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Which came First ... the Cow or the Beef?

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Posted Jul. 31, 2002

Which came first, the cow or the beef?

This thought-provoking cattle version of the old chicken-and-egg adage comes to mind when one looks back to the Jan. 1, 2002, cattle inventories and outlook forecasts. All cattle and calves in the United States as of Jan. 1, 2002, totaled 96.7 million head 1 percent below Jan. 1, 2001, and 2 percent below the 98.2 million head on Jan. 1, 2000. Similarly, cattle on feed numbers for Jan. 1, 2002, were 2 percent below Jan. 1, 2001. Noted outlook economists pointed to the steady to reduced placements into feed yards since July 2001 as assurance that numbers would be tightening as we moved through the first quarter.

Fast forward to the first week of July 2002. Beef production during the first half of 2002 was 4.6 percent higher than in 2001. Total red meat production beef, pork (not white meat), lamb and veal set a record high in May 2002, totaling 4.02 billion pounds, up 4 percent from May 2001. Beef production alone, at 2.34 billion pounds, was 2 percent above the previous year and a new record high for May. Pork production in May was up 6 percent from the previous year and also a new record for May. To make matters worse from a meat supply standpoint, the record red meat production came on top of record poultry production.

How did this happen with reduced cattle and feedlot numbers going back to last year?

Which came first, the cow or the beef?

Some detractors and their representative organization would point solely to imports as the culprit. Imports of cattle increased by 351,000 head in 2001 and 265,000 head in 2000, but that hardly accounts for record beef production. Federally-inspected cattle slaughter was 1.4 percent larger during this spring quarter than in 2001. Average dressed weights, however, were 3.6 percent heavier this April through June than in 2001, (see Figure 1) and the combination led to a 5 percent increase in beef production.

So much for recent history what does the future hold? Large slaughter cattle supplies and heavy weights continue to pressure cattle and beef prices. Large placements of heavy-weight cattle on feed through June mean that cattle slaughter supplies will remain large most of the summer. Fed cattle prices will struggle to average in the mid-$60s. Once again, tightening supplies loom on the distant fall horizon, but competing meat supplies (pork) conjure memories of 1998 ? and there is news that Russia is again threatening to ban U.S. poultry effective Aug. 1.

Is there any optimism? Yes, it rained in July, beef demand continues to increase, and the cowherd, due to drought and other uncertainties, will decline again during 2002. For those willing and able to stay the course, there will be a better tomorrow!

Thought for the month: "Be there a will, and wisdom finds a way." - George Crabbe, The Birth of Flattery (1823)

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