Monday, October 17, 2016

COW/CALF CORNER The Newsletter From the Oklahoma Cooperative Extension Service October 17, 2016

The Newsletter

From the Oklahoma Cooperative Extension Service
October 17, 2016

In this Issue:

World beef markets and trade expected to grow in 2017
Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

Know the USDA cull cow grades before you send them to market
Glenn Selk, Oklahoma State University Emeritus Extension Animal Scientist

World beef markets and trade expected to grow in 2017
Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

The latest global meat trade estimates from the USDA Foreign Agricultural Service indicate that beef production and consumption among major beef countries is growing in 2016 and is projected to grow additionally in 2017.  Aside from the U.S., the world’s largest beef producing and consuming country where both production and consumption are increasing, beef production is expanding in several major beef producing countries.  Brazil, which saw decreased beef production in 2015 and 2016, is projected to increase production in 2017.  Beef production is also expected to increase in China, India and Argentina with the European Union (EU) holding about steady.  Australia is an exception, with drought forced liquidation in 2014 and 2015 leading to a projected 19 percent beef production decrease in 2016 and continued smaller production in 2017. 

In addition to the U.S., beef consumption among major beef consuming nations is projected to expand in 2017 in China and Brazil, with a modest year over year decrease in the EU.  In the remaining top ten beef consuming nations, beef consumption in 2017 is projected to expand in Argentina, India, Mexico, Pakistan and Turkey.  Russia is expected to post another decrease following reduced beef consumption in 2015 and 2016.  Beef consumption in Japan, which is currently the number eleven beef consuming nation, is projected to hold steady in 2017.

Beef exports among major exporting countries are projected to increase year over year in 2017.  In 2016, sharply lower beef exports from Australia and New Zealand are projected to more than offset increased exports from Brazil, India and the U.S. resulting is a slight year over year decrease in total exports from 2015 levels. Australia and New Zealand are expected see continued reductions in beef exports in 2017 with growth continuing in the three other largest beef exporting countries.  Beef exports also expected to continue growing in other top ten exporting countries in 2016 and 2017 including increased exports projected for Canada, Paraguay, Uruguay (steady in 2017), the EU and Mexico along with Argentina, currently the number eleven beef exporting country.

Despite sharply lower U.S. beef imports in 2016 and additional reductions projected for 2017, total beef imports among major importing countries are expected to increase year over year in 2016 and 2017.  Rapid growth in beef imports in China is the most dramatic change in global beef markets.  China, which was not a global beef market player at all just a few years ago, has risen to be the second largest beef importing country in 2016 with additional growth projected in 2017.  At the current pace of growth, China could surpass the U.S. as the largest beef importing country in the next two or three years.  Beef imports in South Korea have also increased sharply in 2015 and 2016 with modest increases projected to continue in 2017.  Japan is also projected to continue modest year over year increases in beef imports in 2017. Russia, which has seen beef imports fall by more than half since 2013, is projected to stabilize beef imports in 2016 and 2017 at the lowest level in more than 15 years.  Beef imports in most other significant beef importing countries are projected to be steady to higher in 2017.  These countries include the EU, Hong Kong, Egypt, Canada, Chile and Malaysia.

Know the USDA cull cow grades before you send them to market
Glenn Selk, Oklahoma State University Emeritus Extension Animal Scientist

Some culling of beef cows occurs in most herds every year. The Beef Audits have generally shown that cull cows, bulls, and cull dairy cows make up about 20% of the beef available for consumption in the United States. About half of this group (or 10% of the beef supply) comes from cull beef cows.

Whether we are culling because of drought or to improve the productivity of the herd, it is important to understand the values placed on cull cows intended for slaughter.

The USDA market news service reports on four classes of cull cows (not destined to be replacements). The four classes are divided primarily on fatness. The highest conditioned cull cows are reported as "Breakers". They usually are quite fleshy and generally have excellent dressing percentages. Body condition score 7 and above are required to be "Breakers".

The next class is a more moderate conditioned group of cows called "Boners" or "Boning Utility". These cows usually would fall in the body condition score grades of 5 to 7. Many well-nourished commercial beef cows would be graded "Boners".

The last two grades of cows as reported by the market news service are the "Leans" and "Lights". These cows are very thin (Body condition scores 1 - 4). They are in general expected to be lower in dressing percentage than the fleshier cows and are more easily bruised while being transported than are cows in better body condition. "Lights" are thin cows that are very small and would have very low hot carcass weights.

Leans and Lights are nearly always lower in price per pound than are the Boners and the Breakers. "Lights" often bring the lowest price per pound because the amount of saleable product is small, even though the overhead costs of slaughtering and processing are about the same as larger, fleshier cows.  Also thin cows are more susceptible to bruising while in transit to market and to the harvest plant.  Therefore, more trim loss is likely to occur with thin cull cows than with those in better body condition.

Producers that sell cull cows should pay close attention to the market news reports about the price differentials of the cows in these classes. Cull cows that can be fed enough to gain body condition to improve from the Lean class to Boner class can gain weight and gain in value per pound at the same time. Seldom, if ever, does this situation exist elsewhere in the beef business. Therefore during the fall and early winter, market your cull cows while still in good enough condition to fall in the Boner grade. If cows are being culled while very thin, consider short term dry lot feeding to take them up in weight and up in grade. This usually can be done in about 50 to 70 days with excellent feed efficiency. Rarely does it pay to feed enough to move the cows to "Breaker" class. There is very little, if any, price per pound advantage of Breakers over Boners and cows lose feed efficiency if fed to that degree of fatness.

Dressing percentage within each of the four grades will also play a major role in the price per pound of cull cows.  High dressing percentage cows often may bring 6 to 10 dollars or more per hundredweight than low dressing cows within the same grade.  The current cow and bull market for Oklahoma City National can be found at this web link.

Oklahoma State University, in compliance with Title VI and VII of the Civil Rights Act of 1964, Executive Order 11246 as amended, Title IX of the Education Amendments of 1972, Americans with Disabilities Act of 1990, and other federal laws and regulations, does not discriminate on the basis of race, color, national origin, sex, age, religion, disability, or status as a veteran in any of its policies, practices or procedures. This includes but is not limited to admissions, employment, financial aid, and educational services.  References within this publication to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement by Oklahoma Cooperative Extension Service.

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