Cattle slaughter, beef production leading to lower exportable supplies

By Tyler Cozzens, Livestock Marketing Information Center

Cattle slaughter and beef production continue to track below year-ago levels, which is leading to lower exportable beef supplies for the global market. Year-to-date through August, weekly cattle slaughter is tracking about 4% below the same period in 2023. During the same period, cattle dressed weights have been about 3% higher, on average, from last year. The higher-than-expected dressed weights have partially offset the lower slaughter numbers, leading to beef production, year-to-date through August, down about 1%. Lower beef production through the first eight months of the year has resulted in lower available beef supplies for the global export market.

From January through July, total U.S. beef exports were nearly 1.8 billion pounds, which was a 2.9% decrease from the same period in 2023. Of the top five U.S. beef export destinations, year-to-date export levels through July were down. South Korea was down 12%, China 9% and Canada 3%. Export levels to Japan and Mexico were up 0.2% and 14%, respectively.

Despite the year-to-date decline in total U.S. beef export volumes, the total U.S. beef export value is 6% higher than last year to nearly $5.5 billion from January to July. On a value basis, year-to-date U.S. beef exports are higher for South Korea (up 3%), Mexico (up 22%), Japan (up 5%), and Canada (up 11%), while the value of U.S. beef exports to China is lower (down 5%). The volume of total U.S. beef exports in 2024 is expected to be below 2023, but the value of total U.S. beef exports is likely to be higher than a year ago.

Lower available beef supplies domestically have led to higher beef imports so far this year. Through the first seven months of the year, U.S. beef imports were just over 2.6 billion pounds, an increase of 20% from the same period in 2023. From January to July, beef imports have increased from Canada (up 4%), Australia (up 75%), Brazil (up 31%), and New Zealand (up 12%), but imports have declined from Mexico (down 17%). On a value basis, year-to-date total U.S. beef imports through July were nearly $6 billion, an increase of 17% over the same period in 2023. The value of beef imports increased from Australia (up 59%), New Zealand (up 15%), and Brazil (up 26%), while the value declined from Canada (down 4%) and Mexico (down 0.6%).

The year-to-date increase in both volume and value of beef imports correlates with the rise in weekly wholesale boneless beef prices (fresh, 90% lean), which reached the mid- to upper $3.00 per pound range in July and August. In early August, the wholesale boneless beef price reached a record level of $3.76 per pound, an increase of 28%, or 82 cents per pound, over the same week from the prior year. The record wholesale boneless beef price signals robust demand for lean beef product (90% lean) to be ground with fat trimmings (50% lean), which make the various ground beef products sold at the retail level. The weekly wholesale boneless beef price for fresh, 50% lean product was $1.39 per pound in late August, which was above the 88 cents per pound average price seen during the first half of the year.

The rise in prices for both fresh, 90% lean and for fresh, 50% lean product signals continued demand for ground beef products at the retail level. In July, the retail ground beef price was a record at $5.50 per pound, an increase of 8% from the prior year and an indication that demand for ground beef product is holding strong at the retail level.

A few macroeconomic factors could influence future beef demand and beef trade include but are not limited to the strength/weakness of the U.S. dollar and consumer credit card debt. From a U.S. beef export perspective, a strengthening U.S. dollar would make U.S. beef exports more expensive, which could limit the competitiveness of U.S. beef globally. Conversely, a weakening U.S. dollar can lead to U.S. exports being relatively cheaper and thus more competitively priced globally. At the consumer level, the Federal Reserve Bank of New York reported that credit card balances reached a record $1.14 trillion during the second quarter of 2024. The record credit card debt is noteworthy as it could indicate that consumers may have less discretionary income to purchase goods (e.g., higher-priced ground beef). These factors could influence the U.S. beef sector and U.S. beef trade, but the rise in both the volume and value of year-to-date beef imports indicates strength in domestic beef demand. And while U.S. beef exports are down year-to-date, the strength in domestic beef demand combined with the growth in the value of beef exports are positive indicators for the U.S. beef sector.