27th: Weekly Corn Crop Condition Report
27th: Commodity Market Comments
The Bull” -- Christopher B. Swift.
|Live Cattle: Indecision remains
as current demand battles with future supply. The indecision is great
at this time as seen by the limit moves back to back in opposite directions.
The major wave 4 is the breeding ground for this indecision. My analysis
has not changed, and won’t until or unless new lows in this decline are
made. By that time, I won’t be able to clean the mud from my face.
The current volatility is immense, but it has been this way for quite sometime.
No one has control over that. So, the only thing one can control
is themselves in the market. My control level is to allow time to
go by to see if I am correct on my analysis. If I am incorrect and price
action begins to dissolve my analysis for a 5th wave new high, then I will
take action deemed necessary at that time. If I am correct, then
the wave 4 is anticipated to be in its termination phase with a resumption
of the upward trend.
Feeder Cattle: I am unable to produce
the analysis most want. That is, the price will stop here and rally
to there by such and such a date. My analysis all along has been
that the industry is in a transition and that transition is creating significant
price fluctuation. I perceive the industry to still be in transition
as we deal with elevated inventory, an increasing domestic and export demand,
and not all sectors of the industry benefiting from the price rise the
first half of the year. The perception that supply and demand have
begun to equalize, which creates indecision, which leads to the breeding
grounds of the wave 4. Hence, this is where I perceive we sit.
Corn: At this point, I can only
anticipate that the report on Friday will hold some type of information
to move corn one way or the other. At this point, not much else is.
Crude: Crude perked up a little
today. The sharply lower US dollar is most likely a reason.
I am paying attention to this as the move higher today has begun to turn
technical indicators. So, were crude to set a new low from this rally,
I would be looking for a bottom in crude.
US Dollar Index: The US dollar finally
produced the thrust lower I have been anticipating. The US dollar
traded and closed at a new low today from the December ’16 high.
This thrust is anticipated to push the US dollar to, or potentially under,
the $.9000 area.
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
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
27th: The Myth of “Hormone-Free” Beef: Debunked
-- Fort Hays State University
As consumers, many
people have seen a beef product on the supermarket shelf with a stamp or
sticker on it claiming it to be “hormone free.” How is this even possible
when beef cattle contain naturally occurring hormones? In reality, “hormone-free”
beef is simply beef that is raised without extra hormones given to the
animal to promote the growth of the animal during production. But many
consumers do not fully understand this concept.
Sex hormones, especially
estrogen, have been used by ranchers to fatten up beef cattle since the
Food and Drug Administration approved them for use in 1954. Six hormones
are approved for use in beef production in the United States. Naturally
occurring hormones include testosterone, estrogen, and progesterone. The
other three are synthetic hormones that are genetically similar to the
naturally occurring hormones.
Are these added hormones
dangerous to consumers who eat the food? After extensive research, the
FDA found that there is no danger in consuming beef with added growth-promoting
hormones. Today, the majority of growth hormones are administered via implants
placed under the skin in the middle of the backside of the animal’s ear,
giving the animal a slow and constant rate of these hormones. The implants
are not required to be removed at any time before slaughter. When the cattle
are slaughtered, the ear is simply removed and does not enter the human
food chain, allowing for a zero-day withdrawal period. This means that
FDA has approved that the meat is safe to consume at any time after the
animal has been treated because the growth hormones are metabolized by
the animal before it goes to slaughter.
What is most important
for a consumer to recognize is that many common foods contain natural estrogen
in levels much higher than those found in beef from an animal that has
been implanted. In comparison, according to the Michigan State University
article “Examining Growth Hormones in Beef,” a four-ounce steak from a
steer treated with hormones contains only 1.6 nanograms (an untreated steer
contains 1.2 nanograms) of estrogen while four ounces of raw cabbage contains
2,700 nanograms. Soy also has a large amount of estrogen in it. Your average
soy latte has approximately 30,000 nanograms of estrogen. If you are worried
about your food containing too many hormones, ditch that soy latte.
If the thought of
consuming beef from implanted cattle still concerns you, buy beef that
is labeled as organic or natural. Organic and natural beef contains only
the naturally occurring hormones but is sold at a much higher price due
to having a higher cost of production. But even organic beef is not proven
to be any better for you. It just may give you peace of mind to know you
will not be consuming these additional 0.4 nanograms of hormones per serving.
That peace of mind may not necessarily be worth the premium price that
you will have to pay for it.
It is safe to say
that there is absolutely no such thing as what consumers refer to as “hormone-free”
beef. The cold, hard truth is that no matter what kind of beef you consume,
whether you prefer grain fed, grass fed, natural, or organic, the beef
is going to have some hormones. And what many consumers forget to think
about is the fact that the amount of hormones found in beef is quite minuscule
to many other daily food sources. It only seems reasonable to take these
naturally occurring hormones and give them a boost to help keep beef productivity
levels high and inputs low in order to meet expectations. Otherwise, there
is no way that the beef market could keep up with our constantly growing
a 2012 Wheatland High School graduate, graduated this spring with a degree
in agricultural business from Fort Hays State University. She is the daughter
of Duane and Kris Vollbracht, Grinnell KS.
27th: U.S. Range & Pasture Conditions
Pasture and range
conditions for the US this spring, on average, have declined slightly more
than a typical year. Deteriorating conditions are most evident in the Dakotas
and Montana. An accelerated decline in conditions in the Dakotas started
in the last week in May. The percentage of pastures rated very poor during
that week increased by 5 percent in both South and North Dakota. Over the
course of the following two weeks, percentages of pastures rated very poor
increased by 12-15%. Ratings stabilized for the third week of June, but
in the last week, another sizable increase in very poor pastures was noted.
The story for Montana shows similar timing for the weeks of interest, but
more moderate condition shifts. In fact, notable reductions in the amount
of pasture rated very poor was encouraging for the latest week.
US pasture and range
conditions still look good compared to longer term averages. Texas and
Oklahoma pastures are similar to the very favorable ratings of a year ago.
The Western Region (New Mexico, Utah, Idaho and west from there) conditions
continue to get a boost from the drought-busting rains and elevated snow
pack of the winter and early spring. The percentage of pastures rated excellent
in this region is the highest that has been seen since the mid-1990s. East
of the Mississippi, pastures in the Southeast have improved steadily as
the spring has progressed. Ratings for the latest week are the best since
June 2013. Conditions in the Midwest are about the same as a year ago.
Northern Plains pasture
conditions are having an impact on feeder cattle prices. Prices for 600
pound feeder steers at South Dakota auctions last week were down $9 per
cwt. from a month earlier. Similar feeder steers in Montana were priced
$4 per cwt. lower than in mid-May. Weekly feeder cattle receipts at South
Dakota auctions as reported by USDA-AMS (Agriculture Marketing Service)
during the first week in June were down 12% from a year earlier. The next
three weeks have shown increases of 22, 102, and 146% respectively. Pasture
conditions in Nebraska, one state south of South Dakota, are much more
favorable. Whereas 53% of South Dakota’s pastures are rated poor or very
poor, only 8% of Nebraska’s pastures fall into the poor or very poor category.
Prices for 600 pound feeder steers in Nebraska in the latest week were
up $10 from mid-May. Moving a little further to the south, Oklahoma City
600 pound feeder steers prices moved up $3 per cwt during the last month.
Feeder cattle market
receipts across the nation in June continue to run well above a year ago
and conditions in the Dakotas and Montana are probably a factor. Auction
receipts this month are up 10% from last June. In May, auction receipts
were up 16% from the prior May.
26th: Bargaining Strength Rolling Over
Ag Center Cattle
The change in bargaining
strength can come quickly and dramatically as the past two weeks have demonstrated.
Movement from price leverage on the side of the cattle owner has quickly
changed to packer control and processing margins that are at all-time highs.
Trades at $137 have been eclipsed and replaced by sales under $120 in two
short weeks. While it might be easy to blame the quick decline on weak
sellers, the more likely culprit is building supplies.
Rolling over is as
much a state of mind as a statement of the balance between supply and demand.
Packer spin about the lack of need for more inventory and filled slaughter
slots are common. Some is just spin and some is a changing landscape that
involves more supplies and limited slaughter capacity. The facts are supportive
of the notion that most of the recent price decline has found a home in
the pocketbooks of the processors.
Two open questions
remain. How long will this newly found buy side bargaining strength last
and will the same rate of decline continue? The answer to the first
question is it will last so long as the packers manage the kill size to
keep the supply side on the defensive. The answer to the second depends
on the resolve of the sellers. The sellers can stop the decline anytime
just by saying NO. This, of course, risks a backup of numbers and more
trouble down the line.
Looming in the backdrop
of the current situation are some extraordinary influences: the JBS Bribery
scandal and the opening of the Chinese markets to U.S. beef. Chinese demand
for beef is swelling. In the past four years, imports of beef have increased
nine-fold, reaching 601,000 MT in 2016. This may only be the start and
an emerging middle class, anxious for more beef in their diets, may be
a catalyst for increased demand for U.S. beef and a balance to increasing
The future of the
world’s largest meatpacker remains unclear. Political wrangling in Brazil
has pitted the Batista family against an embattled President whose focus
of recent is mainly towards revenge. JBS has stated a desire to concentrate
future emphasis on the U.S. operations -- the centerpiece of their meat
empire. Meanwhile, they are disgorging almost a million head of feeding
capacity and no buyers have been announced. Rumors of U.S. plant closings
are fiction. Plants will stay open so long as processors are making $200/head.
The future for prices
for domestic cattle is not good in the near term. Nonetheless, there remain
opportunities and foremost is a place for more processing capacity. More
processing capacity would restore a more sharing balance in beef margins
between processors and live producers. Taking the mothballs off some of
the recently closed plants might make sense. Alternatively, making use
of new technologies for processing beef with magnetic imaging and robotic
cutting devices might create new opportunities for business disrupters.
Increased competition is always possible anytime one sector in beef production
gains too much leverage.
26th: Analysis of June Cattle on Feed Report
As of June 1, the
total inventory of cattle on feed in feedlots with +1000 head capacity
was estimated at 11.096 million head, almost 300,000 head (+2.7%) larger
than a year ago. This was the first time since January 2013 that the inventory
has surpassed 11 million head and the last comparable June 1 inventory
was in 2012. On feed supplies have increased recently as feedlots in the
last three months (Mar, Apr & May) have increased placements by 600,000
head vs. the comparable period a year ago. So while the front end supply
still looks relatively current, available inventory should start to increase
in August. The 120-day inventory on June 1 was down about 9% compared to
the previous year. The marketing rate in May was 17.7%, faster than the
previous years and in line with the five year. Based on fed cattle slaughter
so far in June, we think the marketing rate in June was near 18%, surpassing
both last year and the five year average. Robust marketings and the seasonal
decline in placements in February have contributed to the right front end
While there has been
a lot of talk about the surge in Mexico cattle imports recently, at this
point it looks like larger domestic calf supplies rather than big imports
are the main reason for the surge in placements. During the 13 weeks in
Mar, Apr and May, imports of feeder cattle from Mexico were 336,983 head,
about 34,000 head more than the previous year. However, imports of feeder
cattle from Canada during this period were down by a little over 50,000
so overall imports of feeder cattle in the last three months are down compared
to the same period a year ago.
Marketings in July
and August remain key although at this time it appears futures are trying
to price in a possible slowdown in retail beef features and slower product
movement. While this is possible, there are also a number of factors that
should continue to support beef demand this summer. Consumer income growth
remains good, the unemployment rate is substantially lower and higher equity/housing
markets have bolstered both household balance sheets and overall consumer
confidence. Retailers were quite adept at promoting beef this year, in
part because lower prices last fall and early this year provided an opportunity
to do so. Also, beef provides the opportunity to book higher dollar sales
while holding the meat margin together.
Beef packer margins
at this point remain excellent and this has encouraged them to maximize
fed cattle slaughter. Total cattle slaughter last week was reported by
USDA at 632,000 head, 4% higher than the previous year. One of the issues
that some readers have brought up, and its quite valid, is that more recently
the first USDA estimate of cattle slaughter has fallen well short of the
actual. For those not following the cattle market as closely, USDA provides
an estimate of daily slaughter based on numbers reported by larger plants.
In two weeks, USDA will issue the actual slaughter numbers (the same report
that also includes cattle weights) which tabulates all the slaughter data
reported by USDA inspectors from all plants. For the week ending June 10,
fed cattle slaughter was 512,000 head, almost 12,000 head (2.4%) higher
than the initial estimate. Since March, the short fall in first estimate
reporting vs. actual has averaged 6,657 head/week.
24th: The Worst Is Yet To Come For The Cattle Market
Rich Nelson --
The monthly Cattle
on Feed fulfilled its bearish promises. USDA counted 12.2% more placements
than last year in May. That was over the 10.4% increase the trade was expecting
(ALDL +14.0%). At 2.119 million head, it was 230,000 head larger last year.
Placements have been running at a good quick for some time, higher than
last year in six of the past seven months. Over the past seven months they
have added 1.324 million head more than last year. May placed cattle are
ready for slaughter from November through February. The bearish fall supply
is already set in stone. Now, we are working on extending this problem
into the end of the year.
The number of finished
cattle leaving feedlots in May totaled 8.8% over last year. That was just
over the average +8.5% guess (ALDL +8.1%). This marketing number was artificially
inflated by 4% as there was one extra weekday in May 2017 vs. 2016. With
the placement and marketing numbers mentioned, and including the never-mentioned
fourth category called other disappearance, the number of cattle on feed
as of June 1 totaled 2.7% over last year. That is an increase over the
2.0% higher number posted May 1.
There are various
calculations that we can do to off these numbers. One of them is a calculation
of cattle that have been in feedlots for over four months, a measure of
marketing currentness. We calculate there are 3.566 million head as of
June 1 that have been in feedlots for over 120 days. That is 9% fewer than
last year. That sounds bullish, but let’s not forget this same calculation
was 16% smaller on March 1 and 15% smaller than last year on April 1. There
has been a measurable change in the feedlot population. You can bet this
will continue to worsen into fall. Within three months’ time, we will likely
be over last year in this metric.
The charts still
show the double-top formation on the August contract. It implies pricing
down to 106.00.
We are not going
to get bullish about the recent USDA suspension of Brazilian beef imports.
After seeing an 11% rejection rate on recent shipments from Brazil, U.S.
authorities enacted a ban on all fresh beef from them. The normal rejection
rate is around 1%. USDA officials suggested a high rate of abscesses and
unidentified foreign material. Brazil’s ag minister is planning a trip
to the U.S. to try to push for a lifting of the suspension. The reason
we don’t call this clearly bullish is that imports from Brazil, of all
types of beef, total only 5% of our import total.
Thursday’s Cold Storage
report was great to see. End of May beef stocks at 412.87 million tonnes,
were lower than the 438.6 average trade guess (ALDL 436.348). We drew down
46 million in stocks last month, the biggest May drawdown ever.
On Thursday, Chinese
authorities announced they accepted the first load of U.S. beef in 14 years.
We hope to see this grow in the coming weeks and become a market-moving
issue in a few months.
This market had so
many weeks of winning, on the bull side, that current pricing is almost
shocking. Cash peaked at $144/$145 seven weeks ago. This week’s low price
was $119. That is the lowest since the first week of the year. Given the
fact that we have not even started to get into the rough patch waiting
for us from late July through the end of the year, it won’t be hard to
say we really have not gotten anywhere into the worst of things. This call
will come a few months from now. Our $114 to $117 call for the August contract
is likely a bit too high. We remain bearish and will hold the $120 to $123
hedges advised in the first seven days after the main market peak on May
4. We will strongly advise producers following this plan to hold those
hedges until the cattle are sold.
23rd: National Feeder & Stocker Cattle Weekly Summary
Direct Video/Internet Total
Compared to last
week, steers and heifers sold mostly 2.00 to 8.00 lower. Yearlings and
heavy weight steers were steady to weak with lower undertones noted. The
supply of feeder cattle is fairly tight as there is competition in the
marketplace with farmers trying to buy cattle at lower prices, especially
farmer feeders with old crop corn to feed. Live and feeder cattle futures
started the week by closing moderately lower and continued with a mostly
downward trend for much of the week before seeing slight gains on Friday.
Compared to last Friday, June live cattle futures ended the week 2.50 lower
at 119.20 and August 2.90 lower at 115.27. Feeder cattle futures were 2.92
lower at 144.95 for August and 2.95 lower at 144.40 for September. Although
the market lost support from the board throughout the week, there were
still positive high-notes out in the field, including the sale of 200 head
of home raised steers weighing 770 pounds at 178.00 in Valentine, Nebraska
on Thursday. Throughout the week, cash cattle trade has moved lower and
at a significantly quick pace. In the Southern Plains live trades were
5.00 to 11.00 lower from 122.00-123.00. In Nebraska live trades were 9.00
to 11.00 lower from 121.00-123.00 and dressed trades were 7.00 to 17.00
lower from 193.00-198.00. In Colorado live purchases were 9.00 to 10.00
lower from 122.00-123.00. Colorado’s week-to-date volume is 11,236
so far, the third largest head count in over six years.
Along with this,
it must be noted that in NASS’s Livestock Slaughter Report the average
dressed carcass weights of steers and heifers have dropped 25 pounds since
last year. Since the previous report covering April, steer carcasses have
decreased 13 pounds and heifer carcasses have decreased 20 pounds, indicating
feedlots are staying current and “green” cattle being sold for slaughter.
The U.S. cattle industry experienced many market moving headlines throughout
the week. On Tuesday, an announcement from the largest feedlot operator
in the U.S. as they disclosed their divestment plan. The plan included
the dispersal of several major feed yards throughout the country. Also,
on Thursday it was announced that the U.S. would suspend beef imports from
Brazil, mainly due to safety and health concerns. Drought remains persistent
in the upper Great Plains, impacting the states of Minnesota, Montana,
and the Dakotas. Producers have requested the use of Conservation Reserve
Program (CRP) acreage for emergency grazing, as well as haying. Although
the area has received recent rain showers, there will be little impact
on long-term conditions and after a harsh winter, there is a shortage in
the hay supply. If the use of CRP land is not granted or much needed rain
is not received, producers will face tough decisions, including the options
of decreasing their herd size or driving several hundred miles to purchase
hay. The most recent five-day forecast remains dry for the area, which
may be hard on livestock and crops. Throughout the north and southeast
portions of the Midwest, scattered rain showers are expected, with mild
According to this
week’s Crop Progress Report, corn and soybeans are rated with 67 percent
in the good to excellent categories, with soybean plantings now 96 percent
complete. The month of May saw large volumes of feeder cattle run through
auction barns. This is credited to the higher futures and cash cattle trade.
Cattle on Feed was released this afternoon with numbers that were slightly
above the estimates. Cattle on feed June 1 totaled 103 percent, placed
on feed during May totaled 112 percent, and fed cattle marketed in May
totaled 109 percent. Yesterday NASS’s Cold Storage Report was released,
which concluded that total red meat supplies in freezers is down 5 percent
from last month and 7 percent from last year. Total pounds of beef in freezers
is down 10 percent from last month and down 11 percent from last year.
For pork, frozen supplies are slightly lower than last month and down 4
percent from last year, with the stock of pork bellies down 6 percent from
last month and 59 percent from last year. The Choice-Select spread began
to recede this week, closing today at 23.03, down 7.01 from last Friday.
For the week, Choice boxed-beef closed 10.09 lower at 239.75 and Select
closed 3.08 lower at 216.72. Auction volume this week included 57 percent
weighing over 600 lbs and 42 percent heifers.
23rd: Shootin' the Bull Weekly Analysis
|In my opinion, the
fat cattle futures have made a 5 wave move down from the contract high
per respective contract month that is anticipated to terminate the C wave
of major wave 4 at this weeks low. The current conflicting fundamentals
between supply/demand are thought to be the production of the wave 4.
Wave 4 is a pause in the main trend in which the price of a market supersedes
the fundamentals at present. Hence a cooling off time frame to allow
fundamentals and price time to sort out their differences. I've noted
this week the extremes cattle prices have taken when moving higher in comparison
to when they move lower. It is hands down the upside price action
is much more prominent than the downside price action. My analysis suggests
that wave 5's termination will help to be confirmed upon a trade above
$114.50 October. This area, per respective contract month, is the
June 14th and 15th's low and the 21st's high which is the minor wave 3
of C low and top of what may be the minute sub-wave 4. When you look
at the charts on these dates, you will see the area of interest. Once through
that, there is an intra day gap on the October and a full fledged gap on
the August that I anticipate traders to shoot for. I urge you to
not be quick to be a seller were this rally to materialize until the determination
can be made whether it is an impulsive move that begins the wave 5 rally,
or a 3 wave move that suggests further sideways to lower trading.
My analysis suggests to anticipate the termination of the wave C of major
wave 4 with a major wave 5 to a new contract high anticipated. Were
the wave C termination be the $111.15 October low, a wave 5 target is projected
to $129.52 . Via the Moore Research, the August and October contracts
are no strangers to moving higher after the 1st of June. With the
extent of recent price movement lower, coupled with the indecisiveness
of the fundamentals, I urge extreme caution being short down here.
Lastly, I continue to perceive the industry as a whole is undergoing a
change. This change is anticipated to keep the upward movement going
for sometime to come. The increase of domestic demand and anticipated further
demand from exports is consuming the supply at a faster rate than most
ever anticipated. While we may still have significant tonnage to
chew through, with the help of only 10% of the 3.2 billion Chinese
that will soon be eating US beef, this may consume product at an even faster
The basis to June
has been aggregated. With a $121.00 cash trade this week, and a $119.40
close of June today, next week will be little more than narrowing the $1.60
spread. So, did cash come to futures, futures to cash, or meet in
the middle? Looks like they fell literally simultaneously week to
week with price visibly falling on the futures and theoretically on the
cash until the lower cash trade was established. I can't recall a
more self fulfilling prophecy to have materialized as this time.
The urging of bearish analyst, much more widely followed than me, to sell
the futures discount regardless, helped to embolden the packer to lower
bids. Perception and psyche appears to have played a much more important
role in this decline than actual numbers. In my opinion only, the
marketing's and kill increases tells us demand is robust. Potentially
much more robust than supply burdensome. However, the sole focus
on supply continues to plague producers.
Feeder cattle well
out performed the fats this week with most not having to revisit the low
made on Tuesday as did the fats. The abrupt and significant change
in basis over the past three weeks has been a stunner for feeder cattle
buyers. What once appeared to be a significant premium for feeders
in the future has turned into buying them for $2.00 to $3.00 under the
index with the most favored January contract still with a $11.00 positive
basis. I recommend feed yard managers take action with this spread
while still this wide. A trade above the $145.00 area August will
be a critical pivot point. The $145.00 fulcrum is the same dates
as the fats. With it seemingly that cash feeders have sustained their
higher trade in sale barns, yard managers may be quicker to want to own
cattle on paper than in the flesh for the time being. Like the fats,
it is perceived a 5 wave move down has been made. This 5 wave structure
is believed to be the C wave of a major wave 4 correction. Were the C wave
termination be the current $140.77 low, a wave 5 target is projected to
Grain traders have
committed to there being no risk of crop failure or demise this year.
Pushing corn to a new low for the year by a half a cent, there is zero
weather premium or any other premium to potentially offset something occurring.
It appears to me a lot like putting a bull in the pen and turning your
back on him because you think he's tame. Nonetheless, traders appear
willing to increase risks by selling a market with a perceived intrinsic
value of $3.50 and unlimited upside potential.
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
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
23rd: Cattle on Feed Report
Cattle on Feed Up 3 Percent
Cattle and calves
on feed for the slaughter market in the United States for feedlots
with capacity of 1,000 or more head totaled 11.1 million head on June 1,
2017. The inventory was 3 percent above June 1, 2016.
Placements in feedlots
May totaled 2.12 million head, 12 percent above 2016. Net placements
were 2.05 million head.
During May, placements
of cattle and calves weighing less than 600 pounds were 400,000 head, 600-699
pounds were 315,000 head, 700-799 pounds were 529,000 head, 800-899 pounds
were 550,000 head, 900-999 pounds were 235,000 head, and 1,000 pounds and
greater were 90,000 head.
fed cattle during May totaled 1.95 million head, 9 percent above 2016.
June Cattle On Feed Report
totaled 70,000 head during May, 5 percent
Feed Inventory in 1,000+ Capacity Feedlots as of June 1st
Millions of Head
Cattle Placed on Feed in 1,000+ Capacity Feedlots in May
Millions of Head
Cattle Marketed from 1,000+ Capacity Feedlots in May
Millions of Head
Feed by State as of June 1st
23rd: Federal Judge Bars Involuntary Collection of Montana Beef Checkoff
Great Falls, Mont.
-- On June 22, the United States District Court for the District of Montana
affirmed a ruling that the U.S. Department of Agriculture’s beef checkoff
program, as currently administered, violates the First Amendment. The District
Court put in place a preliminary injunction prohibiting the private Montana
Beef Council from retaining beef checkoff funds without the payers’ consent.
The court took action
after a magistrate previously recommended the injunction in December 2016,
agreeing with plaintiff in the suit - the Ranchers Cattlemen Action Legal
Fund United Stockgrowers of America (R-CALF USA) - that the checkoff was
being run unconstitutionally.
“The Government violates
the First Amendment when it compels a citizen to subsidize the private
speech of a private entity without first obtaining the citizen’s ‘affirmative
consent.’ … What distinguishes unconstitutional subsidies for private speech
from constitutional subsidies of government speech is not the content of
the speech, but rather that the latter is ‘democratic[ally] accountab[le].’
… The USDA does not control how the Montana Beef Council spends the money
that it obtains from the federal beef checkoff program,” the court wrote
in its decision.
The beef checkoff
is a federal tax that compels producers to pay $1 per head every time cattle
are sold, half of which is used to fund the advertisements of private state
beef councils, like the Montana Beef Council. The Montana Beef Council
is a private corporation whose members include representatives of the largest
multinational beef packers. The council promotes the message that there
is no difference between domestic beef produced under U.S. food safety
laws and beef produced in foreign countries. It has paid for advertisements
for the fast-food chain Wendy’s, for example, to promote hamburgers that
use North American beef, meaning beef that can come from anywhere on the
continent, but not necessarily Montana or even the United States.
“For well over a
decade R-CALF USA members fought to reform what we considered a terribly
mismanaged national beef checkoff program. And, for well over a decade
we faced an impenetrable wall of top-ranking USDA officials whose connections
to the multinational meatpackers’ lobby caused them to steadfastly oppose
every single reform proposal we advanced”, said R-CALF USA CEO Bill Bullard.
“Yesterday, after a meaningful, law-based evaluation of our concerns, we
won. We hope this will be just the first step of correcting over a decade’s
worth of beef checkoff program mismanagement.”
Senators Cory Booker
of New Jersey and Mike Lee of Utah have put forth bipartisan legislationthat
would seriously reform the checkoff programs to make them more transparent
and accountable to producers.
David Muraskin of
Public Justice, lead counsel for the plaintiff in the case, said that the
District Court’s decision will “finally provide Montana ranchers leverage
to control how their money is spent and their goods are advertised. Without
government accountability and control the checkoffs amount to nothing more
than a massive transfer of wealth from farmers and ranchers to multinational
corporations, which is against our values and laws.”
“For too long the
big meat packers and the National Cattlemen’s Beef Association have used
their allies in Washington to squelch the voices of rural America,” said
J. Dudley Butler, of the Farm and Ranch Law Group. “We hope this is a step
towards fairer treatment of farmers and ranchers and a more accountable
R-CALF is also represented
by Bill Rossbach of Rossbach Law, P.C. in Missoula, Montana.
23rd: Drought in North Central States
have swept the northern reaches of the Great Plains this year, parching
grazing pastures and grain fields while demonstrating how quickly severe
weather can upend commodity markets. Prices for spring wheat, grown in
the area, have soared 16 percent this month as volatility jumped. While
the rush of cattle to auctions probably won’t have an immediate impact
on U.S. meat supplies, some of the ranchers who are being forced to sell
their animals early or pay more for feed may see their incomes suffer.
“Probably more than
70 percent of the cows that sold would have ended up as hamburger later
this year -- the drought sped up the liquidation,” Hellwig said.
The dry conditions
spurred the National Farmers Union along with groups from Montana, North
Dakota, South Dakota and Minnesota to send a letter to U.S. Agriculture
Secretary Sonny Perdue this week requesting that land in a federal conservation
program be released for emergency grazing or haying. As some ranchers trim
herds, others are driving hundred of miles to find hay, the letter said.
At the start of the year, the four states held about 10.7 million cattle,
or 11 percent of the national cattle and dairy herd, government data show.
About half of South
Dakota, two-thirds of North Dakota and a quarter of Montana are in moderate
drought or worse, according to U.S. Drought Monitor data as of June 20.
While some recent showers have eased parched conditions in North Dakota,
there’s little rain expected in the next few weeks for most of the northern
regions, said Brad Rippey, a meteorologist with the U.S. Department of
Agriculture in Washington.
Some cattle have
been sold to ranches in Wyoming and Nebraska, where grazing conditions
were more favorable, said Tim Petry, a livestock marketing economist at
North Dakota State University. Better pastures in the rest of the U.S.
will also limit the impact of increased cattle auctions on meat supplies
and prices, he said.
In eastern Montana,
more than double the amount of cattle were sold at auctions at Sidney Livestock
Market Center when compared with a typical June, according to Tim Larson,
the manager. Most farmers in the area have enough grass for the summer,
while persistent dryness could cause a shortage of the hay supply that
animals rely on in the winter months.
“Come October or
November, that’s where we’re going to see substantial numbers and things
change,” Larson said.
23rd: Analysis of USDA Cold Storage Report
Total supplies of
beef, pork, chicken and turkey in cold storage at the end of May were 2.324
billion pounds, 0.6% less than a year ago but still 3.1% higher than the
five year average. Cold storage stocks of all major meat proteins at the
end of May were about the same as where they were the previous month. In
the past five years cold storage stocks have increased an average 1% from
April to May. See page 2 for full details.
price increases, especially for fat beef trimmings, likely caused end users
to rely heavily on their freezer inventories. Boneless beef stocks at the
end of May were 377.8 million pounds, 11.2% less than a year ago and 8.3%
lower than the five year average. The drawdown in stocks in May was 9.1%
when in the last five years the average drawdown was 4%. Beef imports continue
to track under last year, which also has reduced the supply of lean boneless
beef going into cold storage. Sharp spike in middle meat cuts also caused
end users to liquidate their stocks of beef cuts, which dropped 18% compared
to the previous month. This is not unusual as end users had been accumulating
inventories in March and April in anticipation of better demand in May
and decided the time was right to unwind those freezer hedges. Total beef
inventories at 412.8 million pounds down 10.6% from last year and 10% under
the five year average. The lower inventories continue to be supportive
for beef pricing in the short term. Beef exports continue to be generally
positive although the recent price spike has reduced volumes shipped compared
to the torrid pace earlier in the year.
the tight belly stock situation remains positive for the pork market in
the short term, inventories of other pork products increased at a faster
pace. Total pork in cold storage at the end of May was 592.1 million pounds,
3.9% lower than a year ago and 5.8% less than the five year average. Pork
inventories in May were 0.5% less than the previous month when compared
to an average 4% drawdown in stocks during the past five years. The trend
in cold storage for the next three months will be critical. Pork production
is expected to ramp up higher in Q3 and it is necessary to get into that
quarter with relatively current pork stocks. If product starts to accumulate
in the freezer, be this because of slower exports or because high prices
kill some demand in late summer, it could put further downward pressure
on fall pork prices. Ham inventories at the end of May were 144.1 million
pounds, unchanged from a year ago and 3.5% higher than the five year average.
23rd: U.S. Halts Brazilian Fresh Beef Imports Due to Safety Concerns
Secretary Sonny Perdue on Thursday announced the suspension of all fresh
beef imports from Brazil because of recurring concerns about the safety
of the products.
Since March, USDA’s
Food Safety and Inspection Service (FSIS) has been inspecting all meat
products arriving from Brazil and has refused entry to 106 lots of beef
-- about 1.9 million pounds -- due to public health concerns, sanitary
conditions and animal health issues, USDA said. The rejection rate of 11
percent of Brazilian fresh beef is substantially higher than the 1 percent
rejection rate for shipments from the rest of the world, the agency noted.
The suspension will
remain in place until the Brazilian Ministry of Agriculture takes corrective
action that USDA finds satisfactory, USDA said.
Perdue said the action
was necessary to safeguard the nation’s food supply. “Although international
trade is an important part of what we do at USDA, and Brazil has long been
one of our partners, my first priority is to protect American consumers.
That’s what we’ve done by halting the import of Brazilian fresh beef,”
Perdue said in a statement.
USDA said its decision
supersedes the Brazilian government’s own suspension of five facilities
from shipping beef to the United States.
Five beef plants
in Brazil -- three from Marfrig, one from JBS and one from Minerva -- had
their permits to export beef to the United States suspended last week by
the Brazilian government after U.S. sanitary officials found non-conformities
in reactions to vaccination against foot-and-mouth disease (FMD).
The vaccine can sometimes
cause reactions that provoke abscesses in the meat, the Brazilian association
for meat exporting companies, ABIEC, said in a statement to the press.
JBS said in a statement
that its plant in Campo Grande had its authorization suspended. “The company
informs that it has already forwarded the clarifications requested through
ABIEC and emphasizes that no problems were found regarding plant facilities
or product quality,” JBS said.
Marfrig had plants
in Promissão, São Gabriel and Paranatinga suspended. “The
company clarifies that it is already taking all necessary steps to meet
the requirements of the American market in its production processes ...
aiming for the return of these plants to export for this market,” it said.
Minerva, which had
exports from its Palmeiras de Goiás plant suspended, said the non-conformity
found in the exported meat was “vaccine marks” in some cuts of beef that
do not pose a risk to human health.
“The company, which
follows the most stringent standards of food quality and safety in all
countries where it operates, informs that it has intensified controls to
resume operations of this plant to (export to) the U.S. as soon as possible,”
ABIEC said the suspended
plants represent “a minimal fraction of the national production of animal
protein,” and the Brazilian beef industry “follows the highest standards
of sanitary surveillance and quality.”
22nd: USDA Livestock Slaughter Report
Record High Total
Red Meat and Pork Production for May
meat production for the United States totaled 4.28 billion pounds in
May, up 7 percent from the
4.00 billion pounds
produced in May 2016.
at 2.16 billion pounds, was 6 percent above the previous year. Cattle
slaughter totaled 2.75 million
head, up 9 percent
from May 2016. The average live weight was down 26 pounds from the previous
Veal production totaled
6.3 million pounds, 6 percent above May a year ago. Calf slaughter totaled
39,300 head, up
11 percent from
May 2016. The average live weight was down 11 pounds from last year, at
Pork production totaled
2.10 billion pounds, up 8 percent from the previous year. Hog slaughter
totaled 9.95 million
head, up 8 percent
from May 2016. The average live weight was down 1 pound from the previous
year, at 282 pounds.
Lamb and mutton production,
at 11.8 million pounds, was down 9 percent from May 2016. Sheep slaughter
180,300 head, 3
percent below last year. The average live weight was 131 pounds, down 9
pounds from May a year ago.
January to May
2017 commercial red meat production was 21.0 billion pounds, up 4 percent
production was up 5 percent from last year, veal was down 2 percent, pork
was up 3 percent from last year, and lamb and mutton production was down
22nd: USDA Cold Storage Report
As of May 31st:
Total red meat
supplies in freezers were down 5 percent from the previous month and down
7 percent from last year.
Total frozen poultry
supplies were up 4 percent from the previous month and up 4 percent from
a year ago.
Total pounds of beef
in freezers were down 10 percent from the previous month and down 11 percent
from last year.
Frozen pork supplies
were down slightly from the previous month and down 4 percent from last
Stocks of pork bellies
were down 6 percent from last month and down 59 percent from last year
Total stocks of chicken
were down 1 percent from the previous month and down 3 percent from last
Total pounds of turkey
in freezers were up 13 percent from last month and up 17 percent from May
22nd: Futures Resume Down; Uncertainty Mounts
Cassie Fish --
Most of the negotiated
trade occurred yesterday, though there are some dribbles of trade continuing
today as cheap as $120. Cash prices are $6-10 lower than a week ago and
some cattle were left unsold. Even today there are rumors of trades as
much as 2 weeks out $2-3 lower than this week. Whether true or not, the
sense that the market is moving away from any offers is palpable.
The frustration that
cash market sellers are experiencing is high. It is obvious packers are
getting their needs met easily outside the negotiated pool of cattle and
with boxed beef values finally in decline with plenty more to come, there
is incentive only to buy a few and back up if a packer.
Margins are well
over $200 per head this week and it appears that packers may be able to
keep cattle costs declining faster than boxed prices- or that is the plan
anyway. Once the choice cutout has sunk back into the $230s, it will be
key to see whether cheaper prices bring in a round of buying. Do cheaper
prices not trump the hot, slow days of July or does the cutout decline
back to $220?
This week’s kill
is expected to edge up over 630k with a shift on Saturday scheduled at
a few more plants. A repeat of that slaughter level is expected to continue
next week too, ahead of the holiday-shortened kill week after next.
Futures have concluded
their short-term rally which began Tuesday late session and continued most
of yesterday. But $6 was too close for comfort for Aug LC yesterday, and
as cash prices eroded, the rally began to fail. Today’s gap-lower opening
was all the evidence needed that, despite being oversold, futures are in
trouble. Tuesday’s lows have been taken out, the charts look bearish and
there is absolutely no reason to pick a bottom here.
Aug LC open interest
dropped 2k yesterday, but that is a drop in the ocean of huge long fund
ownership of Aug LC. Until traders get a look at the next Commitment of
Trader’s report, it’s only a guess as to how much the funds have liquidated.
Today’s action doesn’t ‘feel’ like a fund selling deluge at all, which
if correct, does not bode well.
It’s more of the
same and same is bearish.
20th: Brazil's JBS Plans to Sell Five Rivers & Other Assets
Brazil's JBS S.A.
announced on Tuesday it has submitted an asset divestment program to its
board of directors, in which it plans to sell Moy Park, Five Rivers Cattle
Feeding and a 19.2 percent stake in Brazilian dairy company Vigor Alimentos
to raise BRL6 billion ($1.82 billion).
“The divestment program
will reduce the company's net debt and, consequently, its financial leverage,
strengthening JBS' financial structure,” the company said in a statement
The world's largest
beef processor added that its divestment plan considers “non-core and less
strategic assets.” The $1.82 billion that JBS plans to raise by selling
the assets would be in addition to $300 million from the sale of the company's
beef operations in Argentina, Paraguay and Uruguay to Minerva, announced
on June 6. The divestment plan still has to be approved by the board and
by shareholder BNDESPar, the investment arm of Brazil's national economic
development bank BNDES.
The holding company
controlling JBS, J&F, signed a leniency agreement on June 5 to pay
a BRL10.3 billion ($3.3 billion) fine to settle charges related to corruption
and payment of bribes by its controlling shareholders to Brazilian politicians.
Since then, the company's controllers have been looking for ways to raise
funds in order to reduce the group's debt.
JBS bought Irish
poultry producer Moy Park from Marfrig Global Foods in June 2015 for $1.5
billion, as part of JBS' plans to expand business in Europe and improve
Five Rivers Cattle
Feeding is a wholly-owned subsidiary of JBS, with combined feeding capacity
of more than 980,000 head of cattle, and farms located in Colorado, Kansas,
Oklahoma, Texas, Arizona, and Idaho. The company also manages a 75,000
head capacity feed yard in Canada, according to information on its website.
Vigor Alimentos is
one of Brazil's largest dairy companies, controlled by J&F.
20th: Impact of China on U.S. Cattle & Beef Markets
Glenn Selk, Oklahoma
State University Extension
Step one of U.S.
beef exports to China is completed. The first step of opening any international
market is the political process of negotiating access and agreeing on the
conditions and stipulations of that access. Step one establishes the game
and the rules of the game.
Let the game begin.
Step two follows with the economic process of markets determining the value,
size and timing of trade. The restrictions and requirements for U.S. beef
to enter China mean that initially only a small portion of U.S. beef production
will qualify for export to China. Increasing the qualified supply
will necessarily involve additional costs for the industry. The pace of
export growth will depend on the value of U.S. beef in China and that,
in turn, will depend on which products (cuts and quality) are demanded.
Exporters will likely move rather cautiously initially until the market
values and export procedures become more certain. The additional costs
to qualify for export are typically incurred for entire animals (carcasses)
even though only certain products are exported, meaning that the export
value must be sufficient to cover the additional costs for non-exported
portions of the carcass.
In general, not much
is known about the composition of Chinese demand for U.S. beef. What mix
of middle versus end meats; Choice versus Select; and offals will make
up Chinese demand for U.S. beef? However, given that unofficial flows
of U.S. beef have been entering China in recent years, some beef packers
may have insight, at least initially, into beef product demand in China.
It will likely be a moving target for many months.
product flows pose additional questions about the timing and volume of
beef exports for the first few weeks or months. It is possible that unofficial
flows will convert quickly into official exports in which case apparent
initial volumes of exports to China may simply displace export volume currently
being transshipped through other countries. It is possible that the unofficial
flows will continue and be augmented by new official exports. It will be
important to look comprehensively at export volumes across countries to
understand the net effect. It is even possible that China will move quickly
and aggressively to stop unofficial flows which could happen before official
flows have developed and could actually result in a temporary reduction
in net beef exports. The next few weeks/months will no doubt be very dynamic.
There are many unknowns
but it seems unlikely that beef exports to China will have a large noticeable
effect on cattle and beef prices and beef production in the U.S. initially.
Over time, with growing market share, prices for particular products might
be affected depending on the quantity, quality and specific products demanded
in China. More general price effects on beef and perhaps cattle will depend
on the dynamics of demand relative to supply for U.S. beef products in
the Chinese market. The U.S. industry will benefit over time from some
combination of higher prices and/or increased export volumes as the Chinese
market grows. Beef exports to China could be a very big deal in the future
but will likely start fairly slowly.
20th: Ranchers Sue to Return Country-Of-Origin Labeling
SPOKANE, Wash. (AP)
— Ranchers on Monday sued the U.S. Department of Agriculture, seeking to
force meat to again be labeled if it's produced in other countries and
imported to the United States.
The lawsuit, filed
in federal court in Spokane, seeks to overturn a March 2016 decision by
the Department of Agriculture to revoke regulations requiring imported
meat products to be labeled with their country of origin. That change allowed
imported meat to be sold as U.S. products, the lawsuit said.
want to know where their food comes from," said David Muraskin of Washington,
D.C., an attorney for Public Justice, which filed the lawsuit. "With this
suit, we're fighting policies that put multinational corporations ahead
of domestic producers and shroud the origins of our food supply in secrecy."
Between 2009 and
2016, the USDA required country-of-origin labeling on meat.
The lawsuit said
the change violated the nation's Meat Inspection Act, which required that
slaughtered meat from other countries be clearly marked.
The Department of
Agriculture on Monday declined to comment on a matter that is in litigation.
The lawsuit was brought
by the Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America,
the nation's largest group of independent cattle producers, and the Cattle
Producers of Washington.
Bill Bullard of United
Stockgrowers said the labeling is essential to allow Americans to support
U.S. ranchers. "Empowering consumers to buy American beef with country
of origin labels will strengthen America's economy," Bullard said.
use the lack of clear labels "to import more beef from more foreign countries,
including countries with questionable food safety practices," he said.
The lawsuit asks
the court to vacate USDA's current regulations, which allow corporations
that import beef and pork and other products into the United States to
label that meat "Product of USA."
Beth Terrell, another
attorney for Public Justice, which is a nonprofit legal group, noted that
President Donald Trump initially expressed support for country-of-origin
labeling, but he has since backed off. "Both consumer advocates and domestic
producers were disheartened by President Trump's reversal," Terrell said.
More than 800 million
pounds of foreign beef is imported into the United States each year, Public
labeling, "domestic ranchers and farmers tend to receive lower prices for
their meat because multinational companies can import meat and misleadingly
present it as homegrown," Public Justice said in a news release.
19th: Amazon -- The Disrupter
Ag Center Cattle
Kroger, the nation’s
largest food chain, reported earnings last week that failed to meet expectations
and crashed the stock 20%. Kroger cited increased competition and variable
food prices as reasons for the declines. They also forecast lower earnings
for the coming year. This was only the start of their problems. On Friday,
the internet giant Amazon announced the purchase of Whole Foods, the organic
high end grocer with 450 stores, in an all cash transaction of $14 billion
Amazon has disrupted
retailing in our country and brought online purchasing and quick delivery
to every household and business. Amazon delivers both convenience and price
efficiencies to the marketplace and the growth has been astronomical. The
market viewed the purchase of Whole Foods favorably and the stock price
increase Friday caused the increase in the market cap Friday to be equal
to the purchase price of Whole Foods -- meaning one might view the purchase
as being free.
Amazon is no stranger
to the food business having struggled with a food delivery service called
Amazon Fresh for several years with a renewed effort this past two years.
Pilot projects in Seattle, Amazon’s home town, accompanied with forays
into L.A., New York and other cities showed a seriousness of intent and
now they have demonstrated a full commitment. It poses an irony that the
company that upended bricks and mortal retailing is now purchasing bricks
and mortar. Recent moves experimenting with bricks and mortar stores are
aimed at both distribution centers and as retail stores. Amazon Book stores
have popped up across the country and model grocery stores are being tested
for new technologies involving food distribution, inventory and marketing.
Amazon has stated
the possibility of new grocery stores allowing the customer to pull items
off Smart shelves, place them in Smart baskets and totally eliminate the
check out line. This approach not only brings total inventory control to
the grocer but an important check out convenience to the customer saving
large costs in the process.
There may even be
larger disrupter influence of the Amazon purchase of Whole Foods. It may
cause a rethinking of the entire process of food distribution. There is
little reason to believe in today’s connected world that shortening up
the delivery speed and distance from food production to consumer is not
possible. Today almost all major grocers ship to distribution houses where
food is aggregated, priced and delivered to the stores. There may be delivery
mechanisms for further processing of items like meats at the plant and
shipping directly to the consumer’s home.
One can see a beef
plant where primal cuts are sent to further processing for portion control
cuts ready for consumer consumption. Those cuts could be marketed over
the web and delivered to homes, fresh or frozen and ready for consumption.
The selection could also include cooked or pre-seasoned offerings designed
to match consumer taste. This might revive an ago old practice of daily
milk delivery. The path forward in retail marketing of food means more
choices and cheaper prices for consumers and all of that is positive for
19th: An Offal Lot of Potential
-- Farm Bureau Economist
On June 12, 2017,
the final protocols were released for shipping U.S. beef to China. Of the
requirements listed, a few highlights include:
Beef and beef products
must be derived from cattle that were born, raised, and slaughtered in
the U.S., cattle that were imported from Canada or Mexico and subsequently
raised and slaughtered in the U.S., or cattle that were imported from Canada
or Mexico for direct slaughter;
Cattle must be traceable
to the U.S. birth farm using a unique identifier, or if imported to the
first place of residence or port of entry;
China also bans the
use of growth promotants, feed additives, and chemical compounds; and will
conduct residue testing at port of entry on shipments of beef. This is
one more important step forward to market access that could have a lot
of potential for U.S. beef producers.
Beef and beef products
must be derived from cattle less than 30 months of age;
China has about
1.4 billion people and over the last five years, beef consumption has been
climbing along with imports. Up until 2011 beef imports to
China struggled to reach more than 50,000 tons, but in 2012 imports doubled.
Over the next four years, imports would increase nine-fold, reaching 601,000
tons in 2016. U.S. market access was eliminated in 2003 as a result
of BSE and over the last 14 years, Australia has taken the lion’s share
of the business in this growing market, followed by Uruguay. Figure
1 shows the historic rise in beef imports over the last 20 years.
China is expected
to become the largest beef destination in the world and has the potential
to be a major destination for U.S. product. The market in China has
changed substantially in those 14 years. Back in 2003, the U.S. supplied
80 percent of Chinese beef imports according to Global Trade Atlas.
Of those 80 percent, more than 20 percent was offal, items such as tongues,
kidneys, livers etc. As the demand for beef has grown in China, the
amount of offal imports has grown as well but has been vastly outpaced
by the rise in muscle cuts. In 2011 offal accounted for 25 percent
of total beef imports to China, and by 2016 that number dropped to 4 percent,
even though offal imports have increased three-fold since 2011. Figure
2 shows the change in meats versus offal imports.
Offal Market in
In 2003 China was
the seventh largest destination for U.S. frozen offal, and the sixth largest
destination for tongues. Today, Mexico and Japan are the top two destinations
for offal. The U.S. ships almost all offal produced overseas.
It is a critically important piece of the carcass value to find a home
for these by-products that would not be used by the domestic market.
One important thing to note is that as carcass weights have gotten heavier
and dressing yields improved, indicating more meat has become available
on a per carcass basis. However, it does not change the volume of
organs. Cattle still have one tongue, one liver, two kidneys etc.
The numberof offals available is directly tied to number of head moving
through the system. The U.S. has rather consistently exported between
250 to 300 thousand metric tons of offal over the last 14 years.
The ban on the use
of growth promotants, feed additives, and chemical compounds greatly affects
how much potential the Chinese market has. Because these production
tools are accepted in the U.S. as a science based production practices,
producing for the Chinese market will likely need to carry a premium to
drive producers to adopt a production system to fit that market.
The question then becomes at what price and volume will Chinese consumers
pay, and how sensitive are they to price fluctuations. These are questions
that the market will determine, but should be interesting to watch it unfold.
this will further segment the market, driving farmers and ranchers to producea
specific product for a specific customer. The number of producers are interested
in satisfying that market may depend on the cost of changing and adopting
new on farm traceability protocols as well as new management programs
to achieve results without the use of banned substances. In the end, the
premium attached to the Chinese market must warrant those changes.
The Chinese requirements
will not be something that U.S. meat packers can sort in the cooler.
Product will need to be grown to meet these specifications, starting at
the cow-calf level to move through the system. This will slow the
potential ramp up of any additional exports to China. Only a small
proportion of commercial beef production would fit the current parameters
surrounding this protocol.
This also could have
some interesting implications in the offal market. As mentioned earlier,
offal production is determined by the number of head slaughtered.
A rapid increase in the demand for these products would require large numbers
of cattle to fit the parameters in a different way than a rise in the demand
for muscle cuts. These production requirements will need to be addressed
at the whole animal level, but there could be short-term price adjustments
as the U.S. supply chain tests the market.
19th: Chinese Beef Buyers Race to Get American Steak
Chinese meat importers
are racing to get their hands on the first shipments of beef from the United
States in 14 years, as strong demand for premium steaks continues to grow
in the $2.6 billion beef import market.
China and the United
States last week settled the conditions for American beef exports after
the two sides agreed in May to resume the trade. Pent-up demand for U.S.
meat could erode sales of Australian beef, China's current top supplier
of premium steaks.
"We have ordered
56 to 58 tonnes of whole carcasses, which are expected to arrive by the
end of July," said Chen Fugang, owner of Aoyang International, a Shanghai-based
Chen said he expects
the product to be a hit in the Chinese market, where total beef sales grew
around 4 percent last year to reach 5.9 million tonnes, according to Euromonitor.
"We're especially interested in several barbecue products, like rib eye
and fillet steak, which we believe Chinese customers would like," added
American beef is
known for its quality in China, but was banned in 2003 after a mad cow
disease scare. Since then, other beef imports have surged, as domestic
production has struggled to keep up with demand from the expanding middle
Total beef arrivals
rose 22 percent to 579,836 tonnes last year and foreign suppliers will
meet about 20 percent of demand by 2020, forecasts Rabobank.
"The number of enquiries
to our exporters number in the hundreds, if not low thousands, since the
announcement of the agreement," said Joel Haggard, senior vice president
for the U.S. Meat Export Federation in Asia-Pacific.
for the lucrative premium market will stir concerns in Australia, where
a drought has cut the herd size.
Similar quality cuts
of U.S. beef are expected to be cheaper than Australian meat because of
low U.S. grain prices, a large component of the cost of raising cattle.
Chen, who sells Australian
and New Zealand beef to five-star hotels and high-end restaurants, declined
to reveal the price for his U.S. cargoes, adding that customs and handling
fees still needed to be factored in.
But the product would
be cheaper than Australian beef, he added. "Price is a key (selling) point,
as U.S. beef is cheaper than Australian beef of the same quality," he said.
Despite the high
interest, strict Chinese import conditions will limit shipments of American
beef initially. And U.S. prices are also high currently, warned the Meat
Export Federation's Haggard. "This isn't going to be a wave of product
coming in. It's going to roll in slowly," he said.
Australian beef will
still see strong demand, said Michael Finucan, general manager of international
markets at industry body Meat & Livestock Australia.
beef is seen as "more green" than American in some markets, he said. And,
unlike the U.S., the country can export refrigerated beef to China, tapping
into demand from high-end retailers.
However, for some,
U.S. beef has the edge. "I have been in this industry for a long
time. In my view, U.S. beef tastes more tender," said Aoyang's Chen.
19th: Maintain The Forward Momentum
-- Sterling Marketing
Although severe winter
weather and wildfires wore heavily on many ranchers this year, the prices
across the market have generally been a reason to smile. That said, I believe
it is time to follow up on my previous comments about profits across the
industry. I preface these thoughts with - this is not intended
as a doom and gloom outlook for the industry. Rather, just a few
of thoughts on maintaining the beef industry’s forward momentum.
The cattle market’s
strength was not happenchance. It was the result of feedlots that
are very current, carcass weights well below a year ago, strong exports,
and solid U.S. consumer demand. Each of these market conditions can
easily change and when coupled with increasing cattle numbers, I don’t
think I have to describe the likely impact on the overall beef market.
Therefore, the goal would be to sustain the conditions that the industry
has best control.
The four that I have
identified are important. There are other factors but today, maintaining
forward momentum rather than simply letting the market takes its course
will at least require that 1) feedlots remain current, 2) carcass weights
remain below a year ago, 3) U.S. beef exports remain strong, and 4) consumer
demand remains relatively solid.
What will likely
change the conditions listed? Together, a feedlot’s supply-marketing
balance (how current they are), fed cattle prices, feeder cattle prices,
breakeven prices, and weights go hand-in-hand. It doesn’t take much
to turn the tide of stability into problems. Prices go down, feedlots
begin holding cattle and weights start increasing in short order.
Compound that situation with high break-evens driven by high feeder cattle
prices. Short term decisions and reaction quickly turns into a downward
may not be the catalyst but they definitely compound the downward spiral.
Breakeven prices are best managed by managing the first-cost of the feeder
cattle going on feed rather than adding pounds to cattle already on feed.
Furthermore, consumer demand for smaller cuts only further supports the
case for smaller carcasses. And yes, I understand the economics of
yield in beef production.
Weights and industry
break-evens are the key to forward momentum. In raising the yellow
flag for both, I would submit that maintaining the current situation of
the past five months will be necessary for sustaining profitability as
the industry enters the second half of 2017.
16th: Boxed Beef Value & Trade Volume
Demand for Choice
beef over the last four weeks has been impressive, possibly the best this
decade for the weeks surrounding Memorial Day. The Choice Beef Cutout reached
its highest value for the year-to-date early this week at $252.52 per cwt.
on Monday. This was up $4 from the weekly average for the third week in
May. Going back to 2010, the beef cutout value declined five years out
of seven from mid-May to mid-June. The biggest price appreciation for that
set of weeks during the last 7 years was an $8 gain in 2014.
Looking at weekly
price changes in the Choice Beef Cutout from mid-May to mid-June during
the last seven years shows last year was the most similar to this year.
Last year, the cutout in the week prior to Memorial Day declined $2 followed
by a $1 drop during the holiday week and then a $3 increase in the first
full week of June. This year, during those same weeks, the cutout declined
$2, then $1 and finally climbed $5 last week (rounding error gets you to
the $4 change referred to above). For sake of comparison, the price changes
in 2014 for these weeks was up $3, down $2 and unchanged.
price trends in both the cash and futures markets have been “spooked” this
week, even as the Choice Beef Cutout has been resilient. The August Live
Cattle contract closed last Friday at $123.85, but after three days of
trading this week had slumped to below $118.00. USDA-AMS (Agriculture Marketing
Service) reported negotiated cash trade last Friday at close to $136, but
this week’s mid-week trade was at $129. Given this disconnect between finished
product and on-the-hoof values, the issue of expectations is definitely
in play relative to prospects for finished product values.
Refocusing back on
weekly prices trends in the Choice Beef Cutout for the next few weeks provides
a better sense for understanding this week’s slaughter cattle price action.
With last year’s cutout value mapping closely with this year’s, the concerns
about what cutout values did in the second half of June appear to be coming
to the fore. Last year, the Choice Beef Cutout was down slightly (close
to unchanged) for the current week. This was followed by a $9 decline in
the next week and an $8 decline for the last week in June. Laying this
price template onto this year’s market still puts the Choice Beef Cutout
slightly above $230, which is still a very high price from a historical
perspective (see graph above).
expectations is the assumption about beef demand. Running these price changes
off the current situation as a base period of some of the highest values
in history makes some fairly rosy assumptions about product demand. Choice
beef product negotiated cash trade volumes reported to USDA-AMS in the
week following Memorial Day were the highest since early April, suggesting
that holiday product clearances were favorable. Cutout values were 10%
higher than in April, so speculative bargaining hunting is not a likely
component of current demand. Choice beef trade volumes were running above
a year earlier during the first few days of June, but since then have lagged,
an indication that packer demand for cattle may also be receding.
15th: Utah Rancher Files Lawsuit Against Beef Checkoff
A Utah rancher has
filed suit against the U.S. Secretary of Agriculture and the U.S. Department
of Agriculture, the Utah Ag Commissioner and the state of Utah over the
one dollar federal and fifty cent Utah state beef checkoff.
According to the
class action complaint, filed May 5 in the third judicial district court
in and for Salt Lake City.
State beef commissions
or councils exist in nearly every state in the U.S., to collect the one
dollar federal beef checkoff every time a beef animal is sold. Each state
submits fifty cents of each dollar to the Cattlemen's Beef Board (CBB),
and retains the other fifty cents for use as they choose. Often times,
an additional portion of the remaining fifty cents is also sent to the
Federation of State Beef Councils – a division of the National Cattlemen's
Beef Association (NCBA). The NCBA is also the largest contractor with the
In the complaint,
the plantiffs said they do not take objection to the fifty cents that is
submitted to the CBB, their concern is with the remaining fifty cents,
and the additional state checkoff – another fifty cents – that is managed
by the Utah Beef Council.
Because the CBB is
under federal oversight and their activities have already been deemed "government
speech" by the Supreme Court, Evergreen Ranch doesn't take issue with the
fifty cents of the federal checkoff that is forwarded there.
The plaintiff said
that the Utah Beef Council is a "private entity" and they believe that,
for Utah's producers to be compelled to finance the "private speech" of
this "private entity" is unconstituational.
"In compelling plaintiffs
to associate with, support, and subsidize the private speech of the Utah
Beef Council, the defendants are violating plaintiffs' rights under the
First Amendment to the United States Constitution and Article I §
1 of the Utah Constitution," says the complaint.
Brent Tanner, who
has served as executive director of the Utah Beef Council for 25 years,
said that because his group isn't named as a party in the lawsuit, he doesn't
feel comfortable commenting on the specifics of the lawsuit until the defendants
have done so.
"As beef industry
leaders in Utah we feel that we are promoting our product to the benefit
of all of our producers. We work hard to be sure that oversight requirements
are being followed by the council," he said.
Evergreen Ranch seeks
damages in the amount of the last four years worth of checkoff funds it
has paid and reimbursement of court costs. They are also hoping to see
a declaration that the state beef council's use of mandatory checkoff funds
Attorney Robert Fuller
said the plaintiff filed the suit as a class action because there are many
others in the state of Utah who have also paid the checkoff involuntarily,
and if he and his client win the suit, it will then apply to every other
Utah individual who has paid the state and federal checkoff over the last
four years, who objects to paying or who did not consent to paying it.
Fuller, himself a
sixth generation rancher, said Evergreen has two main complaints.
The Utah Beef Council
is a private entity, not under the jurisdiction of the government, and
Evergreen ranch is being forced to support the private entity.
Fuller grants that the
fifty cent state checkoff is refundable within 60 days, but he said his
client believes that the process is complicated and that the beef council
does not provide sufficient information about the refund process.
The checkoff violates
Evergreen Ranch's constitutional freedom of speech.
The Utah Beef Council
refused to show him a copy of the annual budget when he asked, said Fuller.
Fuller pointed out
that some dairy producers are selling baby calves right now that are hardly
worth the fuel it takes to drive them to town. "$1.50 is a pretty big percentage
of the value of that calf," he said. He added that profit margins for all
cattle producers in his state are slim, and that every dollar makes a difference
to their bottom line.
In May of 2016, national
cattle organization R-CALF USA, based in Billings, Mont., filed a similar
lawsuit alleging that it is unconstitutional for the government to allow
private beef councils, like the Montana State Beef Council, to keep and
spend one-half of all checkoff dollars to pay for the beef council's private
speech. Specifically, the group alleged it was unconstitutional for the
government to compel its members to fund the private speech of state beef
On Dec. 12, the U.S.
magistrate judge issued his findings and recommendations in the R-CALF
case. The magistrate judge recommended that the U.S. District Court for
the District of Montana grant their request for a preliminary injunction.
The preliminary injunction would stop the government from continuing to
allow the Montana State Beef Council to use checkoff dollars to fund its
advertising campaigns unless a cattle producer provides prior affirmative
consent that his/her checkoff dollars may be retained by the council for
that purpose. R-CALF USA continues to wait for the ruling from the district
9th: USDA World Agricultural Supply & Demand Estimates
POULTRY: The forecast for total meat production is lowered from last
month per 2017 but is raised for 2018. Beef production for 2017 is lowered
primarily on lighter carcass weights which more than offsets higher expected
slaughter in the later part of 2017. Higher expected placements support
a higher 2018 beef forecast. Pork production for 2017 is lowered on the
current pace of second-quarter slaughter and lighter carcass weights.
No changes are made
to the 2018 production forecast. USDA’s Quarterly Hogs and Pigs report
will be released June 29 and will provide an indication of producer farrowing
intentions for the remainder of 2017. Broiler production for 2017 is lowered
on the pace of secondquarter slaughter. No changes are made to outlying
quarters or the 2018 forecast. Turkey production in the second quarter
of 2017 is reduced on the current pace of slaughter, and third-quarter
production is lowered as weak demand is expected to limit the rate of expansion.
No changes are made to the 2018 turkey forecast.
Beef trade forecasts
for 2017 and 2018 are unchanged from last month. The pork export forecast
for 2017 is unchanged from last month, but the import forecast is raised.
No changes are made to the 2018 pork trade forecasts. The second-quarter
broiler import forecast is lowered on recent trade data but no changes
are made to outlying quarters. No changes were made to the 2017 broiler
export forecast, but the turkey export forecast was lowered on continued
demand weakness. Poultry trade forecasts are unchanged for 2018.
Cattle and hog prices
for 2017 are raised from last month on price strength to date and continued
price strength in the third quarter. Cattle prices are unchanged for 2018,
while hog prices are raised on expected strong packer demand next year.
Broiler prices are raised for 2017 and first quarter 2018 on expectations
of continued strong demand. Turkey prices are reduced for 2017 and 2018
on weaker-than-expected demand.
U.S. wheat supplies for 2017/18 are higher this month on increased beginning
stocks, production, and imports. Projected 2017/18 U.S. wheat production
is slightly increased by 3.8 million bushels to 1,824 million. The NASS
June Crop Production report indicates higher Hard Red Winter and Soft Red
Winter wheat production forecasts, which more than offset a reduced White
Winter wheat crop. All of the wheat use categories are unchanged this month.
The net supply increase raises projected 2017/18 ending stocks by 10.8
million bushels to 924.3 million. Carryout remains 20 percent below last
year. The 2017/18 season-average farm price is projected at $3.90 to $4.70
per bushel, up 5 cents on both ends of the range. The mid-point of this
range is up $0.40 from 2016/17. High-protein wheat supplies are expected
to remain constrained in 2017/18, resulting in relatively higher prices
for this wheat.
Global wheat supplies
for 2017/18 are raised 2.8 million tons, primarily on higher forecast wheat
production for Russia, which is up 2.0 million tons to 69.0 million. Conditions
continue to be favorable for winter wheat in most areas since the crop
emerged from dormancy. Turkey’s wheat production is also forecast higher,
up 0.5 million tons to 18.0 million on improved crop conditions this spring.
India’s wheat production forecast is reduced 1.0 million tons to 96.0 million
but is still record large and 9.0 million tons above 2016/17. European
Union wheat production is forecast modestly lower at 150.8 million tons
on a smaller expected crop in Germany but still 4 percent above last year.
Foreign exports for
2017/18 are fractionally higher this month with increases in Argentina
and Iran more than offsetting a reduction for the EU. Imports are projected
higher for Brazil, Chile, and South Africa but down for Iran. Total world
consumption is marginally lower, as a 1.0-million-ton reduction in India
is only partially offset by increases in Russia, Brazil, and Chile. Global
ending stocks are projected at a record 261.2 million tons, up 2.9 million
from last month.
The 2017/18 outlook for U.S. feed grain supplies is virtually unchanged
this month as an increase in sorghum beginning stocks is largely offset
by reductions for barley and oats. Projected corn production for 2017/18
is unchanged at 14,065 million bushels. USDA will release the Acreage report
on June 30, providing a survey-based estimate of corn area planted and
a forecast of area harvested for grain. The seasonaverage corn price received
by producers is unchanged from last month at $3.00 to $3.80 per bushel.
The increase for
2017/18 sorghum beginning stocks reflects a 5 million bushel reduction
for 2016/17 food, seed, and industrial use based on reported sorghum used
for ethanol production through April in the Grain Crushings and Co-Products
Production report. With other use categories unchanged, sorghum ending
stocks for 2016/17 are raised 5 million bushels.
This month’s 2017/18
foreign coarse grain outlook is for lower production, increased trade and
reduced stocks relative to last month. EU corn production is down based
on government data indicating lower-than-expected area in France and Germany.
Canada corn production is lowered on reductions to both area and yield,
as wetter-than-normal conditions in Ontario and Quebec during May delayed
plantings and are expected to reduce yield prospects. Ukraine corn production
is raised based on reported planting progress to date indicating a level
of planted area above previous expectations. Turkey’s barley production
is raised as the impact of April dryness was not as severe as previously
anticipated. For 2016/17, Brazil corn production is raised as above-normal
rainfall in the Center-West during May boosts yield prospects. South Africa
corn production is higher reflecting the latest production estimate from
Major global trade
changes for 2017/18 include higher projected corn exports for Ukraine and
Russia, with increased corn imports for the EU. Foreign corn ending stocks
are lowered from last month, with reductions for Canada, the EU and Russia
more than offsetting increases for South Africa and Ukraine.
19th: 2016 Livestock Slaughter Summary
Record High Total
Red Meat and Pork Production in 2016
Total red meat production
for the United States totaled 50.5 billion pounds in 2016, 4 percent higher
than the previous year. Red meat includes beef, veal, pork, and lamb and
mutton. Red meat production in commercial plants totaled 50.4 billion pounds.
On-farm slaughter totaled 93.2 million pounds.
Commercial cattle slaughter
during 2016 totaled 30.6 million head, up 6 percent from 2015, with federal
inspection comprising 98.5 percent of the total. The average live weight
was 1,363 pounds, up 3 pounds from a year ago. Steerscomprised 54.8 percent
of the total federally inspected cattle slaughter, heifers 25.6 percent,
dairy cows 9.6 percent, other cows 8.4 percent, and bulls 1.6 percent.
Beef production totaled
25.3 billion pounds, up 6 percent from the previous year.
Veal production totaled
81.0 million pounds, down 8 percent from last year.
Pork production, at
25.0 billion pounds, was 2 percent above the previous year.
Lamb and mutton production
totaled 155.4 million pounds, down slightly from 2015.
Commercial calf slaughter
totaled 487,700 head, 8 percent higher than a year ago with 98.4 percent
under federal inspection. The average live weight was 266 pounds, down
44 pounds from a year earlier.
Commercial hog slaughter
totaled 118.2 million head, 2 percent higher than 2015 with 99.3 percent
of the hogs slaughtered under federal inspection. The average live weight
was down 1 pound from last year, at 282 pounds. Barrows and gilts comprised
97.3 percent of the total federally inspected hog slaughter.
and lamb slaughter, at 2.24 million head, was up 1 percent from the previous
year with 89.8 percent by federal inspection. The average live weight was
down 2 pounds from 2015 at 134 pounds. Lambs and yearlings comprised 94.6
percent of the total federally inspected sheep slaughter.
There were 814 plants
slaughtering under federal inspection on January 1, 2017 compared with
808 last year. Of these, 650 plants slaughtered at least one head of cattle
during 2016 with the 13 largest plants slaughtering 58 percent of the total
Hogs were slaughtered
at 621 plants, with the 13 largest plants accounting for 60 percent of
For calves, 3 of
the 200 plants accounted for 46 percent of the total and 3 of the 531 plants
that slaughtered sheep or lambs in 2016 comprised 54 percent of the total
Iowa, Kansas, Nebraska
and Texas accounted for 49 percent of the United States commercial red
meat production in 2016, unchanged from 2015
22nd: Post-Wildfire Reality Sinks in for High Plains Ranchers
-- Progressive Cattleman
reality of it all is sinking in,” said Greg Gardiner of Ashland, Kansas,
in a phone interview 10 days after the Starbuck fire – which had consumed
over 300,000 acres in Oklahoma and nearly 500,000 acres in southwest Kansas
– claimed 43,000 of the 48,000 acres at Gardiner Angus Ranch.
Officials are calling
the Starbuck fire the largest single fire in Kansas state history. Additional
wildfires on the same day brought the state total to 650,000 acres burned.
All told, multiple
windswept wildfires on March 6 burned close to 2 million acres of grasslands
and left a deadly trail of crippling losses in four states.
loss estimates for Kansas, Oklahoma, Texas and Colorado are approaching
7,000 to 9,000 adult cows and untold numbers of calves, horses and wildlife.
These numbers are expected to increase in the weeks ahead as more cattle
are located and those with less severe injuries are monitored and may not
of the affected ranching families suffered the ultimate loss of loved ones.
Seven people lost their lives, at least five while trying to herd cattle
to safety before becoming trapped in the rapidly moving fire when the high
winds changed direction.
It was the perfect
storm when the red flag day dawned in the High Plains. The 60 to 70 mph
winds drove multiple fast-moving fires that found abundant fuel in the
grasslands that had previously benefited from two years of good moisture
before turning tinder-dry over the past 60 days.
In fact, the Starbuck
fire was so fast and intense that even where fence appears to be standing,
the wood at ground level is disintegrated. In Kansas, alone, an estimated
12,000 miles of fence will eventually need to be replaced. The priority
is perimeter fencing, so materials and fencing crews are needed.
With severe losses
of grazing land and stockpiled hay, another immediate concern is feeding
the estimated 25,000 to 30,000 surviving cattle in the affected areas of
the four states for the next 30 to 60 days while ranchers deal with the
recovery while finishing out the calving season before they can take stock
of their positions and make decisions about their futures.
The toll of survival
While Gardiner Angus
Ranch lost 500 adult cows – mainly donor cows for fall breeding and spring
calving females on grass – the 1,500 cattle on wheat pasture and those
gathered for their April 1 production sale were not affected. Gardiner
estimates they have lost 300 calves. All of their stored hay is gone –
5,000 round bales and 3,000 bales of horse hay – despite scattered locations.
Of the cattle in the line of the fire, 150 survivors are being monitored
in corrals, and 30 of them have calved within days of the fire.
“Those cows didn’t
deserve this,” said Gardiner of the devastation. “We found many with their
calves flat beside them – having just calved as the fire raced through.
The fire happened so fast, but everything that day seemed to be happening
in slow motion.”
“Everywhere you looked,
it was like the world was on fire with fire lines on every horizon,” Gardiner
said, explaining how fast the fires were upon them and the complications
of changes in wind direction, making it impossible to move cattle ahead
of the fire.
Even people evacuating
their homes were back and forth on where to go as the shifting high winds
fueled fires that jumped roads and turned in unpredictable ways throughout
the day and night. Greg’s brother Garth had a few close calls, as the fire
came first from the north and Garth’s family evacuated their home. Then
it switched and the roads were blocked.
Greg Gardiner described
his own close encounter while following his brother Mark with a horse trailer.
Mark and Eva were attempting to save three horses and two dogs with the
fire closing in on their home. When a tree belt erupted in flames, the
blackness descended and the heat of the fire reached Greg’s vehicle. He
was forced to retreat with zero visibility, and was left wondering for
what seemed like an eternity whether Mark and Eva had escaped before their
home was engulfed.
A firefighter emerged
30 minutes later to tell him they had made it out.
“This thing is of
biblical proportions. Everywhere you look, it is like an apocalyptic wasteland,
but that seems like small potatoes right now: My family is alive,” said
Waves of relief
As the heart-wrenching
stories and statistics emerge from the region, the focus is transitioning
from cattle triage to organizing the significant short- and long-term needs
of the ranchers. The agriculture community across the country is wasting
no time organizing shipments of donated hay, milk replacer, fencing materials
and other needs, while foundations are setting up methods to accept donated
funds, and auctions are being organized to raise additional funds for these
“When the hay trucks
rolled in, it was like the cavalry arrived,” said Gardiner, whose ranchlands
were largely burned by the Starbuck fire, deemed the largest single fire
in Kansas state history. All told, 22 counties in Kansas were affected
by multiple wildfires.
from drop points to ranches describe the evident relief in the faces of
the ranchers they have met. While the early convoys of semis and flatbeds
traveled under lifted highway restrictions, strangers along the way offered
cash for fuel or for the ranchers. But the cost of fuel and the availability
of trucking remain a bottleneck in getting some of the hay donations to
Hay has been delivered
from mainly a 300-mile radius of the affected areas. Dr. Randall Spare
of Ashland Veterinary Clinic said 800 bales are waiting in Waco, Texas,
if they can find trucking. Convoys are also being assembled in South Dakota,
Kentucky, Tennessee and Minnesota, with calls coming into the various state
coordinators from as far away as Arizona, Wisconsin, Vermont and Canada.
“By Friday we were
just amazed at the amount of hay and calls we were getting, and it continues,”
said Danny Nusser, Texas A?M Agrilife Extension regional director. “We
put the message out Saturday morning that we will take all that we can
By Monday, however,
the 4,200-bale goal set for the three Panhandle supply points had been
met, and Nusser reported they are taking names and numbers until they further
assess the region’s needs. The goal was to gather a 30-day supply for the
estimated 15,000 surviving cattle in the Panhandle.
In Oklahoma, hundreds
of large round bales were received over the weekend; one convoy was organized
by ranchers in the southern part of the state.
In Kansas, 3,000
large bales were received within a week of the wildfires, and according
to Spare, they can use more. “We don’t want to turn down hay because some
of our ranchers are just coming to grips with what their losses are and
what their needs will be. Since Gardiner Ranch has the capacity to unload
and accumulate hay where neighbors can come and get what they need, we
are utilizing that.”
has an estimated 15,000 surviving livestock on ranches that have lost most
of their grazing and hay.
The challenge with
the hay, said Spare, is that “some producers are saying they don’t need
the hay or they feel embarrassed to take it, but the grass is all gone
and we are 60 days from good grass [in unburned areas], and that’s if it
rains, so we are still in the process of contacting ranchers, trying to
help people understand as they make their plans that they will need to
have something to feed.”
As the immediate
hustle to triage cattle and secure feed and care for survivors shifts to
a longer-term coordination of ongoing recovery, those close to the situation
are urging more distant donors to consider monetary donations to help with
trucking of closer hay and materials and other needs instead of trying
to send hay from 1,000 miles away.
Spare has spent his
time trying to connect the dots. And those dots include the growing number
of orphaned calves.
With fences to build
and repair, feed to secure, cows still calving and long-term plans and
decisions to make, there’s no time to bottle and bucket feed calves two
and three times a day, particularly for those ranchers who have also lost
Kansas county 4-H
clubs put the word out early that youth members are taking in bucket calves
to help the ranchers who have so many other things to do in the recovery.
To follow their progress and donate milk replacer and other supplies, visit
the Orphaned Calf Relief of SW Kansas on Facebook.
reaching out to colleagues in the hard-hit areas. Spare received a call
late last week from Dr. Tera Barnhardt. She and Deerfield Feeders’ general
manager, Cary Wimmer, came up with the idea of offering temporary homes
and care in the calf ranch hutches for orphaned calves from Ashland.
Many ag companies
have donated milk replacer, feed, pharmaceuticals and other animal care
products – and along with hay donations from other ranches, have come personal
items for the families who have lost their homes and belongings.
“Our hearts go out
to the ranchers,” said Barnhardt. “I’m just glad we could help connect
some dots and take something off their plate.”
With the fires mostly
contained in the affected regions, conditions are still tricky in some
spots, according to Nusser. He said it will be June or July, with sufficient
rain, before the greenup slows the fire threat in the Panhandle.
County FSA offices
are asking ranchers to contact them with loss numbers so this information
can be tied to emergency declarations from each state’s respective governors
for grazing lands exceptions and assistance.
The problem is that
individual ranch losses will far exceed the individual $125,000 caps for
USDA programs like the Livestock Indemnity Program and fencing cost shares.
rancher will weather these losses differently, depending on their financial
position at the time of the fire,” said Dr. Steve Amosson, AgriLife Extension
economist in Amarillo, Texas. His early estimate for the Panhandle, alone,
is $21 million in losses, which he expects to see increase as more information
is gathered. He said that for many ranchers, little insurance money will
come into play.
In Texas, the Perryton/Lipscomb
fire is deemed the third largest in Texas state history.
For the short term,
the tangibles are necessary because it takes time for the various foundations
to pool monetary donations and get resources to the ranchers. Over the
next 30 to 60 days, the recovery will transition to a rebuilding effort.
This will be a long
recovery for ranchers who have lost 50 to 90 percent of their herds and
multiple years of income and stockpiled forage, according to Spare.
“We’re praying for
rain,” he said, describing dirty skies as the wind lifts the gray dusty
sand over charred soils.
“I told CNN that
we as ranchers are stewards of the grasslands, and that the only way we
have something to sell for an income is to sell grass through the cows
that are eating it. We are working to take care of that and start all over
again,” said Spare, who had significant losses among his own cow herd and
was relieved when his son showed up in the driveway Tuesday morning, taking
time away from vet school before spring exams to take care of the home
front while he worked with other ranchers and their cattle.
As for the immediate
fencing need, a short- and long-term approach is being pursued. While fencing
certainly has its government specs to qualify for USDA cost-sharing, several
ranchers interviewed for this report indicate that the amount of fencing
they have to replace so greatly exceeds the cap on funds they will begin
with what is donated to establish perimeters and do their cross fencing
as they can over the next few years.
While prayers are
most coveted, those who want to help are urged to contact organizers in
the affected states to see what the needs are as community leaders develop
an ongoing relief plan.
“There are no guarantees
in agriculture. We know the risks and we appreciate this is life we have
chosen to live,” said Gardiner. “This is an emotional deal, hitting us
all every day. We’ll take it one step at a time. We’ll survive by keeping
“There is so much
appreciation in this community for the outpouring of love and compassion
from the people who have come alongside us with prayers and help,” said
Spare. “Many don’t know how they’ll get through this, but we know we will
get through it.” end mark
The Starbuck fire
consumed 43,000 of the 48,000 acres at Gardiner Angus Ranch. Over 12,000
miles of fencing in Kansas, alone, is estimated in need of replacement
as the rapidly moving and intense fire disintegrated posts at the ground
by Julie Tucker
How you can help
Wildfire relief organizers
are indicating that the best way for distant donors to help is to provide
monetary donations for transporting nearby hay and resources to the areas
affected by the wildfires.
In addition, auctions
are being organized to benefit wildfire funds. For example, a heifer donated
by Oklahoma West Livestock Market was auctioned 105 times on March 8 to
garner $115,449 with proceeds going to the Oklahoma Cattlemen’s Foundation
Fire Relief Fund. Similar ideas are creating a ripple response throughout
the agriculture community and can be replicated anywhere.
Trent Loos at Rural
Route Radio is helping to organize this idea to fund the recovery and rebuilding
efforts in the fire-ravaged areas of the High Plains through means of raising
cash. For information about how to participate in this and to find a list
of upcoming auctions, as well as how to set one up, contact Trent Loos
at (515) 418-8185.
To give supplies
and trucking or to donate funds to foundations for direct wildfire relief,
contact the state-by-state resources below.
Ashland Community Foundation/Wildfire Relief Fund at www.ashlandcf.comor
P.O. Box 276, Ashland, KS 67831. The Kansas Livestock Association/Wildfire
Relief Fund at 6031 SW 37th St., Topeka, KS 66614.
Hay, trucking and
fencing donations: Call Ashland Feed and Seed at (620) 635-2856. (Ashland
Feed and Seed is also taking credit card orders over the phone for feed
and milk replacer or other supplies for ranchers in the area.)
Texas Department of Agriculture STAR Fund.
Hay, trucking and fencing
donations: Ample hay has been received for two to three weeks, so call
to see if and when more is needed. Fencing supplies are needed, which can
go to the Agrilife supply points. Contacts are J.R. Sprague at (806) 202-5288
for Lipscomb, Mike Jeffcoat at (580) 467-0753 for Pampa, and Andy Holloway
at (806) 823-9114 for Canadian.
For questions about
donations or relief efforts, contact Texas A?M Extension at (806) 677-5628.
Hay, trucking and fencing:
Contact Kent Kokes (970) 580-8108, John Michal (970) 522-2330, or Justin
Price (970) 580-6315.
Oklahoma Cattlemen’s Foundation Fire Relief at P.O. Box 82395, Oklahoma
City, OK 73148 or www.okcattlemen.org.
Hay, trucking and fencing
donations: Contact Harper County Extension at (580) 735-2252 or Buffalo
Feeders at (580) 727-5530.
Other states organizing
Texas: Four deaths and
more than 480,000 acres burned and early livestock loss estimates of 2,500
adult cattle. Texas A?M Agrilife Extension estimates preliminary damage
at over $21 million, not counting equipment losses. Gov. Greg Abbott declared
a state of disaster in six counties in the Texas Panhandle.
Kansas: One death, 11
injuries, more than 40 homes destroyed and 702,000 total acres burned,
462,000 of which stem from the Starbuck fire deemed the largest single
fire in Kansas state history. Kansas Gov. Sam Brownback signed a disaster
declaration covering 20 counties. Early estimates of livestock losses are
3,000 to 6,000 adult cows and additional calves.
Oklahoma: One death,
eight homes and 381,000 acres burned from the Starbuck fire. Three additional
fires in the state have burned 120,000 additional acres. Gov. Mary Fallin
declared a state of emergency for 22 counties. Early estimates of livestock
losses are 3,000 cows and additional calves.
Colorado: Five homes
were destroyed and more than 30,000 acres burned; early livestock loss
estimates are 185 cow-calf pairs.
15th: Comprehending the Immensity of the National Debt
This does not directly pertain to the cattle
market, but we recently came across the map of the United States found
below that shows the proportion of Federally owned land in each state.
This prompted the question, "How much of the nearly $20 trillion
National Debt could be paid if vast amounts of this land, much of which
costs more to administer than it generates in lease payments, were sold
and the sale proceeds applied to the debt?" -- National
What was found in the New
Estimates of Value of Land of the United States - Bureau of Economic
Analysis - April 3, 2015, is astounding and may be the most compelling
and understandable way to comprehend the immensity of the National debt...
In the conclusion of this report, it is
stated... "This paper presents new estimates of the value of land in
the lower 48 United States from 2000 to 2009. In 2009, the value of
land was approximately $23 trillion, $1.8 billion of which is owned
by the federal government. According to the National Land
Cover Database, 6% of the lower 48 states is developed, and according to
the estimates in this paper, this land consists of 50% of the overall land
value. Land values rose until 2006 and then fell until the end of the sample
"The estimation methodology consists of
dividing the U.S. into a mosaic of parcels at the census tract level and
below, assigning ownership and prices to each parcel, and tabulating.
Whereas past estimates have omitted large areas of land or have based valuation
on potentially implausible estimates of structure values, this attempt
instead misses no land area and uses hedonic estimates of land values."
The Bottom Line... Selling all Federally
owned land and applying the sale proceeds to the National Debt would only
be "a drop in the bucket" and nearly all of the land in the lower 48 states
would have to be sold to pay the debt.
Cattle & Calves Inventory: January 1, 2017 vs. 2016
Compiled from USDA
National Agricultural Statistical Service Data
Cows Inventory: January 1, 2017 vs. 2016
Compiled from USDA
National Agricultural Statistical Service Data
Heifers Inventory: January 1, 2017 vs. 2016
Compiled from USDA
National Agricultural Statistical Service Data
31st: January 1 Cattle Inventory Up 3 Percent
USDA - National
Agricultural Statistics Service (NASS)
All cattle and calves
in the United States, as of January 1, 2017, totaled 93.6 million head.
This is 2 percent above the 91.9 million head on January 1, 2016.
All cows and heifers
that have calved, at 40.6 million head, are 3 percent above
the 39.5 million head on January 1, 2016.
Beef cows, at
31.2 million head, are up 3 percent from a year ago.
Milk cows, at
9.35 million head, are up slightly from the previous year.
All heifers 500 pounds
and over, as of January 1, 2017, totaled 20.1 million head. This is1
percent above the 19.9 million head on January 1, 2016.
heifers, at 6.42 million head, are up 1 percent from a year
heifers, at 4.75 million head, are down
1 percent from the previous year.
at 8.88 million head, are 1 percent above a year earlier.
Calves under 500
pounds in the United States, as of January 1, 2017, totaled 14.4 million
head. This is 2 percent above the 14.1 million head on January 1,
500 pounds and over totaled 16.4 million head, up slightly from
one year ago.
500 pounds and over totaled 2.23 million head, up 4 percent from
the previous year.
The 2016 calf crop
in the United States was estimated at 35.1 million head, up 3 percentfrom
last year's calf crop.
Calves born during
the first half of 2016 were estimated at 25.6 million head. This is
4 percent from the first half of 2015.
Calves born during
the second half of 2016 were estimated at 9.53 million head, 27 percent
of the total 2016 calf crop.
Cattle and calves
on feed for the slaughter market in the
United States for all feedlots totaled 13.1 million head on January 1,
2017. The inventory is down 1 percentfrom
the January 1, 2016 total of 13.2 million head.
Cattle on feed, in
feedlotswith capacity of 1,000 or more head, accounted for 81.2 percent
of the total cattle on feed on January 1, 2017. This is up 1 percent
from the previous year.
The combined total
of calves under 500 pounds and other heifers and steers over 500 pounds
(outside of feedlots) is 26.6 million head. This is 2 percent
above one year ago.
16th: What Did it Cost to Produce a Calf This Year?
Berger -- University of Nebraska Extension
Weaning of spring-born calves has occurred
for many cow calf producers. Right after weaning is a good time to analyze
the business and see what it cost to produce a pound of weaned calf.
Cow costs and thus the cost to produce
a weaned calf have shot up over the last 15 years. From 1987 to 2001, the
Livestock Market Information Center reports that annual cow costs increased
from $300 to $400 per cow. From 2002 to 2015, cow costs more than doubled
from $400 to $875 per cow.
These annual cow costs figures are from
National Ag Statistics Surveys. Cow costs in much of Nebraska would be
equal to or higher than the national average due to the cost of pasture.
Obviously not every cow weans a calf, so the actual cost per calf produced
is much higher than $875!
This information prompts the question:
What did it cost you to produce a pound of weaned calf this year? What
do you project it will cost in 2017?
Unit cost of production (UCOP) is a value
based on a relationship in production between costs and units of product
made or produced.
Unit Cost of Production = Costs / Units
The relationship between the numerator
(Costs) and the denominator (Units Produced) is what drives the UCOP value.
The power of the UCOP ratio for cow-calf producers is that everything involved
in the production of a pound of calf is represented in the numerator or
denominator of the equation. For example, if a producer wants to buy a
pickup that will be used in the production of calves, he can estimate how
the purchase of that pickup will affect his UCOP in terms of cost per pound
of calf produced. The same thing goes for the purchase of a bull. Evaluating
the purchase of a bull in light of how many estimated pounds of calf that
bull will produce in relation to his cost can give insight into what a
producer might be willing to spend.
What did it cost to produce a pound of
weaned calf this year? What is it projected to cost next year? The old
adage "you can't effectively manage what you don't measure" is true in
relation to managing the cow-calf enterprise. The first step in calculating
UCOP is to have accurate production and financial records. These records
do not have to be complicated, but they need to be accurate and thorough.
If current management and information systems don't provide the data to
run this type of analysis, consider making changes that will provide the
Unit Cost of Production takes into account
both product produced and input costs. Knowing UCOP allows a manager to
look forward utilizing both present and projected input costs with production
numbers to make informed decisions. You can’t change last year’s cost of
production numbers, but with good information, you can make management
changes that will impact the upcoming year. Cow-calf producers who know
UCOP numbers and understand the interaction between costs and production
can implement strategies to effectively manage resources to meet business
and personal goals.
As with most things in life, the first
few times you do something, you make mistakes and through the process learn
how to get better. The first time someone learns to drive, there is going
to be gears grinding, lurching and jerking, and some killed engines. There
also is likely going to be some parent or adult with more gray hair (or
perhaps less hair) in the process! Passing the driver’s test and being
able to drive is well worth the hassle and effort!
Learning how to calculate UCOP is a similar
process for cow-calf producers who have never done it before. The first
few times through the mental gears will be grinding and there will be frustration
along the way. However once someone does it and gets comfortable, the value
of knowing this information and being able to confidently make decisions
that improve profitability is extremely satisfying!