Outlook for Beef Production in U.S. Remains Favorable

(ARLINGTON, VA) Commercial beef production for 2019 is forecast to increase by about three percent (27.61 billion pounds), eclipsing the prior production record set in 2002. According to information presented at the 95th Annual USDA Agricultural Outlook Forum, steer and heifer slaughter will be above 2018 as feedlots market cattle from higher year-over-year inventories. Although the pace of placements during the fourth quarter of 2018 is expected to have been below that of 2017, supplies of cattle in feedlots at the end of 2018 and those likely available for placement in the first half of 2019 are expected to support higher marketings during this year. After reaching its highest level since 2013, cow slaughter is expected to decline in 2019. Total commercial cattle slaughter is expected to increase by just over one percent. Although muddy feedlot conditions and winter weather have affected weight gains in the first quarter, average carcass weights are forecast to average above 2018. Beef exports in 2019 will face the prospects of higher prices, but recent drought and flooding events in Australia may limit competing supplies. Exports are forecast at 3.26 billion pounds, just over two percent higher than last year. Beef imports are forecast at three billion pounds for 2019, fractionally higher than last year. U.S. cow slaughter is forecast lower and increased availability of fat trim from higher fed cattle slaughter may stimulate demand for lean processing-type beef. The 5-Area steer price for 2019 is forecast to average $1.15 to $1.22 per pound, up slightly from last year’s average of $1.17. Despite increased production beef demand is expected to remain strong and the willingness of feedlot operators to hold cattle in feedlots longer may help support prices during much of the year. Cow-calf operators and backgrounders will likely see lower prices on a combination of higher feed prices, expected large supplies of cattle in feedlots and adequate supplies of calves available for placement. Feeder steer prices in 2019 are forecast to average $1.41 to $1.48 per pound, compared to $1.47 in 2018.