by David Anderson, Texas A&M University

The wholesale beef market, as measured by the Choice beef cutout, has jumped more than $16 per hundredweight (cwt.) in the last two weeks. Most of the cutout’s underlying primal cuts (the rib, loin, chuck, round and brisket) have increased in value. Weekly beef production has dipped from six weeks of less-than-a-year-ago production.

We might think about the cutout value in the context of USDA’s Cattle on Feed report released Friday, May 24. For the first time in eight months, the total number of cattle on feed declined to less than last year’s level. The 11.5 million cattle on feed were the fewest since September 2023. The number of cattle on feed has been elevated in recent months by placing more heifers, placing available feeder cattle earlier and placing more cattle from Mexico.

Almost 6% fewer cattle were placed in April, and placements were the fewest since 2020.

Compared to last year, when holidays and weekends occurred this spring, there were two fewer slaughter days in March and two more days in April. This large swing in slaughter days has not happened since the mid-1990s. The two extra days in April meant feedyard marketings were more than 10% larger than in April last year. Almost 6% fewer cattle were placed in April, and placements were the fewest since 2020.

The combination of large marketings and light placement numbers pulled down cattle on feed to less than a year ago. There remains more cattle on feed for longer than 90 and 120 days than a year ago, so that should keep dressed weights high. But, overall, the trend of more cattle on feed has likely been broken for a long time.

Remember that the Cattle on Feed report is backward-looking. It contains marketings and placements in April and the number of cattle on feed on May 1. In the ensuing couple of weeks, prices, including the cutout, fed cattle and calves have jumped higher. Whether that increase in cutout value reflects some packer cutback in processing to try to boost prices, or some Memorial Day summer bump in buying, or fewer cattle on feed, or a combination of all three (most likely), the result is higher wholesale beef prices. Fewer cattle on feed promises to cut beef supplies that have been larger than last year during the last eight weeks. Tighter supplies will work to boost prices for calves, feeders and feds.

Editor’s note: This article is reprinted with permission from a May 28, 2024, article on the Livestock Marketing Information Center (LMIC) website, www.lmic.info. Contributor David Anderson is a professor and extension economist for the Texas A&M Extension Service.