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Here’s the outlook for 2017 beef cow slaughter

2016 beef cow slaughter
How many cows can we cull just to maintain herd equilibrium? The number may surprise you.

Last week’s Industry At A Glance highlighted the annual change in beef cow numbers (%) versus the previous year’s beef cow slaughter rate (%). The analysis was based on inventories and slaughter (as a percentage of starting inventory) between 1987 and 2016. 

Overall, the equilibrium slaughter rate runs around 9.3%. Bigger slaughter means a smaller cowherd in the following year, while a slower rate than 9.3% spells expansion. The data are fairly reliable with only a few outliers including 1993, 2015 and 2016. 

Within that analysis, it’s also important to look at what’s occurring month to month. That is, comparing monthly slaughter data to expectations allows us to monitor on an ongoing basis what producers may be thinking even before USDA comes out with their inventory reports.

As such, this week’s data reflects average monthly beef cow slaughter rate during the previous 30 years. That rate is then converted to an actual head count based on the Jan. 1, 2017, beef cow inventory. For example, the average January slaughter rate in the previous 30 years has run right around 0.82%; converting that to a 2017 base equals about 255,000 beef cows. As noted above, the equilibrium runs around 9.3% - that’s equivalent to total slaughter of about 2.91 million cows in 2017.

This illustration highlights the year-to-date expectations around equilibrium. Throughout the course of the year, we’ll compare actual with expected to get some sense of what’s occurring out in the country.  

With that in mind, what are your intentions for the coming year in terms of expansion or liquidation? Is the current market slowing down your expansion plans? Do you foresee 2017 to play out differently than 2016 in terms of growing the cowherd across the U.S.? Leave your thoughts in the comment section below.  

Nevil Speer is based in Bowling Green, Ky., and serves as vice president of U.S. operations for AgriClear, Inc. – a wholly-owned subsidiary of TMX Group Limited. The views and opinions of the author expressed herein do not necessarily state or reflect those of the TMX Group Limited and Natural Gas Exchange Inc.

TAGS: Outlook
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