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All of the Above

Written by Dennis Sun

As the summer grilling season winds down and demand for beef tightens up, it will be interesting to see what happens to the price of calves or, in some cases, yearlings that haven’t been sold. Since early in the year, it seems that we have heard about how cattle prices should be going down as the feeder futures were lower. Well, up to now, they have bucked that trend as beef demand stayed up, some say due to increased exports. And that is most likely true, but as we have learned in the last few years, the reasons for cattle prices rising and falling are the result of “all of the above.”

Those of us who admit that we don’t understand the beef markets are always looking for one reason to blame or thank for the ups and downs in the markets. It is just easier that way, but we soon realize that the factor we thought is just not the only cause. It is really a complex discussion, and one I suspect we try to avoid.

Take last week for instance. Reports showed that in the U.S., there were around 627,000 head of cattle slaughtered that produced over 505 million pounds of beef. That is mostly beef that has to be chilled or frozen, sold, shipped and made ready for a meat counter or restaurant. And don’t forget the most important part. We in the beef business want to make a profit from our beef.

Consumer demand comes at the end, but it governs the whole process. Take this summer’s beef demand as an example. It caused the numbers in the feedlots to stay current, made packers want to slaughter more and was the reason for lower weights of slaughter cattle, mainly steers.

Let’s take slaughter numbers from last April, too. They say commercial beef production for April was fractionally below a year ago in April, but even with one less slaughter day in the month, packers slaughtered two percent, or 54,000 head, more cattle than April 2016.

From progressivecattle.com, according to the USDA’s National Agricultural Statistics Service (NASS) Livestock Slaughter report released in May 2017, dressed weights for steers and heifers slaughtered under federal inspection declined 25 to 22 pounds, respectively, year over year. The decrease in the average carcass weight more than offset the increase in the number of cattle slaughtered and kept production from increasing, and that is good news to ranchers across the nation. We like lots of lighter cattle being slaughtered daily and buyers around the world looking for more beef.

So, that means we have to help market our beef, either by promoting it ourselves or supporting our state beef checkoffs. And we need trade agreements with countries that the U.S. exports to, like Japan.

We see this past week that Japan announced an automatic tariff rate increase on imports of frozen beef from the U.S. Some say it may be one of the first consequences to the U.S. for backing out of the Trans-Pacific Partnership (TPP). The tariff increase from 38.5 percent to 50 percent began on Aug. 1 and ends on March 31, 2018. The tariff will only affect exporters from countries that do not have free trade agreements with Japan, such as the U.S.

So, come on, guys, get to the negotiating table. It is our livelihood.