US cattle slaughter well below normal in 2015

01 September 2015

The latest Daily Livestock Report (27 August 2015) out of the US covers an interesting topic, which helps explain the price movements in the cattle and beef industry this year. It shows US cattle slaughter, across different categories, for 2015 compared against 2014 and the average for 2010-2014.

To begin, total US cattle slaughter for the year-to-date, based on weekly Federally Inspected numbers, is down 6.3% on last year, and much lower against the five-year average. The report then takes the reader through the breakdown of steers/heifers (essentially a proxy for feedlot cattle) and cows, which shows the relative value placed on certain types of stock over the last two years.

The most notable points are the relative changes in slaughter between steers and heifers, and between beef cows and dairy cows. So far in 2015, steer slaughter is 3.2% lower than 2014, while heifer slaughter is 11.2% lower than last year. In the cow category, beef cow slaughter is down a huge 16.6% on 2014, while dairy slaughter is actually 4.4% higher.

This breakdown shows the high value being placed on breeding stock for beef cattle, with heifer and cow retention at levels that indicate and encourage significant herd rebuilding. The rise in dairy cow slaughter also shows that the relative returns for beef and dairy in the US are currently well in favour of beef.

The other point to make is that while slaughter has been much lower this year, feedlots have been finishing cattle at much heavier weights to try to improve their returns. This means production has not fallen to the same degree as slaughter, and also means there has been relatively higher production of fat trim – causing those prices to fall, and encouraging higher prices for lean trim – of which Australia has been a beneficiary in the last two years.

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