Lighter Dressed Weights Lower Beef Production Forecast, Beef Prices Expected To Go Up

Average retail beef prices ($6.86 dollars per pound) were up 32 cents per pound year-to-date in 2021 when compared to retail averages across all of 2020. These numbers are courtesy of the latest U.S. Department of Agriculture Economic Research Report, which also notes that average beef farm values and beef wholesale values are higher thus far in 2021 than in 2020. The Q4 forecast for fed steers is expected to increase beef values further, gaining $4 cwt (per hundredweight) to $131 based on the current prices and robust demand. These relative strengths also prompted a revision to the 2021 annual forecast (up $1 from last month to $122.20 per cwt) and 2022 annual forecast (up $2 from last month to $128 per cwt).

Average Cattle Dressed Weights Down

The global pandemic had a notable effect on cattle dressed weights in 2020; the USDA says that cattle were held back and fed longer due to the effects of COVID on producers, resulting in cattle being heavier. The USDA reports that, for the week ending in August 21, average cattle carcass weights were 12 pounds below the average weight during the same time period last year. A higher proportion of cows in the slaughter mix also contributed to the lower average carcass weight. The USDA slightly reduced 2021 beef production forecasts based on the lighter average carcass weight to 27.74 billion pounds, revising the forecast down by 130 million pounds from last month. The USDA adjusted the forecast based on expectations that lower steer and heifer slaughter will more than offset the second-half increase in cow slaughter.

July Beef Exports Up More Than 45 Million Pounds YOY

Exports to China accounted for 14.4% of U.S. beef exports over the first seven months of 2021, and the total beef exports to China in July 2021 were the largest ever recorded. In total, July U.S. beef exports were 297 million pounds, which exceeded last year’s July exports by 45 million pounds. The USDA raised forecasts for Q3 (by 20 million pounds) and Q4 (by 10 million pounds) based on the continued strong demand from trading partners.

Beef Import Forecasts Raised

Compared to the five-year average from 2016 to 2020, beef imports in July were up 2%, and Canada’s July beef shipments (accounting for over 28% of all July beef imports) represent the highest since September 2005. The USDA referred to the five-year average, in part, because July 2020 posted the second-largest import totals on record and could produce misleading year-over-year comparisons. With that context, the forecast for Q3 2021 beef imports was raised by 25 million pounds to 855 million pounds, and the annual 2021 forecast for beef imports was raised to 3.14 billion pounds.

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Source: USDA