Heifers on feed increase indicates producer intentions toward slowing herd growth.

May 1, 2018

3 Min Read

Beef: The U.S. Department of Agriculture’s latest “Cattle on Feed” report contained quarterly estimates for cattle on feed by class, revealing a continuation of placing more heifers in feedlots. The number of heifers on feed, reported at 4.2 million head, is the largest since 2012 and represented 36% of the total on-feed inventory. Compared to the previous year, heifers on feed increased 14% -- the largest year-over-year increase since 1997 -- while the quarter-to-quarter increase was substantially more muted, at just 1%. It is worth noting that from January to April, the heifers on feed number has increased only four times across the past 22 years. The larger inventories of heifers came as no surprise, as heifer slaughter throughout the first quarter was 4.4% larger than the prior year. The larger inventories of heifers, coupled with a beef cow slaughter increase of 10.5% throughout the first quarter, continue to indicate producer intentions to slow herd growth throughout the year. While herd liquidation likely is not on the table just yet, producers appear to be positioning themselves to react to increasingly dry conditions.

Pork: The USDA “Cold Storage” report released last week showed healthy additions to levels in stocks for rotation and continuity of supply. Stocks in cold storage in March totaled 611 million lb., up slightly from February and up more than 60 million lb. from the prior year -- an increase of 11%. In 2017, cold storage stocks trended the lowest since 2011 (if excluding 2014 due to porcine epidemic diarrhea virus), and continuity of supply was an issue during peak demand months last year. Many were left shorted on product last year, with some items not available even at record-high prices. Many buyers were left burned last year as the available fresh supply was supposed to more than amply account for demand. This was obviously not the case, and stock-building programs started in December. Levels have been trending higher than last year by 10% and are likely conducive for continuity of supply for the remainder of 2018.

Poultry: Broiler-type hatching egg production is on the rise again, with the March total up 1.9% compared to the same month a year earlier, according to USDA's most recent “Chicken & Eggs” report. At 1.08 billion broiler-type hatching eggs laid, it was the strongest single month total since August last year, narrowly eclipsing the October 2017 total. April 1 broiler-type hatching egg layers reached 58.98 million head, up 4.3% from the same month a year earlier and 1 million more layers than reported for the March 1 total. While egg layer totals continue to rise, broiler-type hatching egg production per 100 layers reached just 60 during March, down 1.8% from a year earlier. Despite declining productivity, monthly broiler-type egg production is projected to be 12.97 billion for 2018 overall, up 2.9% from 2017.

For a more detailed look at the weekly forecasts for the various meat sectors and meat cuts, subscribe to the "Meat Price Outlook." Contact Susan Dahlgren at [email protected] for more information.

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