According to the United States Department of Agriculture (USDA), US red meat production is expected to decline by nearly 2% in 2003/04 due to shrinking inventories of cattle, hogs and sheep, though larger than expected slaughter in the second quarter increased beef production.  Higher than expected placements in the second quarter along with higher forecast placements in the third quarter meanwhile are expected to lead to larger beef production in late 2003 and early 2004 than previously expected, heralding the start of herd rebuilding. 

In the meantime, US cattle prices are continuing to benefit from the still-unresolved ban on imports of Canadian beef and cattle following the discovery of a single case of BSE (bovine spongiform encephaalophy) on May 20, USDA says.   The market remains short of beef supplies at a time of very strong demand, particularly since a series of late-winter storms held down weight gains in feedlots. 

First half slaughter statistics strongly suggest at least one more year before the cattle industry even begins to move toward herd expansion.   Although drought conditions remain a concern with much of the western half of the nation continuing in drought, moisture and forage conditions are much improved in the eastern half of the country.  Either way, cow slaughter remains high at 8% above year-earlier levels and we are currently seeing the largest cow slaughter since 1997.  Dairy cow slaughter was up  13%, the largest margin since 1997, the result of abnormal culling and low milk prices.  Beef cow slaughter meanwhile was up 4%, the largest since 1998 as forage uncertainties in some areas and continued drought in much of the West continues to stem expansion considerations.  Replacement heifers being retained on January 1, 2003, were about unchanged from the past couple of years. Consequently, it appears almost certain that the beef cow herd will continue to decline. 

In terms of fed slaughter levels, following the May 20 ban on Canadian beef and cattle imports, fed cattle marketings have been pulled forward to increase slaughter and productions levels to supplement the shortfall in production from Canada.  Cattle on feed inventories at the beginning of the second quarter in feedlots with 1,000+ head were nearly 8% under a year earlier levels.  However, improved feeding conditions, stronger prices encouraging marketing ahead of schedule and concerns over more Canadian beef and cattle coming into the market if the ban is lifted has resulted in a fairly sharp increase in slaughter in the second quarter.

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