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September 18th - Closing Futures Summary

Bearish cash expectations undercut the cattle market. Beef prices have declined consistently this week, which in turn sparked strong selling since Wednesday’s opening. Technical factors and growing pessimism about this week’s cash prospects also encouraged bears. October live cattle futures plunged 1.42 cents to 155.60 cents/pound as Thursday’s CME session ended, while December futures dove 1.07 to 158.92. Meanwhile, October feeder futures stumbled 0.40 cents to 227.70 cents/pound, and January feeders skidded 0.42 to 219.70.

Dollar strength probably weighed on corn prices Thursday. The U.S. dollar surged to a 14-month high overnight and is close to its highest levels since spring 2010. Greenback strength raises the cost of U.S. commodities on international markets, thereby hurting their competitiveness. Prices typically adjust downward as a result. The weekly Export Sales result for corn was mediocre. December corn futures dipped 3.5 cents to $3.3825/bushel at Thursday’s close, while May sagged 3.25 to $3.5925.

Talk of surging yields depressed soy values. Another sizeable bean sale to China was announced Thursday morning, while the bean and meal results on the weekly Export Sales report seemed to offset. CBOT futures turned substantially lower, which reportedly reflected industry talk of soaring soybean yields as the harvest gets underway. November soybean futures ended Thursday having fallen 11.0 cents to $9.715/bushel, while October soyoil slumped 0.67 cents to 32.72 cents/pound, and October soymeal dropped $7.6 to $328.8/ton.

Wheat exports disappointed traders this morning. Recent events have emphasized the global wheat glut and the fact that U.S. wheat isn’t competitive on the global market. Recent dollar strength and today’s weak result on the USDA Export Sales report offered confirmation of those ideas. December CBOT wheat tumbled 10.75 cents to $4.885/bushel in late Thursday trading, while December KC wheat sank 12.5 cents to $5.6975/bushel, and December MWE wheat dropped 12.75 to $5.5025.

Pork losses exaggerated technical selling in hog futures. The cash hog markets rose again Wednesday, which seemed supportive. However, pork prices fell, thereby appearing to exaggerate technical selling spurred by nearby futures’ inability to hold above moving average support. Deferred futures bounced from midsession lows, while October remained under pressure. October hogs plunged 2.12 cents to 102.97 cents/pound in Thursday’s closing action, while December dipped just 0.10 to 93.80.

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September 18th - EPA Water Bill Not Out of Hot Water Yet

The White House has issued a veto threat for a bill that would prevent the Environmental Protection Agency (EPA) from chugging ahead with a rule that would redefine its jurisdiction over streams and ponds saying its “strongly opposes” the bill. Advisers are recommending that President Obama vetoes the bill if it makes it to him, Timothy Cama reported for The HIll.

Obama administration officials think the bill will add ambiguity to the current regulations laid out in the Clean Water Act. In March, the bill was proposed to clarify the bodies of water that will need permits from the EPA for certain activities that might cause pollution. People involved in agriculture are concerned that this will give the government too much power. The EPA has stated that the bill wouldn’t increase the government’s power much.

The full House is expected to vote on the bill Tuesday. Its future is uncertain.

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September 18th - U.S. Beef Exports Slow & Imports Gain in July

U.S. beef imports surged during July, bringing this year’s cumulative total through July to 1.627 billion pounds, 15 percent higher than a year earlier. Imports from Australia totaled 97.0 million pounds during July, 71 percent higher than July 2013 and the highest single month total from Australia since April 2009. Imports have also increased notably this year from New Zealand (up 8 percent), Canada (up 11 percent), and Mexico (up 11 percent) (see figure). Demand for imported processing beef has been strong this year due to declining U.S. beef production. Through August 30, 2014, federally inspected cow and bull slaughter is down 13 percent from a year earlier, leading to lower domestic supplies of lean beef. Imports were up only 1 percent during the first quarter but have increased steadily since March. 

Higher imports have been facilitated by higher production this year in Australia. Drought has persisted in Australia’s cattle-producing regions, leading to an 11 percent increase in cattle slaughter through July. Beef production has increased 9 percent, offset somewhat by lower weight animals. Pasture conditions have improved in New Zealand this year, leading to a reduction in cattle slaughter. However, New Zealand beef exports are up 6 percent year to date, with the United States accounting for just over half of exports. The forecast for U.S. beef imports in 2014 was raised to 2.684 billion pounds, an increase of 100 million pounds. The forecast for 2015 was also raised to 2.700 billion pounds. Strong import demand is expected to continue throughout the forecast period due to lower U.S. beef supplies and strong U.S. beef prices expected to draw supplies from abroad.

After increasing in each of the first 6 months of 2014, U.S. beef exports cooled during July. Exports fell 13 percent from the previous year’s level, largely due to lower shipments to Canada (down 26 percent) and Hong Kong (down 32 percent). July’s downturn in exports indicates that higher U.S. beef prices are beginning to impact trade (see figure). The average price of boxed beef was almost 30 percent higher in July 2014 than a year earlier. Exports to Canada in particular have fallen this year (down 22 percent), further impacted by a weaker Canadian dollar. 

Despite considerably higher prices, U.S. exports through July are still marginally above last year’s level. Demand has been robust from Asia, including higher cumulative-year exports to Hong Kong (up 36 percent), South Korea (up 22 percent) and Taiwan (up 9 percent). Shipments are also up 24 percent to Mexico, making it the second largest market for U.S. beef. Japan remains the top market, although shipments have been lower than a year ago. Japanese imports of beef from all countries are down almost 9 percent this year, but the United States has increased its market share at the expense of imports from Australia. The forecast for U.S. beef exports in 2014 is 2.620 billion pounds, 1 percent higher than 2013. Exports are expected to decline in 2015 to 2.525 billion pounds as high prices are expected to weaken export demand.

USDA

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"Click Here" to view a Slide Show of Drought Monitor maps for the last 12 weeks
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September 18th - Futures Downtrend Resumes; Cash Trade in the Wings

CME cattle futures are headed lower again as the teeter totter continues. Though Feb LC on back look like they are no more than cooling their heels before an assault on the highs later, the Oct and Dec LC charts suggest a test of Monday’s lows and a possible look at both the 50% retracement area and the 40-day moving averages, 200 to 300 points lower. 

To create that kind of downward momentum, cash fed cattle will need to trade lower this week. So far, very little packer inquiry can be found around, though bids of $155-56 south and $245 dressed north supposedly have been made. And triple digit futures losses this morning certainly will aid the packer in his full-court-press to lower his raw material cost. 

The bearish news is abundant in the form of a weaker boxed beef cutout, red packer margins and packers owning more inventory than for quite some time.  And bullish news is absent, at least today.

In fact, the Choice cutout, at $245.91 yesterday, took out the recent low made earlier this month and is now the lowest since, June 26. The loin primal is the weakest link of the carcass right now, dropping to a level not seen since last March and while beef 50s the lowest since April. Neither loins nor 50s typically bottom until October. And heavier cattle out-weights translate into a larger supply of beef 50s, since that’s where about 14% of a carcass ends up. 

Open Interest Up on Up Day

One thing worth noting is the increase in open interest in Live Cattle futures on yesterday’s rally, up almost 5k contracts in most active Dec. We won’t know for a while which market participants were responsible, but if last Friday’s Commitment of Traders’ report was any indication, it’s likely we saw commercials adding to shorts on the rally. 

COF Report Tomorrow

As the marketplace looks for clues as to what’s next in a market that seems to give and take in extreme fashion, tomorrow’s USDA Cattle-on-Feed report isn’t really expected to tell us anything we don’t already know. The industry continues to place fewer cattle than a year ago and market fewer as well. There was one less marketing day in August than in August 2013, which automatically lops 5% off the marketings on a percentage basis. Average analysts estimates are: COF 99.1%; Placed 96%; Marketed 91.4%.

The Beef

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September 17th - The Bigger Picture

A view of the beef markets, or any markets for that matter, can be a multidirectional one and the various perspectives merge and sometimes diverge leading to the ultimate arbitrator of differences --- price. Our domestic beef market certainly does not behave in a vacuum. Influencing beef demand are many factors and forces, most known but a few unknown. Analysts are constantly reminding us of the importance of job growth, disposable income, inflation and exchange rates.  They all are important but weighing each is frequently difficult.

Few factors are more important than our exports. Exports and imports are driven by the absolute value of our beef products but more importantly by the exchange rates of our currency. The ICE Dollar index, that had stagnated at close to 80 for most of the year, has recently in the past month moved the dollar value upward to 84. Few cattle operators track this index and futures contract but it has a major impact of the volumes of our exports and imports. The rise of the value of the dollar from 80 to 84 is 5%. These means without any change to beef prices our exports are $8 cwt. higher on a live steer selling for $160. Alternatively, our imports are cheaper by 5%.

While those exports of beef products are more expensive, we are finding more demand from more areas of the world. Beef exports for the last reporting month of July were down 14% from prior year.  But the good news is the appearance and increasing demand from sources that will likely chart the future of our export market. Japan continues to be our number one trade partner but in the top five we are finding some new names. Hong Kong comes in at #4 and is demonstrating the largest growth in use of our beef which of course, headed to China. Taiwan is #6 just behind Korea.

The recent change in the dollar is negative for beef prices but other factors are not negative. The economy continues to improve and the jobless rate continues to decline. Today's high priced beef is not eaten only by rich people, it is generally part of every household budget. Since June, a 19% fall in gasoline prices is extremely positive for the food budget and beef.

Beef's relative position to other meats has been surprising to some analysts. Production of pork and poultry is not skyrocketing but is on the increase but beef continues to be a favorite on the supermarket shelf. Demand for ground beef appears to be stable and durable and there is little evidence that turkey burgers are taking market share. Beef will be in short supply for the next year but increasing supplies are on the horizon.

Ag Center Cattle Report

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September 17th - USDA Report Summary: More Corn, Less Meat

Last Thursday, USDA released the September Crop Production report along with the monthly World Agricultural Supply and Demand Estimates (WASDE) report.  The market was closely watching to see what USDA thinks about what is shaping up to be a corn crop for the record books.

USDA’s national average corn yield estimate came in at 171.7 bushels per acre.  This was right at a bushel higher than the average pre-report estimate.  It will be, if realized, a record national average yield.  A number of key states are expecting phenomenal yields this year.  Most notable is Illinois, for which the state average yield estimate was pegged at 194 bushels per acre.  Among major producing states, record yields are currently projected for Indiana (184 bushels/acre), Iowa (185 bushels/acre), and Nebraska (179 bushels/acre).  These yields correspond to an aggregate production estimate of 14.395 billion bushels, which will be the second consecutive year of record-high corn production following last year’s 13.925 billion bushel crop.

With the increased availability of corn, use is expected to increase.  Estimates of feed use, ethanol use, and exports were all increased modestly from last month’s report.  Higher use do not fully offset the higher production estimate, though; and corn carryover at the end of the 2014/15 marketing year is currently projected at just over 2 billion bushels – corresponding to a stocks-to-use ratio of 14.7%.  This will be the highest level of carryover (in terms of stocks-to-use) since 2005/06.  The record U.S. corn crop is expected to accompany record global wheat and oilseed crops this year.  Overall, global grain and oilseed markets appear to be completing, with this year’s crops, a transition to a relative abundance following almost a decade of relative shortage.  Demand for feedgrains and oilseeds remains strong globally, and that is not likely to change in the near future; but global capacity has also been increased as well.  It now appears that with this year’s crops, world feedgrain and oilseed production will have exceeded use in three of the past four years. 

The September WASDE paints a bit different picture for meat supplies.  Estimates of U.S. red meat and poultry production for both 2014 and 2015 were revised down a bit from last month.   To be more specific for 2014, beef and pork production estimates were revised downward from last month; the 2014 estimate of broiler production was revised upward but not enough to offset to lower pork and beef numbers.  Beef production in 2014 is now projected to be 5.4% below last year’s level, reflecting relatively tight fed cattle supplies and reduced female slaughter.  Looking ahead to 2015, beef production is currently forecast to decline by a further 2.8%.  On the other hand, pork and broiler production are both projected to expand by around 2.5% in 2015.  If these forecasts hold, for pork this will mark the end of a couple of years of contraction.  For broilers, it will mark the third year of increasing production. 

Further tightening of beef supplies will continue to keep pressure on beef retail prices, which have surged to record levels this year.  This will be balanced, though, by higher combined meat availability as pork production rebounds and poultry production continues to expand in 2015.  In this environment, beef prices (retail and wholesale) will likely encounter stiff resistance to anything like the kind of price increases that have characterized 2014.

The Markets

Several weeks ago, fed cattle prices rather unexpectedly made a six or seven dollar jump to get back close to the highs for the year.  Last week, the market was a little softer but still managed to hold onto most of those gains from two weeks ago.  Last week’s 5-Area weighted average price worked out to $160.84, down less than 50 cents from the prior week’s weighted average – though in some locations (e.g., Kansas) prices were more like $1 to $2 lower.  Wholesale beef prices were higher last week.  The weekly average Choice cutout was $3.46 higher than the prior week, although it may be worth keeping in mind as we look ahead that the lowest prices of the week were on Friday last week.  Strong fed cattle prices and weak corn prices are a potent combination for the calf market.  Feeder and stocker cattle prices were higher again last week, with the National Feeder and Stocker Cattle Summary report calling the market for yearlings $3 to $8 higher and for stockers steady to $5 higher than the prior week. 

Livestock Marketing Information Center

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September 16th - Corn Crop Condition

USDA’s National Agricultural Statistics Service (NASS) September 11 Crop Production report boosted the forecast yield for the 2014/15 U.S. corn crop by 4.3 bushels per acre to 171.7 bushels. This record high stands 22 bushels above the 5-year average, and 7 bushels above the previous high of 164.7 bushels in 2009/10. Yields increased in all but two States for which State-level data are available. Major corn-producing States saw the largest increases. The crop has been favored by adequate moisture and advantageous temperatures as evidenced by crop condition ratings of 74 percent in the good-to-excellent range, compared with 56 percent last year as of early September.

Both planted and harvested acreage forecasts are unchanged this month. With the higher forecast yield, corn production is expected to be a record 14,395 million bushels, 363 million bushels above last month’s projection and 470 million bushels above the 2013/14 estimate.

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September 15th - NASDA Members Say “Withdraw” to EPA’s Waters of the U.S. Rule

Burlington, VT, September 12, 2014 – At the Annual Meeting of the National Association of State Departments of Agriculture (NASDA), NASDA Members unanimously called on the Environmental Protection Agency (EPA) and US Army Corps of Engineers to withdraw the proposed Waters of the U.S. Rule. The action item, submitted by North Dakota Commissioner of Agriculture Doug Goehring, also urges the EPA and US Army Corps of Engineers to collaborate with state departments of agriculture and other stakeholders on the appropriate scope of federal Clean Water Act jurisdiction.

“As it stands, this proposed rule dramatically expands EPA’s jurisdiction and creates too much uncertainty for our farmers and ranchers. This rule must be withdrawn,” said NASDA CEO Dr. Barbara Glenn. “It is critical that the agencies engage state regulators and stakeholders to work together to find a path forward before the agencies move towards implementation or further rulemaking.”

NASDA previously submitted comments expressing concerns about the highly controversial Interpretive Rule for Agricultural Conservation Practices.

“Conservation and environmental protection are among our members’ chief responsibilities as state regulatory agencies. We feel the agencies’ proposals will dissuade the use of critical conservation practices needed to preserve American farmland,” said Glenn.

NASDA is a nonpartisan, nonprofit association which represents the elected and appointed commissioners, secretaries, and directors of the departments of agriculture in all fifty states and four U.S. territories. 

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September 12th - National Feeder & Stocker Cattle Summary
USDA-MO Dept of Ag Market News

RECEIPTS:   Auctions   Direct    Video/Internet Total
This Week     201,100     44,700        26,500        272,300
Last Week     113,200     33,600         4,100        150,900
Last Year       203,400     45,200        37,000        285,600

Compared to last week, coming back after last week’s Holiday with many auctions taking last Monday off, this week’s comparable sales had yearlings trading mostly 3.00-8.00 higher with calves steady to 5.00 higher.  In the Southeast calves sold mostly 3.00-8.00 higher, spots 10.00 higher.  Many of this week’s auctions that were off last week, sold 5.00-15.00 higher catching up with last week’s higher market.  Best demand is noted in the Northern Plains and upper Mid-West on yearlings as a large number of buyers participating for these cattle.  Last week’s rocket sales on fat cattle trading mostly 8.00 higher at 163.00 as packers had to ramp up their bidding and chase after fat cattle to fulfill their needs. 

This inspired confidence and conveyed volumes to the feeder cattle market this week.  It’s not always easy to satisfy packer’s needs from week to week.  The cattle and future markets have had big ups and big downs with wild price swings this year and most recently; this goes with the nature of the business.  This keeps frames of mind, attitudes and positions changing fast and in a hurry.  One question is can the fat cattle market establish the price above the 160.00 level and maintain current beef demand.  Slaughter cattle are focusing on tight supplies for market ready cattle with supplies looking to remain tight throughout the fall.  Feeder cattle contracts this week made all-time record highs as did live cattle contracts only to see triple-digit losses on Thursday.  With feedlot trade so active last week, this had feeder cattle buyers very active again this week to buy feeders.

In Torrington, WY on Wednesday at the Torrington Livestock Commission Company sold 373 head of steers averaging 960 lbs sold with a weighted average price of 216.05.  In Valentine, NE on Thursday at the Valentine Livestock Auction sold 257 head of steers averaging 794 lbs with a weighted average price of 242.27 and 129 head of value added heifers averaging 872 lbs sold with a weighted average price of 221.11. In Pratt, KS on Thursday at the Pratt Livestock Auction sold a near pot load of steer calves weighing 507 lbs with the gavel dropping at 312.00. 

On Thursday USDA estimated this year’s corn yield at 171.7 bpa with a record 14.4 billion bushels up 3 percent from the August forecast and a 4.3 bpa bump up from August.  Corn prices continue to be dominated by this very large U.S. harvest and with lower fed cost will create a strong case for feeder cattle support.  North Central Regional averages this week for 800-900 lb steers was 226.52, last week 223.05 and last year 155.62.  In Kansas on Friday afternoon live prices traded 1.00-2.00 lower from 161.00-162.00.  This week’s auction volume included 49 percent over 600 lbs and 40 percent heifers.

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September 12th - Canadian Weekly Cattle Report
Provided by CanFax

Fed market higher

  • Sharply stronger live cattle futures last week sparked buyers and a few live cattle in Canada traded $2 to $3 per hundredweight higher than the previous week.
  • The Chicago futures prices reflected stronger than expected cash prices in the U.S.
  • The Canfax fed steer average rose by $3.02 to reach $163.50 per cwt. on light to moderate trade. Fed heifers were unchanged at an average $160.75.
  • There were premiums for large volume trades, but only one major packer was buying cash cattle.
  • The weekly cash to futures fed basis weakened to -$7, but remained seasonally strong enough to discourage American packer interest.
  • Western Canadian fed slaughter for the week ending Aug. 30 was down three percent from the previous week at 36,970 head.
  • So far this year, the region’s slaughters is up nine percent at 1.18 million head.
  • Weekly fed cattle exports to Aug. 23 were 38 percent smaller than the previous week at 5,060 head.
  • Demand is expected to soften as fall approaches and retailers need to align beef prices higher in response to record high live cattle.
  • Consumer spending will be disciplined following back to school expenses and beef buyers could shift to cheaper competing meats.
Cow prices rise
  • D1, D2 cows rose $1.33 reaching $123.63 per cwt.. D3 cows averaged $111.90 and slaughter bulls traded slightly higher at $139.41. Rail grade animals traded at $234-$239.
  • The week’s non fed exports were the largest since the end of March.
  • Supplies are expected to remain manageable. Prices are expected to fall in September but should be able to average in the low $120s per cwt.
Feeders up
  • Feeder steers on average rose $6.13 per cwt. and heifers were up $6.06. There was strong U.S. and eastern Canadian competition for feeders but light to moderate volumes of Saskatchewan and Manitoba yearlings are still going into Alberta.
  • A large portion of Canadian feeder exports are heading to Nebraska, so cattle from Saskatchewan and Manitoba have a freight advantage over those in Alberta.
  • Saskatchewan yearlings 700 to 900 pounds are trading at a $1 per cwt. premium over Alberta. That premium is likely to continue as more calves hit the cash market.
  • In the futures market, the January and March feeder contracts were at nearly a $10 discount compared to the spot contract month. Over the past two weeks Alberta 850-870 lb. steers for February delivery have been reported $212.25-$213.50 per cwt. and cash-to-futures basis levels remain seasonally weak at -$18 to -$20 on those lots.
  • Alberta auction volumes totaled 22,882 head, lower than the previous week and the same time last year.
Bred cow-calf pairs traded at $2,000-$2,550.
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September 12th - Shootin' the Bull Weekly Analysis:
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In my opinion, while the near vertical price rally may have benefited some, it is perceived to have created further despair when viewing the future.  Recently purchased inventory will come into the feedyard or backgrounding lot at the highest price currently known.  Via the futures, as fat cattle, there have been a few times in which December or February could have been hedged at a break even or profit.  At the close of this week, it is leaning a little more towards the negative side now.  For backgrounders bringing stockers, again at the highest price known, they are faced with marketing feeders towards the spring of the year at sharp discounts and having to feed them through the winter.  When you throw into the mix that corn is not anticipated to trade much lower than it already is, producers have their work cut out for them. 

This is not voiced as an indicator of prices moving higher or lower, but just to suggest how critical sustaining a minimum sale price is for marketable inventory in the future.  Technical indicators turned down at weeks end.  Most contract months traded back to or under the previous contract highs made at the end of July per respective contract month.  Open interest did increase slightly on the fat cattle.  However, this came at the top end of the market and it is anticipated that commercial's were big sellers and specs were the buyers.  Lastly, this last rally produced the highest price with significant divergence of the oscillator technical indicator.  This divergence between new highs in price, but not new highs on the oscillator, leads me to anticipate a reversal of significance to the down side. 

The USDA report on Thursday confirmed what most already knew, it's a big crop.  Traders have been selling corn in anticipation of this and now that the price is down and crop size confirmed, I don't anticipate much more downside trading to materialize in corn.  The carry charge is going to make it more difficult to see lower prices than what the September contract has already shown us. 

Christopher B. Swift is a commodity broker and consultant with Swift Trading Company in Nashville, TN. Mr. Swift authors the daily commentaries "mid day cattle comment" and "Shootin' the Bull" commentary found on his website @ www.shootinthebull.com

An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits.  You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources and other relevant circumstances. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

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August 22nd - Cattle on Feed Report:

United States Cattle on Feed Down 2 Percent

  • Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 9.8 million head on August 1, 2014. The inventory was 2 percent below August 1, 2013. 
  • Placements in feedlots during July totaled 1.56 million, 7 percent below 2013. Net placements were 1.50 million head. During July, placements of cattle and calves weighing less than 600 pounds were 425,000, 600-699 pounds were 260,000, 700-799 pounds were 355,000, and 800 pounds and greater were 520,000. For the month of July placements are the lowest since the series began in 1996.
  • Marketings of fed cattle during July totaled 1.79 million, 9 percent below 2013. July marketings are the lowest since the series began in 1996.
  • Other disappearance totaled 63,000 during July, 2 percent below 2013.
Analysts regarded the report as slightly negative near-term because July marketings were 1.0% fewer than expected. But placements were positive to the longer-term market. They were 1.7% more than expected but the number of cattle placed 700 lbs and over was down sharply on last year. This meant the August 1 COF total was 0.5% above analysts’ average forecast. The trend of feeding more cattle up north continued. Iowa, Minnesota, Nebraska and South Dakota each had COF totals above a year ago, as each placed more cattle in July than a year ago.

Texas had the most cattle on feed (2.470M head). Nebraska was second with 2.160M head (up 4%) and Kansas was third with 1.900M head (down 5%). The weight breakdown showed a 3.8% year-on-year increase in cattle under 700 lbs (up 25,000 head) but a 14.6% decline in placements 700 lbs and over (down 149,000 head). Iowa, Nebraska and South Dakota marketed more cattle in July than a year earlier.
 

Cattle on Feed Inventory in 1,000+ Capacity Feedlots as of August 1st
Millions of Head
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Number of Cattle Placed on Feed in 1,000+ Capacity Feedlots in July
Millions of Head
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Number of Cattle Marketed from 1,000+ Capacity Feedlots in July
Millions of Head
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Cattle on Feed by State
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August 22nd - Cold Storage Report
  • Total red meat supplies in freezers were up slightly from the previous month but down 10 percent from last year. 
    • Total pounds of beef in freezers were up 2 percent from the previous month but down 21 percent from last year.
    • Frozen pork supplies were down 2 percent from the previous month and down 3 percent from last year. 
    • Stocks of pork bellies were down 23 percent from last month but up 130 percent from last year.
  • Total frozen poultry supplies on July 31, 2014 were up 7 percent from the previous month but down 14 percent from a year ago. 
    • Total stocks of chicken were up 8 percent from the previous month but down 13 percent from last year. 
    • Total pounds of turkey in freezers were up 7 percent from last month but down 16 percent from July 31, 2013.
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August 22nd - United States & Canadian Cattle Inventory Down 3 Percent from 2012

All cattle and calves in the United States and Canada combined totaled 108.3 million head on July 1, 2014, down 3 percent from the 111.3 million on July 1, 2012. All cows and heifers that have calved, at 43.9 million head, were down 2 percent from 2012.

  • All cattle and calves in the United States as of July 1, 2014, totaled 95.0 million head, 3 percent below the 97.8 million on July 1, 2012. All cows and heifers that have calved, at 39.0 million head, were down 2 percent from 2012.
  • All cattle and calves in Canada as of July 1, 2014, totaled 13.3 million head, down 1 percent from the 13.5 million on July 1, 2013. All cows and heifers that have calved, at 4.87 million, were down 1 percent from a year ago
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Submit Comments to Stop EPA’s WOTUS Rule

The Environmental Protection Agency (EPA) and the Army Corp of Engineers (Corps) have proposed a rule to expand federal authority over non-navigable waters, defining almost all waters, regardless of size or continuity of flow, as “Waters of the United States” (WOTUS).

This proposed rule usurps state authority, infringes up on the property rights of farmers and ranchers and amounts to one of the largest ever land-grabs by the federal government.

"Click Here" to help “Ditch the Rule” by submitting comments to EPA and the Corps opposing the proposal.

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August 21st - Seasonal Drought Outlook

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May 21st - As Fundamental Change Moves an Industry

It doesn't feel any different as you walk around but beneath the surface some large and monumental plates are shifting and the foundations of an industry are undergoing change. The day to day business continues and we wake every morning to new bids and offers, new grain prices, the drought, and other continuing influences but there are some big picture developments that are occurring while we move day to day.

  • Climate: There are major changes occurring in the climate. Extreme weather patterns are more severe and long lasting. Drought in some areas continues. Flooding in other regions is causing its own problems. We can debate whether it is man made or not, but large and serious weather patterns are at work and no one impacted more than agriculture.
  • Geography: Nebraska took over Texas's spot as top feeding state. The image below clearly demonstrates the loss of feeding capacities in Texas and increases else where. Processing plants follow the feeding locations for cattle and the southern plains has lost processing capacity to the northern plains -- but both have suffered plant closings and slow downs as the herd grows smaller.
  • Basis: Cattle and grain are moving towards cash markets trading basis the futures. Cattle cash trading has ceased to be reported in Texas and lightly reported elsewhere. Poor grain basis pricing, south of Amarillo, is pressuring south plains feedyards in competitiveness.
  • Sustainability: This is a term used by everyone and understood by no one. Beef retailers are being pressured to act on assuring the industry is observing best management practices to deliver a sustainable agriculture.
  • Mandatory ID: Whether it is a trading scandal involving phantom cattle or a disease threat that can't be traced, animal ID won't go away. International trade and exports will demand it or penalize our products without it.
Downsizing is no fun and lots of money has been lost in processing and feedings. Downsizing is always painful but it also can build a better and stronger industry through change.


The Cattle Report

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May 5th - 2012 Census of Agriculture Reveals Trends

There are now 3.2 million farmers operating 2.1 million farms on 914.5 million acres of farmland across the United States, according to the 2012 Census of Agriculture, released today by the U.S. Department of Agriculture. The agriculture census presents more than 6 million pieces of information, which provide a detailed look at the U.S. farm sector at the national, state and county levels.

"Once every five years, farmers, ranchers and growers have the unique opportunity to let the world know how U.S. agriculture is changing, what is staying the same, what's working and what we can do differently," said Dr. Cynthia Clark, the retiring head of USDA's National Agricultural Statistics Service, which administered the survey. "Today, we can start to delve into the details." 

Census data provide valuable insight into the U.S. farmer demographics, economics and production practices. Some of the key findings include:
 

  • Both sales and production expenses reached record highs in 2012. U.S. producers sold $394.6 billion worth of agricultural products, but it cost them $328.9 billion to produce these products. 
  • Three quarters of all farms had sales of less than $50,000, producing only 3 percent of the total value of farm products sold while those with sales of more than $1 million - 4 percent of all farms - produced 66 percent. 
  • Much of the increased farm income was concentrated geographically or by farm categories. 
  • California led the nation with 9 of the 10 top counties for value of sales. Fresno County was number one in the United States with nearly $5 billion in sales in 2012, which is greater than that of 23 states. Weld County, Colorado ranked 9th in the top 10 U.S. counties. 
    • The top 5 states for agricultural sales were California ($42.6 billion); Iowa ($30.8 billion); Texas ($25.4 billion); Nebraska ($23.1 billion); and Minnesota ($21.3 billion). 
  • Eighty-seven percent of all U.S. farms are operated by families or individuals. 
  • Principal operators were on average 58.3 years old and were predominantly male; second operators were slightly younger and most likely to be female; and third operators were younger still. 
  • Young, beginning principal operators who reported their primary occupation as farming increased 11.3 percent from 36,396 to 40,499 between 2007 and 2012. 
  • All categories of minority-operated farms increased between 2007 and 2012; the Hispanic-operated farms had a significant 21 percent increase. 
  • 144,530 farm operators reported selling products directly to consumers. In 2012, these sales totaled more than $1.3 billion (up 8.1 percent from 2007). 
  • Organic sales were growing, but accounted for just 0.8 percent of the total value of U.S. agricultural production. Organic farmers reported $3.12 billion in sales in 2012, up from $1.7 billion in 2007. 
  • Farms with Internet access rose from 56.5 percent in 2007 to 69.6 percent in 2012. 
  • 57,299 farms produced on-farm renewable energy, more than double the 23,451 in 2007. 
  • 474,028 farms covering 173.1 million acres were farmed with conservation tillage or no-till practices. 
  • Corn and soybean acres topped 50 percent of all harvested acres for the first time. 
  • The largest category of operations was beef cattle with 619,172 or 29 percent of all farms and ranches in 2012 specializing in cattle. 
Conducted since 1840, the Census of Agriculture accounts for all U.S. farms and ranches and the people who operate them. The Census tells a story of how American agriculture is changing and lays the groundwork for new programs and policies that will invest in rural America; promote innovation and productivity; build the rural economy; and support our next generation of farmers and ranchers.
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February 14th - USDA Long-Term Projections

Despite lower prices for many agricultural products in the near future, USDA is projecting U.S. farm income to remain historically high through 2023. Analysis for the report was conducted prior to completion of the Agricultural Act of 2014, and was based on the assumption of continuation of policies in the 2008 Farm Bill. Projections range from long-term economic growth, global production and consumption trends, global trade trends, commodity prices, farm income and more.

USDA projects global economic growth to average 3.2 percent annually over the next decade, with stronger growth projected in developing countries, including China, India, and countries in Africa and Latin America. The U.S. economic growth is projected to average 2.6 percent over the next decade. “Steady global economic growth supports longer term gains in world food demand, global agricultural trade, and U.S. agricultural exports,” according to the report.

While prices for many of the major crops are projected to decline in the next few years, long-term growth in global demand, a low-valued U.S. dollar, and demand for biofuel, will hold prices for corn, oilseeds and other major crops above pre-2007 levels, according to the report.

As a result of recovering from high feed prices in recent years and drought, USDA is projecting livestock production and per capital red meat consumption to increase through 2023.
While beef production is projected to decline through 2016 as producers retain heifers to grow the overall herd, production is expected to begin increasing in 2016. USDA is projecting that beef cow numbers will increase from 29 million today to more than 33 million in 2022-2023. The total cattle inventory is projected to expand to approximately 96 million in 2023, and increasing slaughter weights add to increased beef production projections. USDA is projecting beef cattle prices to increase through 2017, then fall but increase again through 2023.

With regard to global beef trade, USDA is projecting world meat consumption to increase by about 1.9 percent annually from 2014-2023 and world meat trade to increase by 22 percent during that same period. Stagnate beef export projections from Australia resulted in the top four beef exporting nations, according to USDA, to be Brazil, India, the United States and Australia. On the import side, China and Hong Kong are projected to increase beef imports by 55 percent in the next decade as China’s middle class grows from 300 million today to an expected 640 million by 2020.

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February 13th - USDA Projects Net Farm Income to Fall in 2014

While USDA’s latest farm income projections indicate an overall decline in net farm income of around 26.6 percent in 2014, there are some positive projections in the report, especially for livestock producers.

“Livestock receipts are up marginally,” said USDA Chief Economist Joe Glauber. “They’re up at $183.4 billion. It’s the first time in a long while that we’ve seen livestock and crop receipts at around roughly the same magnitude.”

Crop receipts are projected at $189.4 billion in 2014, down more than 12 percent and back to pre-2011 levels. According to the report, declines in cash receipts are expected for almost all major crop categories, including food grain, feed, oil, fruits/tree nuts, and vegetables/melons. Large anticipated declines in the 2014 price for corn are impacting farmers’ decisions regarding other major crops. According to the report, use of corn for ethanol is expected to rise in 2014. Additionally, USDA is projecting declines in hay, wheat and soybeans receipts as well.

USDA is projecting a 0.7 percent increase in livestock receipts in 2014. For cattle and calves, steady receipts are projected due to lower production levels. Additionally, USDA is forecasting a decline in beef and veal export quantities in 2014.

Overall, net farm income, earnings only from current year production, is forecast to be $95.8 billion in 2014, down 26.6 percent from 2013 and projected to be the lowest since 2010. Net cash income, which includes income from carryover stocks from 2013, is forecast at $101.9 billion, down 22 percent from 2013.

For just the second time in the last 10 years and the first time since 2009, USDA is projecting a decline in production expenses, with an expected $3.9 billion decrease in 2014.

“Expenses are down,” Glauber said. “We’re forecasting them at $310 billion. That’s down almost $5 billion from last year, and that’s largely lower feed costs.”

Feed expenses are expected to decline by $6.6 billion, 11.3 percent, but livestock and poultry purchases are projected to increase, driven by an expected double-digit increase in the price of feeder steers due to tight supplies and strong beef demand. The overall expenses for the two major livestock-related expenses, however, are projected to fall by 6.1 percent, or $5.1 billion.

Other farm expense projections include a 4.7 percent decline for the three major crop-related expenses – seed, fertilizer and pesticides; a 9.6 percent decline in net rent to non-operators; a 4.6 percent increase in total labor; and a 3.2 percent increase for miscellaneous expenses, including things like animal health and breeding expenses, contract production fees, irrigation water, and general production and management decisions.

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All Cattle & Calves... State Rankings & Change
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January 1, 2014 Inventory vs. 2013 Inventory... Compiled from USDA National Agricultural Statistical Service Data
Rank
State
2014
2013
% Change
2014 as
% of Total
 
1
Texas
10,900,000
11,300,000
-3.54%
12.42%
2
Nebraska
6,150,000
6,300,000
-2.38%
7.01%
3
Kansas
5,800,000
5,850,000
-0.85%
6.61%
4
California
5,250,000
5,300,000
-0.94%
5.98%
5
Oklahoma
4,300,000
4,200,000
+2.38%
4.90%
6
Missouri
3,800,000
3,650,000
+4.11%
4.33%
7
Iowa
3,700,000
3,850,000
-3.90%
4.22%
8
South Dakota
3,650,000
3,850,000
-5.19%
4.16%
9
Wisconsin
3,350,000
3,450,000
-2.90%
3.82%
10
Montana
2,550,000
2,600,000
-1.92%
2.91%
11
Colorado
2,480,000
2,600,000
-4.62%
2.83%
12
Minnesota
2,280,000
2,390,000
-4.60%
2.60%
13
Idaho
2,190,000
2,370,000
-7.59%
2.50%
14
Kentucky
2,090,000
2,240,000
-6.70%
2.38%
15
North Dakota
1,770,000
1,790,000
-1.12%
2.02%
16
Tennessee
1,760,000
1,830,000
-3.83%
2.01%
17
Arkansas
1,660,000
1,600,000
+3.75%
1.89%
18/19
Florida
1,620,000
1,660,000
-2.41%
1.85%
18/19
Pennsylvania
1,620,000
1,610,000
+0.62%
1.85%
20
Virginia
1,530,000
1,610,000
-4.97%
1.74%
21
New York
1,450,000
1,400,000
+3.57%
1.65%
22
New Mexico
1,290,000
1,340,000
-3.73%
1.47%
23
Oregon
1,280,000
1,280,000
+0.00%
1.46%
24
Wyoming
1,270,000
1,290,000
-1.55%
1.45%
25
Ohio
1,250,000
1,230,000
+1.63%
1.42%
26
Alabama
1,240,000
1,220,000
+1.64%
1.41%
27
Illinois
1,130,000
1,120,000
+0.89%
1.29%
28
Michigan
1,120,000
1,120,000
+0.00%
1.28%
29
Washington
1,100,000
1,150,000
-4.35%
1.25%
30
Georgia
1,000,000
1,020,000
-1.96%
1.14%
31
Mississippi
930,000
910,000
+2.20%
1.06%
32
Arizona
920,000
900,000
+2.22%
1.05%
33
Indiana
870,000
810,000
+7.41%
0.99%
34
North Carolina
810,000
820,000
-1.22%
0.92%
35
Utah
800,000
770,000
+3.90%
0.91%
36
Louisiana
790,000
780,000
+1.28%
0.90%
37
Nevada
455,000
460,000
-1.09%
0.52%
38
West Virginia
380,000
410,000
-7.32%
0.43%
39
South Carolina
360,000
355,000
+1.41%
0.41%
40
Vermont
260,000
270,000
-3.70%
0.30%
41
Maryland
182,000
192,000
-5.21%
0.21%
42
Hawaii
130,000
132,000
-1.52%
0.15%
43
Maine
85,000
85,000
+0.00%
0.097%
44
Connecticut
47,000
48,000
-2.08%
0.054%
45
Massachusetts
39,000
39,000
+0.00%
0.044%
46
New Hampshire
32,000
33,000
-3.03%
0.036%
47
New Jersey
29,000
31,000
-6.45%
0.033%
48
Delaware
16,000
18,000
-11.11%
0.018%
49
Alaska
10,000
12,000
-16.67%
0.011%
50
Rhode Island
5,000
4,600
+8.70%
0.006%






-
Total
87,730,000
89,299,600
-1.76%
 100.00%
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Beef Cows... State Rankings & Change
.
January 1, 2014 Inventory vs. 2013 Inventory... Compiled from USDA National Agricultural Statistical Service Data
. Rank
. State
2014
2013
. % Change
2014 as
% of Total
 
 
 
 
1
Texas
3,910,000
4,015,000
-2.62%
13.46%
2
Missouri
1,820,000
1,757,000
+3.59%
6.27%
3
Oklahoma
1,805,000
1,754,000
+2.91%
6.22%
4
Nebraska
1,797,000
1,805,000
-0.44%
6.19%
5
South Dakota
1,635,000
1,688,000
-3.14%
5.63%
6
Montana
1,476,000
1,506,000
-1.99%
5.08%
7
Kansas
1,414,000
1,328,000
+6.48%
4.87%
8
Kentucky
1,012,000
1,028,000
-1.56%
3.48%
9
North Dakota
943,000
922,000
+2.28%
3.25%
10
Iowa
885,000
925,000
-4.32%
3.05%
11
Arkansas
882,000
851,000
+3.64%
3.04%
12
Florida
877,000
908,000
-3.41%
3.02%
13
Tennessee
864,000
912,000
-5.26%
2.97%
14
Colorado
700,000
715,000
-2.10%
2.41%
15
Wyoming
694,000
694,000
+0.00%
2.39%
16
Alabama
671,000
651,000
+3.07%
2.31%
17
Virginia
657,000
686,000
-4.23%
2.26%
18
California
600,000
610,000
-1.64%
2.07%
19
Oregon
516,000
527,000
-2.09%
1.78%
20
Georgia
480,000
490,000
-2.04%
1.65%
21
Mississippi
477,000
486,000
-1.85%
1.64%
22
Louisiana
450,000
454,000
-0.88%
1.55%
23
Idaho
445,000
510,000
-12.75%
1.53%
24
New Mexico
387,000
390,000
-0.77%
1.33%
25
North Carolina
360,000
364,000
-1.10%
1.24%
26
Illinois
359,000
360,000
-0.28%
1.24%
27
Minnesota
350,000
375,000
-6.67%
1.21%
28
Utah
325,000
315,000
+3.17%
1.12%
29
Ohio
293,000
290,000
+1.03%
1.01%
30
Wisconsin
240,000
260,000
-7.69%
 0.83%
31
Nevada
226,000
231,000
-2.16%
 0.78%
32
Washington
209,000
221,000
-5.43%
 0.72%
33
Indiana
192,000
191,000
+0.52%
 0.66%
34
West Virginia
191,000
200,000
-4.50%
 0.66%
35
Arizona
178,000
175,000
+1.71%
 0.61%
36
South Carolina
174,000
174,000
+0.00%
 0.60%
37
Pennsylvania
170,000
155,000
+9.68%
 0.59%
38
Michigan
114,000
113,000
+0.88%
0.39%
39
New York
105,000
90,000
+16.67%
 0.36%
40
Hawaii
68,800
69,900
-1.57%
0.24%
41
Maryland
38,000
41,000
-7.32%
 0.13%
42
Vermont
12,000
12,000
+0.00%
 0.041%
43
Maine
11,000
11,000
+0.00%
0.038%
44
New Jersey
8,000
9,000
-11.11%
0.028%
45
Massachusetts
6,000
6,500
-7.69%
0.021%
46
Alaska
4,300
4,900
-12.24%
0.015%
47
Connecticut
4,000
6,000
-33.33%
0.014%
48
New Hampshire
3,000
3,500
-14.29%
 0.010%
49
Delaware
2,800
4,000
-30.00%
 0.010%
50
Rhode Island
1,500
1,500
+0.00%
0.005%






-
Total
29,042,400
29,295,300
-0.86%
100.00%
.

February 4th - Rabobank Report: Structural Changes Needed to Keep U.S. Beef Industry Competitive

Consumption shift requires better cost control as U.S. becomes a “Ground Beef Nation”

Rabobank has published a new report on the U.S. cattle industry, calling for changes in the way beef is produced in order for the industry to remain competitive. In the new report, “Ground Beef Nation,”, Rabobank says that changing consumer preferences and a production model tailored to production of top-shelf steaks has put the U.S. cattle industry in a position of losing market share to competitive proteins.

“Under the existing business model, the U.S. cattle industry manages all fed beef as if it were destined for the center of the plate at a white table cloth restaurant,” notes Rabobank cattle economist Don Close. “The industry is, essentially, producing an extraordinarily high-grade product for consumers who desire to purchase a commodity. More than 60% of U.S. beef consumption is ground product. If the U.S. cattle industry continues to produce ground beef in a structure better suited to high-end cuts, the result will be continued erosion of market share.”

The report goes on to explore the trend of changing consumer preferences and the role pricing plays in the notable decline in beef consumption. The industries that produce competitive proteins such as pork and chicken have grown and become more efficient, making the products more readily available at competitive prices.

“The industry must change to a production model that determines the best end use of an animal as early as possible, in order to compete in a ‘ground beef nation’,” notes Close. “A new system for end-use categorization that influences calf selection, cattle management, production costs, and feeding regimen throughout the life of the animal is vital to keeping beef competitive with other choices at the meat counter.”

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USDA Cattle Inventory Report... January 1 Cattle Inventory Down 2 Percent

All cattle and calves in the United States as of January 1, 2014 totaled 87.7 million head, 2 percent below the 89.3 million on January 1, 2013. This is the lowest January 1 inventory of all cattle and calves since the 82.1 million on hand in 1951.

All cows and heifers that have calved, at 38.3 million, were down 1 percent from the 38.5 million on January 1, 2013. This is the lowest January 1 inventory of all cows and heifers that have calved since the 36.8 million head in 1941.

  • Beef cows, at 29.0 million, were down 1 percent from January 1, 2013. 
  • Milk cows, at 9.2 million, unchanged from January 1, 2013. 
Other class estimates on January 1, 2014 and the change from January 1, 2013, are as follows:
  • All heifers 500 pounds and over, 18.8 million, down 2 percent. 
  • Beef replacement heifers, 5.5 million, up 2 percent. 
  • Milk replacement heifers, 4.5 million, unchanged. 
  • Other heifers, 8.7 million, down 5 percent. 
  • Steers weighing 500 pounds and over, 15.4 million, down 3 percent.
  • Bulls weighing 500 pounds and over, 2.0 million, down 1 percent. 
  • Calves under 500 pounds, 13.3 million, down 4 percent. 
  • Cattle and calves on feed for slaughter in all feedlots, 12.7 million, down 5 percent. 
  • The combined total of calves under 500 pounds, and other heifers and steers over 500 pounds outside of feedlots was 24.7 million, down 3 percent. 
 Calf Crop Down 1 Percent

The 2013 calf crop was estimated at 33.9 million head, down 1 percent from 2012. This is the smallest calf crop since the 33.7 million born during 1949. Calves born during the first half of 2013 are estimated at 24.7 million, down 1 percent from 2012.


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