USDA has revised up its beef output projections for 2023, in part because ongoing drought conditions in parts of the country and the supply that has come to market so far. USDA now is projecting beef production for all of 2023 to be 27.229 billion pounds, 1.1 billion pounds (‐4%) lower than last year. Last year USDA was thinking that production in 2023 could be down some 1.9 billion pounds or 6.8%. The expectation for lower supplies is anchored by cattle inventory levels, calf crop and expectations for herd rebuilding activity.

This has been now pushed forward and as a result, USDA has revised down its projections for beef output in 2024, now forecast at 24.768 billion pounds, 2.461 billion pounds (‐9%) compared to 2023 and almost 3.6 billion pounds (‐12.7%) compared to 2022. The shortfall in supply is expected to reduce exports, now forecast down 9.3% this year and then another 8.2% next year.

Curiously, USDA does not expect US beef imports to increase significantly in 2024 despite the big shortfall in domestic production. Per capita consumption (availability) in 2024 is currently forecast at 52.7 pounds on a retail weight basis, 10.8% lower than what it was in 2022 and also lower than the supply levels experienced during the last cyclical bottom in 2014‐15. Cutout managed to hit a high of 343 in June and as much as $190 got paid for cattle. If USDA is right in its assessment of supply for next year, beef and cattle prices will continue to face upward pressure even if/when beef demand cools off.

Source: Daily Livestock Report - Steiner Consulting Group – Read Complete Article