World outlook
With global leather demand lagging, US hide sellers are using the declining supply to their advantage by keeping hide prices steady.
respectively. Mexico and Australia, seventh and eighth, should also see growth in production. On the consumption side, America’s appetite for beef is expected to decrease while China/Hong Kong will see it keep growing. Slight growth is projected for Brazil and the EU.
Rankings of beef production and demand, however, do not match up to the size of each country’s cattle herd. India has more than 30% of the world’s cattle at more than 300 million head. Brazil is next with 194.4 million head, accounting for 20% of the global herd, followed by China with about 11% at 101.5 million head. Only then does the US rank, with its 95.8 million head of cattle and calves, according to the July 1 2023 cattle inventory report.
“Change takes time. Even if the US cattle industry started retaining heifers this fall, feeder supplies are smaller and it could be 2026 before the larger herd had any effect on the hide supply.”
Shrinking US supply Already this year, the US cattle herd is down by 3% compared to 2022. The 1 July beef cow herd was 29.4 million head, down 9.3% from the 2018 peak, and is 1.2% lower than the 2014 low. “It’s still getting smaller. Even though there’s been enough improvement in drought areas, that’s not enough,” says Derrell Peel, Charles Breedlove professor of agribusiness and cattle economics expert at Oklahoma State University. Peel, who writes frequently about cattle supply and related issues, says we are on the front end of the shrinkage in the US herd. “When will we see indications that the industry is actually trying to stop the decline and rebuild
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the herd?” Peel asks. As of yet, there are no indications that we’re starting any heifer retention for rebuilding, he explains.
The current situation has a lot of parallels to the last time the US was in this position in 2013–15. “At that time, we had a good pipeline of replacement heifers,” Peel says. By contrast, the 1 July cattle inventory showed that the heifer count is 4% lower this year and the 2023 calf crop in the US is expected to be 33.8 million head, down 2% from last year. “Essentially, the tightest supply is yet to come,” Peel adds. Indeed, change takes time. Even if the US cattle industry started retaining heifers this fall, feeder supplies are smaller and it could be 2026 before the larger herd had any effect on the hide supply, he adds. With leather demand lagging on a global basis, US hide sellers have been using the declining supply to their advantage in keeping hide prices steady. In fact, lower slaughter allowed meat packers to firm prices on most steer selections and push some levels a little higher on improved demand from the automotive sector.
Brazilian slaughter on the rise Data for Q1 2023 indicate that cattle slaughter is on the rise in Brazil, after hitting a decade-low level in the same period in 2021. According to the Brazilian Institute of Geography and Statistics (IBGE), the total was 7.31 million head, up by 4.7% compared with Q1 2022, 6.98 million head. While it’s higher, it’s still well below the Q1 average from the past decade, 7.48 million. Q1 slaughter was also lower than the end of 2022 because of the Chinese embargo on beef exports from Brazil this spring. Experts say that slaughter in Q2 is already on the way up. Brazil may be the largest beef exporting country, but its domestic consumption been on the decline. Rising beef prices started to dent consumption in 2020, which
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