Increasing Meat Production Likely to Push Cattle Prices Lower

Meat production in the U.S. during the January-March quarter was up over 2% compared to a year earlier. The increase in meat production took place virtually across the board as all major meat production sectors, except turkey, posted year-over-year production increases. The largest increases, in percentage terms, were in pork production (+3.7%) and beef production (+2.6%), followed by chicken production (+1.4%). Despite the relatively large meat production increase, fed cattle and feeder cattle prices were stronger than one year earlier. For example, prices for slaughter cattle in the Southern Plains were able to remain above a year earlier during most of the quarter, averaging over $125 per cwt. (live weight) compared to about $122 per cwt in 2017. Fed cattle price strength helped support prices for eastern Corn Belt steer calves and feeder steers as they both averaged well above a year ago during the first quarter. However, unlike fed cattle, much of the relatively large year-to-year price increase in calves and feeders was attributable to very weak prices in early 2017. Prices for 500-600 pound steer calves in Kentucky averaged $160 per cwt. this year vs. $135 in 2017 and prices for 700-800 pound feeder steers averaged $141 per cwt. in 2018's first quarter vs. $121 per cwt. in 2017.