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Northwest Iowa Dairy Outlooks

A local discussion of current science and issues concerning dairying in northwest iowa

CMI reports that despite cow meat supplies near the highs established in the last two years (which were two big liquidation years), lean beef prices are running 14% above year ago levels and some 41% higher than what they were two years ago. There are fewer cows available for marketing today than what we had 3 or 4 years ago and higher prices will be needed to convince producers to part with their animals.

Also, higher prices for calves out front have changed the profitability calculations and the premiums for cows on the ground. US lean beef prices remain firm (currently around $2.07/lb. for 90CL beef) despite higher imports of grinding beef. The latest data from Australia, the largest US supplier of imported lean grinding beef, shows shipments of grinding beef to the US in October were up 71% from a year ago and in the last 3 months shipments of grinding beef were up 47% from last year. Last year beef imports were particularly low but the point is that US lean beef prices have been able to eke out a 14% gain even as both domestic and imported grinding beef supplies have increased. And to think this is the low time of the year. The main concern for end users, both on the foodservice and retail side, is what happens next spring as domestic cow slaughter slows down. Depending on the pace of the slowdown, which in turn will depend on pasture conditions and feed supplies, lean grinding beef availability will be a concern and we could see more fed cattle round cuts end up in the grinder.

Another positive for cattle producers is the fact that fat beef trim prices have

bounced back. In part this is due to short term demand pickup,

as foodservice operations build stocks ahead of the holiday rush

of shoppers. Also, the inventory of fat trim in freezers has been

depleted while packers have re-arranged their production schedules

to yield less 50CL trim. Despite the run-up, we remain cautious

about 50CL trim values, however, given that any big premium

over rendering value will bring more fat trim supply to market.

This should help end users offset some of the premiums for lean beef expected in the months ahead.

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