begin to reflect summer grilling demand in April in preparation for the Memorial Day kickoff to summer beef demand.
Drought and Pasture Management 2023
Mark Z. Johnson, Oklahoma State University Extension Beef Cattle Breeding Specialist
At the conclusion of a winter of feeding cows, this time of year we, (and the cows), look forward to green grass. Parts of Oklahoma have received some much needed rain over the past few weeks and yet a majority of the state remains in various degrees of drought. Moisture over the next few weeks will be critical to help warm season grass pastures (native or improved grasses) get off and running for the summer. Regardless of your current moisture situation, proper range management is critical now and over the next couple of months. We need to resist the temptation caused by green grass, hold off on grazing pressure and manage our grazing eco-system of soil, plants and cattle for optimum, long-term benefit. Following is our management plan for the OSU Purebred Beef warm season grass pastures this spring.
Apply Herbicides for Weed Control Early
Drought stress (past and present) makes the timely application of herbicides critical in order to give the desired plant species the competitive advantage. Proper timing of herbicide application depends on the product used. Read product labels to determine proper timing. For example, post emergent herbicides like 2-4-D works on actively growing weeds. Accordingly, broadleaf weeds need to be growing before we can get effective weed control. That being said, apply herbicide for weed control before the weeds have the opportunity to scavenge moisture and soil nutrients.
Delay Grazing Until…
After or during drought stress, the most palatable plant species are most negatively impacted by grazing pressure. Under continuous grazing pressure, cattle of all ages will graze the most palatable plants and their lush regrowth repeatedly. For example, desirable forage plants will be grazed while rank weeds will grow to maturity untouched. The same holds true among desirable plants, for example crab grass is more palatable than switch grass. What do we do to give desirable grasses the competitive advantage this spring? Resist the temptation of the first signs of green grass and delay grazing as long as your supply of hay and/or supplemental feed permits. Depending on the type of plants in your forage base (native grasses or improved grasses like Bermuda), I suggest waiting until grasses are four to eight inches tall before turning out to graze. This gives the plants a healthy start and will provide cover to bare soils. Permit your desired plant species to get ahead of grazing pressure this spring.
Apply Fertilizer Early/Split Applications
This applies to improved grasses like Bermuda. When considering getting grasses off to the competitive advantage this spring, we want nitrogen fertilizer applied at the optimum time before rain or proper growing conditions happen. If we are dealing with Bermudagrass pastures which include cool season grasses, an extra level of management is needed to determine the best time to apply nitrogen in harmony with proper growing conditions for the Bermudagrass plants. Furthermore, with the uncertainty of moisture, it is best to split the amount of nitrogen fertilizer into at least two applications. For example, if we typically fertilize our Bermuda grass pastures with 100 pounds of actual nitrogen per acre in early May, this year we plan to apply 50 pounds of actual nitrogen per acre by the beginning of May. We will monitor growing conditions and rainfall to determine if/when to apply more nitrogen.
In summary, our goal is to permit our drought stressed, desired grasses some time to heal, grow and get ahead of the weeds and grazing pressure this spring. If we fail to accomplish this goal, the consequence is a weakened stand of desirable grasses, more weeds and more undesirable plant species. Plan ahead now to manage your grazing system for the long-term benefit of your beef operation.
Factors Affecting Calf Prices in 2021-2022 from Superior Livestock Auction Data
Paul Beck, Oklahoma State University State Extension Beef Nutrition Specialist
There are some management and health programs that consistently increase sale price of beef calves. An analysis of calf sales through the Superior Livestock Auction by Kansas State University and Merck Animal Health looked at traits of load lots of calves that had impacted sales price. This analysis included 15,287 lots with over 2.5 million calves. The average lot contained 168 head and weighed an average of 559 pounds. The base average price was $1.81/pound.
As you may suspect, calf sex had a large impact on sale price. Steers brought premiums of $19.26/cwt over the base price and mixed lots of steers and heifers brought $4.90/cwt over the base. There were no bull calves in this analysis, intact bull calves are known to receive discounts of $5 to 7/cwt compared to steers with discounts often reaching over $20/cwt for intact bull calves. The presence of horns leads to an average discount of $3.57/cwt or about $20/head. Survey data of cow-calf producers in Oklahoma (Mulenga, Raper, and Peel; 2021) indicated that 71% of producers castrate their calves and 77% practice some form of horn management.
One practice that did not affect sale price was implanting. In this population of calves, 49% were not in programs that banned the use of growth promoting implants. In these calves, there was no discount for implanted calves. The 10 to 20-pound increase in sale weight from implanting with a value of $18 to 40/head is being left on the table, which is the equivalent of a $3 to 7/cwt discount for the calves sold. The Oklahoma cow-calf survey indicated only 20% of producers implant calves preweaning.
Breed was also a significant factor affecting sale price in this analysis. For the national data set brahman influenced cattle were discounted by $7.43/cwt, but when the analysis was conducted for the Southern Plains region (AZ, NM, OK, AR, LA, and TX) the discount for brahman influence breeding was only $1.56/cwt, likely due to the higher incidence of Brahman breeds in this area. Brahman breeding is essential to match cows to the environment, they are known for heat and insect tolerance and provide hybrid vigor to crossbreeding programs. This analysis indicates we should keep the minimum brahman influence in our herd to meet environmental conditions and market calves where the discounts are lowest.
There are several programs that add to the sale price which may incur some added costs of management, paperwork, ear tags, or audits. Producer BQA (Beef Quality Assurance) certification added $1.40/cwt ($8/head) to sales price, showing buyers see benefits in this certification. All natural programs (Natural+, GAP, NHTC) in this analysis have different requirements that must be considered, but these added from $0.87/cwt (Natural+) to $6/cwt (NHTC) in premiums for calves enrolled in those programs.
Value added health programs showed added value. The base price for this analysis was the VAC24 program where calves are vaccinated at 2 to 4 months of age with 1 dose of a 7-way, 8-way, or 9-way clostridial vaccine; 1 dose of a 5-way viral respiratory vaccine; and 1 dose of a Mannheimia Haemolytica or Mannheimia Multocida vaccine. Calves in the VAC24 program are unweaned at the time of the sale. Compared to these vaccinated but unweaned calves, calves in the VAC45 program (vaccinated twice and weaned for 45-days received a $8.64/cwt premium in the national data set and a $9.87/cwt in the Southern Plains Region. In the analysis of the OQBN preconditioning program premiums for 2022 the weighted average premium for OQBN VAC-45 calves was $18.67/cwt relative to unweaned non-preconditioned calves with no indication of vaccination status (Raper and Peel, 2023).
Buyers recognize the value of these factors. To remain profitable cow-calf producers need to add value where they can to increase the demand for their calves.
References
Brian Mulenga, Kellie Curry Raper, and Derrell Peel. 2021. A market basket analysis of beef calf management practice adoption. Journal of Agricultural and Resource Economics. 46:214-227.