Source: Rabobank
• US beef and cattle demand posts early 2024 highs. The USDA all-fresh beef retail price
was at USD 7.89/lb. in March. A new all-time high for that month. The stronger price trend
pushed first-quarter 2024 consumer beef demand to its second-highest level in the last 30
years. Similarly, the March USDA comprehensive boxed beef cutout value averaged USD
309/cwt., while fed steer prices were USD 187/cwt. Those marks produced demand highs
for those markets not seen in 25 years or more. First quarter prices were 7% to 11% higher
than year-ago in these markets, while estimated per capita beef supplies were steady at
14.6 lbs.
• Early 2024 US beef imports expand, exports shrink. The USDA has released January and
February trade data, and the beef trade deficit continues to widen as beef production
declines. Year-to-date imports are up 206.5m lbs. (32%) with Australia (86m) and Brazil
(64m) leading the growth. Exports were down 16.7m lbs. (3%) with Japan (17m), South
Korea (6m) and China (6m) seeing the largest year-over-year declines.
• Feed yards continue to add weight and days to cattle. Extreme winter weather to start
2024 provided a brief setback to weights, but since early February lows, carcass weights
have trended contra-seasonally higher. Winter and early spring feeding conditions have
been mostly favorable to cattle performance and declining costs of gain are incentivizing
feedyards to add days on feed and weight to cattle. March steer carcass weights will
average of 923 lbs., which is 24 lbs. larger than last year and a new record for the month.
• Drought pressures Canada cattle inventories lower. The January 1, 2024, total supply of
cattle and calves was reported at 11.1m head – declining 240,000 head compared to the
previous year. Declines were prevalent across nearly all classes of cattle. Beef cow
inventories declined 84,000 head to 3.5m. The national beef cow herd is now the smallest
since 1989. Five-consecutive years of herd liquidation reduced feeder cattle and calf
supplies outside of feedyards by an additional 123,000 head to 4.4m head. Expect these
reductions to reduce feedyard inventories and cattle slaughter over the next several years.
• Mexico export growth shifts from beef to cattle in the US market. Through February
2024, cattle exports to the US are 10% higher than a year ago, while beef exports are down
17%. Even with falling beef sales, total carcass-weight-equivalent-exports are 15% above
2023 levels. Mexico feeder cattle prices are currently MXN 65/kg, which is 9% higher than
last year. Expect stronger US beef and cattle demand to support prices as buyers
supplement declining domestic production with Mexico supplies. Ample domestic cattle
numbers are allowing Mexico beef production gains, even with stronger cattle exports.
The result is a stable year-to-date cutout, averaging MXN 96/kg.
