Fed cattle are backing up in feedyards. The implications of that will be long-standing.

Nevil Speer

May 7, 2020

2 Min Read
April fed steer and heifer slaughter takes a nose-dive
Nevil Speer

This column has been featuring the impact of COVID-19 on the beef industry during the past month. The running series has thus far highlighted the following topics:

The final topic featured in last week’s column noted that, “There are less cattle going to slaughter, that means reduced orders for feeder cattle placements to take their place.” Fewer cattle going to slaughter is the focus of this week’s discussion.  

The illustration details monthly fed steer and heifer slaughter during March and April over the past several years. COVID didn’t really begin to hit fed cattle throughput until early April. In fact, March slaughter was up versus the previous three-year average.  

But then the shutdown began. The fallout has been dramatic. Final numbers still aren’t tallied (actual slaughter numbers run on a two-week delayed reporting cycle from USDA), but the industry will obviously be in a sharp deficit. Clearly, that has huge implications even after we get up back and running full speed. 

Related:Annual feedyard marketings: Heavier placements rule

2020-May-Nosedive.png

From a quantitative standpoint, the extra cattle are still in the feedyard and have to be reckoned with – the challenge will be to phase them in along with regular kill. The back-up is challenging just from a standpoint of scale. 

However, from a qualitative standpoint, the disparity becomes even more significant. Cattle are not nearly as fungible as hogs or chickens. That is, when a slowdown occurs, there’s going to be some picking and choosing about which cattle get marketed – better cattle get first priority.  

The best indicator of that playing out is the record jump in cattle grading Prime in April versus January through March. Generally, it goes the other way - grading percentages seasonally decline as we enter the second quarter. 

Putting those two factors together, it represents some marketing challenges within the slaughter mix as we (hopefully) gain some normalcy in the coming month(s). Yet another factor to monitor carefully – stay tuned!

Nevil Speer is based in Bowling Green, Ky. and serves as director of industry relations for Where Food Comes From (WFCF). The views and opinions expressed herein do not necessarily reflect those of WFCF or its shareholders. He can be reached at [email protected]. The opinions of the author are not necessarily those of beefmagazine.com or Farm Progress.

Related:Marketing your calves in 2020 — Plan B

About the Author(s)

Nevil Speer

Nevil Speer serves as an industry consultant and is based in Bowling Green, KY.

Nevil Speer has extensive experience and involvement with the livestock and food industry including various service and consultation projects spanning such issues as market competition, business and economic implications of agroterrorism, animal identification, assessment of price risk and market volatility on the producer segment, and usage of antibiotics in animal agriculture.
 
Dr. Speer writes about many aspects regarding agriculture and the food industry with regular contribution to BEEF and Feedstuffs.  He’s also written several influential industry white papers dealing with issues such as changing business dynamics in the beef complex, producer decision-making, and country-of-origin labeling.
 
He serves as a member of the Board of Directors for the National Institute for Animal Agriculture.
 
Dr. Speer holds both a PhD in Animal Science and a Master’s degree in Business Administration.

Contact him at [email protected].

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