Mindful Breeding of Heifers on Hand

Last Friday’s Cattle on Feed Report surprised analysts with a cattle placement number much higher than the top of pre-report estimates. March placements were down less than 1% from a year ago with a boost from Nebraska feedyards for the month.

With placements above expectations feedyard inventories are still 4.5% smaller than a year ago and 2.5% under the five-year average. Large March placement volume had little bearish impact to the cattle market early this week. Rightfully so given that beef production volume is down due to smaller weekly slaughter totals and lighter carcass weights.

Although fed cattle didn’t mark another record-high last week boxed beef values pressed sharply higher. The CAB cutout was $5.73/cwt. higher with Choice up stronger at $8.64/cwt. Select advanced just $5.26/cwt., widening the Choice/Select spread to $19.38/cwt. – that’s $4.50/cwt. beyond the price gap seen a year ago. The CAB cutout premium narrowed to just $12.75/cwt. over Choice, down $2.91/cwt. on the week. This positions some CAB cuts at a more attractively priced upgrade to commodity Choice, important in a pricing climate that’s 8% higher than a year ago.

Across the CAB carcass report, it’s the thin meats that continue to advance the most aggressively to higher prices. Flank steaks, outside skirts and inside skirts are easily at their record price point for this time of year. There’s room for those to move higher based on historical spring demand patterns and supply.

In the past 30 days, CAB tenderloins have increased $1.53/lb. to average $16.70/lb. wholesale. The direction will likely continue upward for this item with limited supply
available.

All in all, wholesale beef movement has slowed in the current market as price points push buyers back from aggressive procurement. The buying pattern shows much smaller volumes for delivery several weeks out as price points for future delivery are showing steep premiums.

Breeding heifer retention has thus far not been a major factor in 2023 as indicated in the data. The heifer slaughter pace continues to run high, at less than half of a percent smaller than a year ago through mid-April. The heifer share of fed cattle slaughter year to date has run 40.8% of the total versus 40% in 2022, an aggressive proportion historically.

Projections are for beef cow numbers to end the year slightly smaller again in 2023, further fueling the potential for high replacement female values in the future. Yet, severe to extreme drought conditions remain in place from Nebraska south to central Texas, encapsulating large portions of four of the top 10 cow-calf states.

Simultaneously we’ve observed yearling breeding heifers this spring fetch enviable prices as some cattlemen are either restocking their own herds or speculating that bred females will be profitable inventory to trade in the fall.

Those artificially breeding heifers in the next couple of months may do well to consider the genetic advancement that can be made through remarkable calving-ease Angus bull selections. Reviewing both private and commercial A.I. offerings currently on the market reveals multi-trait excellence in a variety of bulls. Some have highlighted the progress in perhaps the past five years regarding stud bulls with an appealing physical phenotype combined with top percentile expected progeny differences (EPDs) in a multitude of traits. Furthermore, there are plenty of sires that excel in EPD rankings for a variety of maternal, production and carcass traits to advance the goals of the cow-calf and feedyard sectors.

If genetic focus includes quality carcass outcomes in the future, then the marbling genetic trend in the Angus breed is on track to deliver results. The chart shows the Angus marbling EPD by birth year, indicating a sizeable move higher to 0.81 marbling units in 2022. Since we recommend Angus bulls with a +0.65 marbling EPD and +$55 $Grid index to position future calf crops to achieve 50% or higher CAB acceptance, there are plentiful sires recently born that fit the Targeting the Brand™ mold.

As you’re contemplating the future impact of today’s genetic decisions, consider the marketability of both feeder calves and potential replacement heifer progeny.