AFBF reports on livestock markets for first half of 2024
July 2024 marks the first time since 2016 the U.S. Department of Agriculture’s (USDA) National Agricultural Statistics Service (NASS) has not published its July Cattle Inventory report.
The data collected in this report helped producers and analysts gauge if the livestock inventory is expanding, contracting or holding steady.
Cattle
USDA estimated in its January Cattle Inventory report, all cattle and calves in the U.S. were 87.2 million, the lowest since 1951.
According to Bernt Nelson, American Farm Bureau Federation (AFBF) economist, as cattle producers face stress from years of drought and high supply costs, they have marketed a lot of cows and heifers so there are fewer female cattle available to produce calves, and feedlot inventories are slowly reflecting the lower cattle inventory.
The USDA Cattle on Feed report released in July estimates all cattle and calves on feed in the U.S. was 11.3 million as of July 1, up one percent from a year ago.
The report notes heifers and heifer calves accounted for 4.48 million head. This is near the record-high number of heifers and heifer calves for the July 1 report and makes up about 40 percent of the overall cattle on feed.
Historically, heifers make up around 32 percent of the overall cattle on feed, so this is a strong indicator producers are still not withholding heifers to rebuild the U.S. cattle herd.
Nelson states, “The first opportunity for herd expansion will be possible if producers begin to withhold heifers from this year’s calves for breeding in 2025. This means the arrival of the 2026 calf crop will be the first opportunity on the horizon to increase the cattle inventory.”
Summer demand has helped push prices up, as Choice grade beef has worked its way above $300 hundredweight (cwt) and was up $1.04 on July 29 at $314.81. Select grade was up $4.06 at $301.52 cwt, he continues.
Something helpful in gauging the demand for beef is the difference between Choice and Select.
A wider difference between Choice and Select beef often indicates a consumer is willing to pay more for premium cuts of beef where a narrowing difference may show consumers are more willing to settle for a lower-quality cut.
“The current spread sits at $13.11, which is just below the year-over-year average of $16.08, and this spread has been widening since late March, which is typical when the grills come out for warmer spring and summer months,” he adds.
The July average cash fed steer prices have ranged from $188 cwt to $192 cwt and as fall approaches, cattle available for placements on feed should slow down, bring higher cash prices at the sale barn and drive beef prices higher as well.
Hogs
USDA’s Quarterly Hogs and Pigs report, released on June 27, contained some important data relating to the U.S. hog inventory.
According to this report, the inventory of all hogs and pigs was 74.5 million head, up one percent from June 2023.
The breeding inventory was 6.01 million head, down three percent from last year, and market hogs were 68.5 million head, up two percent from last year.
Nelson states, “Much like the calf crop supplies cattle for the next year, the pig crop in the first half of the year supplies hogs for the second half.”
The March through May pig crop was 34 million, up two percent from last year, bringing the average pigs saved per litter to 11.56, which is the third-highest average in survey history.
When combined with the December through February pig crop and the slightly higher-than-expected weights from lower feed costs, USDA estimates 2024 pork production at 28 billion pounds, about three percent more than 2023, he adds.
Increased production is bearish news, especially for the cutout, and could bring lower hog prices for farmers in the second half of 2024.
Nelson reports hog farmers faced devastating average losses of about $31 per head in 2023.
“Elevated input costs, particularly from feeds and inflated fixed costs, were responsible for losses,” he explains.
Iowa State University’s June 2024 estimate for returns to farrow-to-finish operations shows a profit of $8.82 per hog, up 133 percent from negative $26.18 in the same time period in 2023.
The difference comes from the 25 percent, or $31 per head, drop in the cost of feed from June 2023.
Nelson says, “Despite the much-needed boost from lower feed costs, the cost of fixed inputs such as fuel and utilities remain elevated from inflation. This will continue to be an obstacle to profitability while pork struggles to find demand.”
In the July World Agricultural Supply and Demand Estimates report, USDA estimates the annual U.S. per capita demand for pork is 51 pounds per person, up 0.4 pounds per person from June projections and up 0.8 pounds from last year’s per capita demand.
According to the latest CME lean hog index, there has been an upward trend since early July. The index was $91.85 cwt on July 29, while the national average cash price picked up $1.94, bringing the price to $84.07 cwt.
Currently daily slaughter numbers are elevated so slaughter hog supplies are expected to grow moving closer to fall and winter months, which may lead to falling cash prices.
Poultry and eggs
USDA adjusted 2024 broiler production and prices down in its July Livestock, Dairy and Poultry Outlook report.
May 2024 broiler production is estimated to be 3.99 billion pounds, down a little over one percent from last year, and the USDA adjusted second quarter production to bring the total forecast for 2024 broiler production to 46.78 billion pounds, up about 0.8 percent from 2023.
According to USDA’s June World Agriculture Supply and Demand Estimates report, per capita demand for broiler meat is 101.6 pounds per person, up 2.1 pounds per person or 2.1 percent from 2023.
“Chicken has the highest consumer demand of any meat in the U.S.” Nelson says. “This increase may be due to higher prices for substitutes such as beef.”
USDA estimates June egg production at 8.81 billion eggs, down two percent from last year. The breakdown includes 7.56 billion table eggs and 1.25 billion hatching eggs.
Of these hatching eggs, 1.15 billion were broiler-type while 96.7 million were egg-type, and the number of layers in June 2024 was 371 million, down three percent, while egg production per 100 layers was up one percent.
“Egg prices are relatively stable for now. However, with the table egg layer inventory as low as it is, any fall outbreaks of the highly pathogenic avian influenza could have the potential to drive up prices,” Nelson states.
Melissa Anderson is the editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.
