Markets
April . However , the slaughter pace , and beef production , picked up substantially during May and June as daily slaughter volume rose 5 to 6 percent above a year earlier . Heavier weights pushed beef production up even more than slaughter volume would indicate as daily beef production rose 6.6 percent during May and 5.7 percent during June .
The percentage of females in the slaughter mix has been increasing , providing additional evidence that cattle herd growth could be coming to an end according to Mintert . Cow and heifer slaughter expressed as a percentage of steer slaughter averaged nearly 83 percent during May and June , up from 75 percent compared to the same two months in 2017 . During January-June this ratio averaged 90 percent compared to 83 percent last year .
“ The rise in the female-tosteer slaughter ratio is not large enough to suggest any liquidation is taking place , but it is indicative of waning interest in herd expansion ,” he says . “ Additionally , drought and tight forage supplies this year in two key cow-calf producing states ,
Texas and Missouri , could help bring expansion to a halt .”
One unknown hanging over all meat markets is the impact of rising tariffs on meat exports .
“ Meat exports have been a bright spot for meat demand in recent years as growing consumer incomes in importing countries has supported increasing exports of U . S . produced beef , poultry , and especially , pork .
“ The impact of rising tariffs on U . S . meat exports will be felt even more strongly in the second half of the year as tariffs on many products exported to China , Mexico , and Canada increased again in early July ,” Mintert explains .
During 2017 , 11 percent of U . S . beef production was exported to all destinations . The largest U . S . beef customer in 2017 was Japan followed by South Korea ( 17 percent ), Mexico ( 15 percent ), Hong Kong ( 12 percent ), and Canada ( 11 percent ). Three of those top five destinations will be impacted by increases in tariffs on beef products from the U . S .
Mintert also adds that fed cattle prices started the year off stronger than in early 2017 and remained above year-earlier levels through early March .
However , since early March , fed steer and heifer prices have consistently fallen below levels observed a year earlier as fed steer prices in the Southern Plains averaged $ 116 per cwt . during the April-June quarter , 12 percent lower than during 2017 ’ s spring quarter . Prices during the first three weeks of July averaged about $ 112 per cwt ., 6 percent lower than a year ago as large meat supplies continued to depress prices .
In contrast to fed cattle , prices for steer calves in the eastern Corn Belt started the year off much stronger than in 2017 , primarily because prices in 2017 were very weak . Prices for 500-600 pound steer calves in Kentucky averaged $ 159 per cwt . during the January- March quarter , 17 percent higher than a year earlier before declining slightly during the second quarter to average $ 156 per cwt ., 1 percent lower than during April-June 2017 .
“ Declines in corn prices have been supportive of prices for both calves and feeder weight steers this summer and are expected to remain supportive this fall .
“ Looking ahead , fed cattle prices are expected to remain below a year ago this summer and fall as large meat supplies continue to exert downward pressure on
24 | SEPTEMBER 2018