Commercial cow slaughter has run at historically low levels so far this year, partly due to short supplies but also indicating ranchers intend to stabilize or expand their herds. The situation remains volatile though, and with drought appearing to be expanding in the West and Southwest, weather conditions will help determine the direction of herd numbers, according to the April Livestock, Poultry and Dairy Outlook report from USDA.

The report also notes that first-quarter commercial steer and heifer slaughter is on track to be the lowest since 1965. Slaughter weights have helped offset some of that loss of numbers, and irst-quarter beef production will likely be the lowest only since 2005.

Other key points in the report include:

  • Corn prices have moved roughly $1 per bushel higher from postharvest lows and were given an additional boost in the intentions to plant fewer acres this year.
  • Cow-calf producers should continue to see attractive cow prices for the near term because of low cow inventories and continued demand for ground beef products from culled cows. Those cow prices could be tempting to producers concerned with drought.
  • Feeder-cattle prices could decline in the short term as grass-fever ebbs and fed-cattle values likely move lower seasonally, but short supplies suggest continued high prices calf and feeder prices later in 2014 and 2015.
  • With feeding costs in the range of $129 to $130 per hundredweight and fed-cattle prices around $150 per hundredweight, cattle feeders are seeing positive margins around $200 per head. Prices could decline through the summer as large placements of heavy cattle from December through February reach market weights.
  • Retail beef prices increased by 4 percent from $5.35 per pound for Choice beef in January to $5.58 in February. All-fresh beef prices increased by almost 5 percent, from $5.04 to $5.28 over the same period. Continued increases in beef prices could drive consumers toward alternative proteins.
  • U.S. beef exports were up 4 percent through February 2014, while imports of beef were down 6 percent. The report increases the forecast for U.S. beef exports to 2.515 billion pounds due to strong demand for beef in Asia.
  • ·Pork production is forecast to decline about 2 percent in 2014, largely as a result of Porcine Epidemic Diarrhea. Prices of both hogs and pork will increase as a consequence. Reduced pork production will likely reduce U.S. pork exports and increase pork imports this year.
  • The milk production forecast is raised in April. Given favorable milk-to-feed price ratios, cow numbers are expected to increase later in 2014; however the 2014 forecast number is unchanged from March. Continued robust domestic and export demand for dairy products tightens ending stocks and suggests higher dairy-product prices, except for nonfat dry milk, which is unchanged from last month in the report.
  • Read the full April Livestock, Poultry and Dairy Outlook report from USDA.