8/18/2012

The Impact Of Drought on Beef Production

Estimated commercial steer and heifer slaughter for the first half of the year was almost 4 percent below first-half 2011, and estimated first-half commercial cow slaughter was 2.5 percent below year-earlier slaughter. Despite these declines, commercial beef production for the same period was down 1.6 percent. The disproportionately smaller decline in beef production resulted from federally inspected first-half 2012 dressed weights that averaged 2.1 percent above first-half 2011 weights for all cattle, including 2 percent above year earlier for steers and 2.4 percent above for heifers.

Increased cow slaughter led to an increase in the supply of 90-percent and other lean-beef supplies to the detriment of prices for those products. Although they have declined, both cow prices and lean-beef prices have remained relatively strong over the last couple of months. However, the price of 50-percent lean trim has declined to less than $45 per cwt partly in response to the continuing negative bias against using Lean Finely Textured Beef in ground beef products.

July 2012’s monthly retail price of $5.01 per pound for Choice beef—up 1.6 percent from June 2012’s $4.93—was only 1.6 percent below January but above April-through-June prices, reflects a continuing decline from January’s record of 5.09 per pound. At the same time, July’s monthly average retail price of $4.72 per pound for All-fresh beef reflects a new record less than 1 percent from June’s $4.71. All-fresh beef prices are not reflecting weakness in demand for middle meats as are the prices for Choice retail beef. 

**Source: ERS/USDA