Given high corn costs, shouldn’t fed-cattle slaughter weights be coming down? You’d think so, say Steve Meyer and Len Steiner, Chicago Mercantile Exchange (CME) ag economists, but the data show otherwise. In fact, they say, cattle, hogs and poultry all have seen all-time record highs for slaughter weights in the past year.
There are several reasons, they say. First, market weight is a key determinant of production efficiency. While feeders and packers denote their facility size in number of head, they denominate sales in pounds. That creates incentive to increase pounds per head.
Second, higher feed costs can create conflicting incentives. “While it’s true that higher feed costs should push end weights down, those same higher costs also drive placement weights upward by creating incentive to add more weight using grass or other forages before the animals are placed in feedlots,” the economists say. Since the finishing process is generally denominated in days, higher placement weights, plus a relatively fixed number of days on feed (necessary to reach acceptable quality end-points), lead to higher finished weights.
And then there’s human nature. “The super-seasonal increase in weights last fall was driven by decisions that cattle feeders frequently make when faced with disappointing prices – feed them a bit longer and hope for a price rally,” the economists say. “The extra gain means that (approach) seldom works, but it hardly ever deters either the thinking or the resulting action.”