Based on USDA’s Agricultural Marketing Service weekly Actual Slaughter Under Federal Inspection reports through February 2009, cow slaughter continues at a high rate compared with the same period in 2008 and represents a slightly larger share of the January 1 cow inventory than last year’s slaughter. The high slaughter rates are due primarily to increased dairy cow slaughter, a result of low milk prices as well as an extended multiyear period of below-normal precipitation in California and the Southern Plains since late fall 2008. Projected cumulative 2009 dairy cow slaughter through February was 16 percent higher than for the same period in 2008. Projected cumulative 2009 beef cow slaughter through February, while about even with year-earlier levels, is still about 5 percent above same-period 2007 levels, which were based on a 2 percent larger January 1 cow inventory.
According to USDA’s National Agricultural Statistics Service (NASS) February Cattle on Feed report, January 2009 placements of cattle on feed in feedlots of 1,000-plus head were up 4 percent over January 2008. Estimated average placement weights for the 5-month period August through December 2008 were higher than for the same period in any of the previous 4 years. The difference in monthly average placement weights in 2008/09 compared with year-earlier weights also appears to be declining since September, probably as a result of declining feed prices since mid-2008.
For January and February 2009, monthly average federally inspected dressed weights for steers and heifers set records, despite declining placement weights and counter to more typical seasonal declines into April-May, the latter effect partly a result of favorable weather conditions for cattle feeding during the late fall and winter. These record-heavy dressed weights could offset lower steer and heifer slaughter and could combine with high dairy cow slaughter rates, resulting in commercial beef production for 2009 within 1 percent of 2008 quantities. While both wholesale and retail prices are declining, wholesale prices are declining more rapidly. As a result, packers are again dealing with negative margins, and pressures are mounting to reduce kills even beyond recent levels and to offer lower prices for fed cattle. It will become more difficult for packers to obtain cattle at lower prices as supplies of market-ready fed cattle become more limited over the next several months. While farm-to-wholesale spreads narrowed, wholesale-toretail spreads widened into January 2009.