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May 22nd: National Feeder & Stocker Cattle Summary
USDA-MO Dept of Ag Market News

RECEIPTS:  Auctions   Direct    Video/Internet     Total
This Week       168,000     29,900           6,800           204,700 
Last Week       147,500     54,800          29,600          231,900 
Last Year         172,200     39,900          38,000          250,100

Compared to last week, yearlings sold fully steady to 3.00 higher with instances 5.00 higher as advance continues to be on heavy yearlings over 800 lbs.  Demand remains very good on yearlings as the draw of steady fed cattle prices on light trade Wednesday in Kansas at 161.00 continues to bring additional interest back to feeder cattle.  Steer and heifer calves traded steady to instances 5.00 higher where tested (mostly throughout the Midwest) as a number of auctions simply do not have enough calves to test the market.   Production areas farther north and west simply don’t do enough fall calving to test the market this time of the year, and the old crop calves are long gone.  In the Southeast steer and heifer calves traded uneven from steady to 5.00 lower to 5.00 higher.  Demand for calves continues to improve with excellent grazingconditions around the country. 

With range and pasture conditions much improved over last year especially in the Southern Plains as conditions in west Texas and Oklahoma have improved dramatically where many spring rains and storms have fallen lately causing flooding conditions in many areas of the Southern Plains.  One year ago at this time over 40 percent of range and pasture conditions in Texas and Oklahoma were rated poor to very poor that now stands at around 10 percent the first two weeks of condition ratings.  Good to excellent rating conditions for range and pastures are at 57 percent across the country compared to 46 percent last year.  Feeder cattle prices have reacted accordingly with the much improved grazing conditions.  Northern Plain’s buyers aided higher feeder prices as last Friday at the Herried, SD Livestock Market sold over 9000 head with over 400 head of steers weighing between 600-650 lbs averaging 627 lbs sold with a weighted average price of 270.16 and over 530 head of yearling steers averaging 881 lbs sold with an weighted average price of 217.13.  In Valentine, NE on Thursday sold near 3000 head with a light test of 500-550 lb steers averaging 520 lbs sold with a weighted average price of 312.64, 131 head of fancy steers averaging 815 lbs sold with a weighted average price of 228.12 and near 200 head of their bigger brothers averaging 924 lbs sold with a weighted average price of 216.33. 

There is a huge price difference between where feeders and fat cattle are trading as cattle feeders are risking another dip in the red ink as they are in competition for yearling cattle.  Choice Boxed Beef prices again this week hit another all-time high on Tuesday topping at 266.77 as additional pre-holiday buying activity continued.  The next six weeks will be a good test to see if beef demand will hold up as we start the beginning of the grilling season.  The Memorial Weekend is the start of the summer grilling season and this is one of the times when consumers are willing to pay for high quality beef items.  One of the key factors going forward is when retail promotions disappear how will the overall cutout values hold up.  It will take strong buying clearance and the need to replenish and own inventory over the next six weeks to help hold values. 

Friday’s Cattle on Feed Report had May 1 inventory at 101 percent; placements at 95 percent and marketings at 92 percent.  Inventory was close to expectations, with placements significantly smaller than expected and marketings close to expectations.  Corn and soybean planting have had one of the nicest planting starts in several seasons, as corn planting is now 85 percent complete ahead of the 5-year average of 75 percent. Soybeans are 45 percent planted ahead of the 5-year average of 36 percent. 

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May 22nd: Closing Futures Summary

Cattle futures traded mixed Friday. Today’s U.S. dollar surge didn’t seem to greatly affect the cattle market, which probably reflects the reduction in exports over the past few years. Actually, many in the industry were surprised by the noon (EDT) release of the monthly USDA Cattle on Feed report (historically published at 3:00 PM). Low marketings and placements made for a mixed CME reaction, with deferred contracts tending to move upward in response to the latter result. June live cattle futures ended Friday having slipped 0.25 cents at 152.12 cents/pound, while August cattle stumbled 0.20 lower to 150.70. Meanwhile, August feeder cattle futures jumped 1.27 cents to 219.00 cents/pound, and November feeders vaulted 1.17 to 216.30..

US dollar strength once again weighed on the commodity sector Friday. A relatively high reading for Core-CPI on a Friday morning report sent the U.S. dollar higher, which in turn undercut the commodity markets. Actually, it wasn’t terribly surprising to see the corn setback, since the market had risen rather significantly lately despite generally bearish fundamentals, especially with the long weekend looming. July corn futures sank 5.0 cents to $3.60/bushel at Friday’s close, while December dipped 4.5 to $3.7775..

The soy complex also turned mostly lower. Signs of persistently firm demand for soybeans and meal have supported those markets lately and may partially explain the firmness exhibited by meal futures today. However, huge South American supplies and prospects for a strong start to the U.S. growing season remain obstacles for bulls. Today’s greenback rally and the downturn posted by the energy complex (which apparently includes soyoil these days) weighed on soybean futures. July soybean futures dove 14.25 cents to $9.2425/bushel at their week-ending settlement, while July soyoil fell 0.61 cents to 31.64 cents/pound, but July meal inched up $0.1 to $304.2/ton..

Technical selling may have exaggerated wheat losses. The wheat markets were threatening a breakout to the upside Thursday night, but proved unable to do so Friday. Thus, selling stemming from the dollar surge and generally negative old-crop supply conditions, as well as pre-weekend long liquidation, was probably exaggerated by the technical failure. July CBOT wheat futures closed 6.75 cents lower at $5.1525/bushel Friday, while July KC wheat plunged 11.25 cents to $5.465/bushel, and July MWE wheat tumbled 9.5 to $5.6875..

Hog futures are trading mostly lower. Today’s midsession cash and wholesale quotes proved quite weak, while the monthly USDA cold Storage report indicated huge pork holdings in U.S. freezers. The fact that futures held up surprisingly well despite that news suggests considerable bearishness was already built into the market. June hog futures slipped 0.12 cents to 83.65 cents/pound in late Friday morning action, while December skidded 0.25 to 69.95..

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May 22nd: May Cattle on Feed Report

United States Cattle on Feed Up 1 Percent

  • Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 10.6 million head on May 1, 2015. The inventory was 1 percent above May 1, 2014.
  • Placements in feedlots during April totaled 1.55 million, 5 percent below 2014. Net placements were 1.48 million head. During April, placements of cattle and calves weighing less than 600 pounds were 320,000, 600-699 pounds were 240,000, 700-799 pounds were 348,000, and 800 pounds and greater were 640,000.
  • Marketings of fed cattle during April totaled 1.64 million, 8 percent below 2014. April marketings are the lowest since the series began in 1996.
  • Other disappearance totaled 66,000 during April, 20 percent below 2014.

Cattle on Feed Inventory in 1,000+ Capacity Feedlots as of May 1st
Millions of Head
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Number of Cattle Placed on Feed in 1,000+ Capacity Feedlots in April
Millions of Head
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Number of Cattle Marketed from 1,000+ Capacity Feedlots in April
Millions of Head
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Cattle on Feed by State as of May 1st
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May 22nd: Shootin' the Bull Weekly Analysis
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In my opinion, not much happened this week to help decipher the next most probable move.  This weeks trading has been fairly mundane.  Traders did not react to the on feed report as I write this.  Very little price movement has taken place as there appears to be ample on feed with the kill capacity and consumer demand.  The placements were a little short, but that is not too bothersome as it is anticipated that many animals that could have gone on feed were diverted from the feed yard into a back grounding or grazing program. Marketing's remain low and that is perceived due to just fewer cattle available than lack of demand for them. 

My analysis suggests to continue to anticipate a major wave C decline.  I anticipate the major B wave to be complete at the $152.95 August live cattle high and $219.60 August feeder cattle high.  A trade above these two respective highs would void the current analysis.  Until then, I anticipate the beginning of the C wave decline to be materializing.  Since the on feed report didn't do much, traders may not be anxious to do anything until closer to the semi-annual cattle inventory report.  About the only thing of interest this week was the cold storage report continuing to show a significant increase year over year. 

December corn is perceived to have found a bottom at the $3.72 level.  I anticipate this low to hold. 

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

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

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May 22nd: USDA Cold Storage Report
  • Total red meat supplies in freezers were up 2 percent from the previous month and up 20 percent from last year. 
    • Total pounds of beef in freezers were down 1 percent from the previous month but up 18 percent from last year. 
    • Frozen pork supplies were up 4 percent from the previous month and up 20 percent from last year. 
    • Stocks of pork bellies were up 3 percent from last month but down 16 percent from last year.
  • Total frozen poultry supplies on April 30, 2015 were up 6 percent from the previous month and up 21 percent from a year ago.
    • Total stocks of chicken were up 2 percent from the previous month and up 31 percent from last year. 
    • Total pounds of turkey in freezers were up 14 percent from last month and up 5 percent from April 30, 2014.
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May 22nd: Canadian Weekly Cattle Report

Fed cattle rise

  • The Canfax fed steers average last week was $202.54 per hundredweight in light trade, up $1.09.
  • Heifers were too few to set a price.
  • Alberta dressed sales were $335-$338.50.
  • Packers were buying for immediate slaughter needs and for cattle to be delivered in the first half of June.
  • Scattered cash trade in Iowa and Nebraska saw live and dressed sales generally steady with the previous week.
  • The strong premium of Canadian prices over the American market kept cattle at home.
  • Only 3,290 head were exported, the fewest this year.
  • June live cattle futures remain at a sizable discount to the U.S. cash trade, but American feeders and packers are cautious on worries over the sustainability of current wholesale beef prices.
  • However, given how active packers have been in locking up June inventory, western Canadian prices appear well supported.
Cow prices fall
  • The cool weather has pastures developing slowly, which has producers selling a few more cows.
  • D1, D2 cows ranged $140-$155 per cwt. to average $146.13, down $1.21.
  • D3 cows ranged $120-$139 to average $130.
  • Rail grade cows were $282-$287.
  • Slaughter bulls were $165.95, down $1.60.
  • Weekly western Canadian non-fed slaughter to May 9 rose 26 percent to 4,963 head.
Feeders stabilize
  • Dry weather is causing concern in some areas of Western Canada but has yet to push significant cattle volumes to market.
  • The Alberta feeder market stabilized following a three week price retreat.
  • Average steer prices firmed more than $2 per cwt. while feeder heifers were steady.
  • Auction volume fell seasonally, and the supply of stockers lighter than 400 pounds was too thin to establish a price trend.
  • Calves lighter than 600 lb. fell $2 on reduced quality and offerings while 600-800 lb. steers saw strong grass and feedlot interest, pushing prices up $6. Similar weight heifers rose $1-$2.
  • Prices rose on all feeders heavier than 800 lb.
  • The yearling steer-to-heifer spread was the widest in six weeks. Heifers are now trading at a typical $15.50 discount to steers.
  • Alberta auction volume fell eight percent to 13,727 head.
  • Bred cows ranged $2,200-$3,150 and cow-calf pairs ranged $2,900-$4,600.
Cattle on feed
  • The Alberta-Saskatchewan cattle-on-feed population as of May 1 was 844,157, down 12 percent from last year.
  • Placements in April were 101,968, down 20 percent.
  • April marketings were 117,412, down 14 percent.
  • Other disappearance was 19,162, up 23 percent.
  • Placements this year are running nearly 100,000 lower than last year.
Beef stronger
  • The U.S. Choice cutout reached a record high of US$264.74 per cwt., rising $7.16 from the previous week.
  • Select rose $5.47 to $251.31 but was $10 lower than the record set in July 2014.
  • Canadian boxed beef prices for the week ending May 8 were unavailable.
  • The Montreal wholesale price dipped to C$342-$344 per cwt.
This cattle market information is from the weekly report from CanFax, a division of the Canadian Cattlemen’s Association.
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May 22nd: The Slow Demise of COOL & How it’s Hurt the Beef Industry

As expected, the World Trade Organization (WTO) upheld Mexico’s and Canada’s complaint that mandatory country-of-origin labeling (COOL) violates this country’s international trade obligations. This final ruling announced earlier this week is the last hurdle in what promises to be a trade war with two trading partners that we do over $1 trillion in business with.

That’s because, now that the U.S. has lost for the fourth time in the WTO process, it has played its hand. There are no other options left in defending COOL and unless Congress repeals it, the U.S. is subject to retaliation.

Canada and Mexico are both claiming damages around $1 billion per year. Canada has signaled that it will likely target wine, chocolate, ketchup and cereal to begin with. Mexico has not stated what products it will target with retaliatory tariffs/sanctions at this point. 

However, few believe that these retaliatory measures will ever go into effect. The U.S. is not likely to start a trade war with its two largest trading partners after losing every battle at the WTO. In fact, the House Ag Committee acted Wednesday with a 38-6 vote to repeal COOL and the full House is expected to vote fairly quickly.

The only drama left seems to be in how the final moments will play out. A few Democrats and COOL advocates have signaled they want to play out the string a little longer, suggesting that they can continue to delay the inevitable by some additional procedural maneuvering with the WTO. But in backroom conversations, they too have largely recognized that it isn’t a question of if, but rather when the final hammer will fall. 

The legal battle over COOL was first initiated by Canada in 2007, eight years ago. If the COOL ordeal shows us anything, it’s that the WTO process is far too cumbersome and takes far too long to complete. Instead of punishing trade partners who fail to act in good faith and according to international agreements, it seems to sanction bad behavior for as long as the offending nation can drag it out through the WTO process. The irony is that it almost incentivizes countries to not act in good faith. 

This is important, because COOL is a rare case where the U.S. was breaking trade laws and behaving in a protectionist manner regarding agriculture; 99% of the time we find ourselves on the other side of the fence. Admittedly, there has been a substantial change in world attitudes toward trade agreements. The value of trade in today’s global economy has greatly reduced the number of countries openly breaking the agreements they have made. Access to global markets and being a good-faith partner has simply proven to be good business. 

With that said, the other thing we have learned is that the one group you can count on to love the expediency of short-term solutions is politicians. The WTO is supposed to counter balance short-sighted political considerations, and while the WTO eventually arrives at the destination, the process takes far too long. 

As far as COOL goes, the problem with its slow, lingering death is that it continues to remind us of an embarrassing episode in our industry. It wasn’t the wasted political capital, it wasn’t the demagoguery, nor was it simply how it diverted us from true industry priorities. It was how we let it divide us and how our opponents used our internal battles to harm us. 

Looking back, there were plenty of good intentions and heartfelt emotions, but a decided lack of common sense. We went through all of this for an outcome that was predetermined to begin with. In the end, the only conclusion one can make is that the industry’s civil war over COOL was never about COOL. 

As an industry, the lesson is clear -- we must avoid allowing ourselves to be divided in such a manner in the future. We need to find a way to decide our direction internally and then stand united in that pursuit. 

Troy Marshall -- My View From The Country

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 May 21st Seasonal Drought Outlook
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"Click Here" to view a Slide Show of Drought Monitor maps for the last 12 weeks
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May 20th: Fed Loses Enthusiasm for Rate Hike

There was less enthusiasm for a June rate hike among Federal Reserve officials than had been the case in March, according to minutes from the April meeting released Wednesday. The minutes show that only a "few" Fed officials thought that the economic data would improve enough to trigger a rate hike at the Fed's next meeting on June 16-17. In March, "several" Fed officials had supported a June move. The minutes of the April 29-30 meeting show that "many" on the Fed thought that June was likely too soon for a rate hike was warranted, although they generally did not rule one out. Overall, "most" Fed officials thought the weakness in first quarter growth was transitory and the economy would resume at a moderate pace, suggesting a rate hike sometime later in the year.

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May 19th: The Demand Picture

It is not easy to define the demand side of the beef equation. Many consumers confuse the consumption of beef with demand for beef. Everyone agrees with the data evidencing the decline in beef production and if you produce less beef, consumption will decline. Some analysts incorrectly point out that consumers are turning away from beef during the past couple of years pointing to evidence of declining consumption.

The fact is beef demand has remained quite good in the face of declining production and sky high prices. Consumers are spending increasing amounts of their household budget on beef but beef is remaining in the diet -- although in decline quantities. Even beef exports are sustaining good demand during this period of production even though the volumes are smaller.

The source of declining production of beef is part of a cycle and has multiple causes. One cause is changing consumer attitudes towards beef. This can be a health threatening food scare like mad cow or ecoli or a health trend like the cholesterol scare of the 1980s. Another cause is overproduction resulting in too much beef at prices too low to return a profit to producers. The last cattle cycle was neither of these causes but instead was an uncontrollable cause, it was a weather related event. Droughts have always been around and always will be part of our existence on the planet earth.

Beef production is built on these cycles. The multiyear drought severely restricted breeding and caused many disruptions to normal consumer use of beef. It also caused structural changes to the beef chain. Many fast food restaurants were forced to change their menus and offer more diversified meat offerings -- the advent of the turkey burger and other non-beef offerings. Grocery chains reallocated shelf space and changed from frequent beef features.

USDA revised its production forecast for 2015 and is expecting slightly more beef produced than 2014.  In spite of increased carcass weights running 3% over prior year, the first half of the year will feature a decline in production. If we produce more beef this year than last, it will happen in the second half of this year and given the optimum pasture conditions it is unlikely cattle will be pushed off pastures into the feedyards anytime soon.

All of this can change once again as the beef production cycle shows the strength of the industry. Beneficial rains across the plains have made possible rebuilding of the herds and they are responding in record speeds spurred on by sky high prices for calves. As production increases and prices fall, the marketing chain will seek out ways to win back consumers to the new increases in supply of beef.

Ag Center Cattle Report

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May 18th: U.S. Loses WTO Appeal in Meat Label Dispute with Canada & Mexico

The United States has lost a battle with Canada and Mexico over its meat labeling rules, the World Trade Organization said on Monday in a ruling that backed calls to scrap the laws or risk costly trade retaliation.

The WTO panel said the United States must bring its country-of-origin labeling (COOL) into line with global trade laws, rejecting the nation's appeal against an earlier ruling that the requirements illegally discriminate against imported livestock.

The move opens the door to multibillion-dollar trade sanctions against the United States, although U.S. lawmakers have signaled they plan to act to repeal the rules as early as this week.

The labeling rules, which advocates say give consumers critical information about where their meat comes from, require retailers such as grocery stores to label meat with the country where the animal was born, raised and slaughtered.

The U.S. rules have resulted in fewer Canadian pig and cattle exports since 2009, according to the Canadian government. Canada has already published a hit list of potential U.S. targets, including wine, chocolate, ketchup and cereal.

"Unless Congress acts now, Canada and Mexico will put tariffs on dozens of U.S. products," said National Pork Producers Council President Ron Prestage. "That's a death sentence for U.S. jobs and exports."

Republican Michael Conaway, who chairs the House of Representatives Committee on Agriculture, said last week that he was working on legislation to repeal the labeling laws.

Conaway's office says the rules have no impact on food safety and that estimates show they cost the livestock and meat industry billions in compliance costs.

The main beef producers' association agreed that Congress must act quickly.

In response, the House Agriculture Committee approved H.R. 2393, a bill to repeal Country of Origin Labeling (COOL) requirements for beef, pork and chicken. The panel amended the Agriculture Marketing Act of 1946, on a 38-6 vote. While repealing the labeling requirements on beef, pork and chicken, it leaves intact the requirements for all other covered commodities.

The bill was approved on May 20, just two days after the World Trade Organization’s (WTO) Appellate Body ruled against the United States’ COOL requirements for meat. Canada and Mexico had challenged the rule for muscle cuts of meat at the WTO, arguing that COOL has a trade-distorting impact by reducing the value and number of cattle and hogs shipped to the U.S. market.

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May 15th: COOL's Cost to Industry & Consumers

The 2014 Farm Bill required the USDA to investigate the cost and benefits of mandatory Country Of Origin Labeling (COOL) laws implemented in 2009 and revised in 2013. University economists found no evidence of increased meat consumption stemming from the labeling, whereas they estimated that it would cost the beef and pork industries $8.07 billion and $1.31 billion, respectively, over a 10-year period. Moreover, they estimated that increased retail prices and reduced availability would add $5.98 billion for beef and $1.79 billion for pork to the cost to consumers.

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May 15th: Another Record Setting Week

Well, it’s been another record-setting week in the beef industry with boxed beef values scoring a new all-time high for the first time since last July. Live cattle futures answered that call yesterday with Jun LC trading up the 300-point limit. As of mid morning on Friday, futures have traded both sides of steady, digesting the recent significant turn of events which have the shorts at a disadvantage and asking if it’s time to double down or abandon ship.

OI Builds and Charts Look Great

Thurday’s rally was accompanied by another monster open interest increase of 7k contract bringing the total to 300k, a level not seen since early December. Every LC futures contract is now trading at its respective highest level since January 2015, finally retracing about two-thirds of the November high to February low monster break of almost $25. And Jun LC is still $8 discount from last week’s cash.

As futures have rallied, the charts have become pretty compelling as futures now find themselves resting upon support that was resistance during the weeks of trading during March and April. The low left in late February at $138.60 seems quite remote and illogical today, established in panic and capitulation. A good reminder that futures reflect only the fear, hope and greed of the moment and no more.

Still Plenty of Seasonal Bears

The fundamental bears are clamoring as loudly as ever this morning, warning that the seasonal probabilities clearly point to a break in June. Over the last 15 years, pretty much two-thirds of the time cash cattle and the beef cutout are lower in June than May. Of course this is no typical May and June from a supply standpoint nonetheless the fundamental bears are insisting lower cash markets will materialize soon. Of course last year the cutout stayed strong until mid-summer. Last year imports were less and exports were more. But then non-fed and fed slaughter were both higher in 2014 than in 2015.

Country Quiet

As of mid morning on Friday, packers are still quiet, trying to ignore the enthusiasm boxed beef and futures values have drummed up in cattle feeders and refusing to indicate any willingness to pay up for cash cattle. At this point, it appears it could be a late afternoon/evening trade or perhaps the packers will fight the fight and attempt to hold out until next week when the calendar would historically be in his favor. The last time the cutout value made an all-time high, cash cattle averaged $163.26, which would be about $1.50 higher than last week, certainly not a stretch for this week. Also, this week’s kill is expected now at 575,000 to 580,000 head as packers roll production at profitable margins and fill orders across the U.S.

The Beef

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May 15th: Consumer Sentiment Falls to a 7 Month Low

Consumer sentiment fell to a preliminary May reading of 88.6, a seven-month low, compared with a final April level of 95.9, according to reports on the University of Michigan gauge released Friday. Economists had expected a May level of 94.5. Economists follow readings on confidence to look for clues about consumer spending, the backbone of the economy. For context, the consumer-sentiment gauge averaged 86.9 over the year leading up to the recession.

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May 15th: House Passes Act to Stop WOTUS Rule

The House passed H.R. 1732, the Regulatory Integrity Act of 2015, by a vote of 261-155 yesterday. This bill would force the Environmental Protection Agency (EPA) and the Army Corps of Engineers to stop moving forward with the proposed “Waters of the United States” rule.  President Obama has threatened to veto the bill if it passes the Senate.

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May 14th: Choice Beef Reaches All-Time High

Wholesale U.S. choice-grade beef hit an all-time high on Thursday, spurred by supermarkets stocking up on tight supplies for the May 25 Memorial Day holiday, the kickoff of the summer grilling season, traders and analysts said.

In addition, end users including retailers, processors and the food service sector are heavily promoting beef in May as the industry celebrates both National Beef Month and National Hamburger Month.

Choice beef is typically more expensive than the next-lower grade, "select cuts," because it includes added "marbling" or fat, making it more juicy and tender.

Thursday morning's wholesale price for choice beef hit $264.52 per hundredweight (cwt), topping the previous record of $263.81 on Jan. 14, according to the U.S. Department of Agriculture (USDA).

It also surpassed the July 2014 record of $263.66 set in the thick of summer barbecues, and outpaced last year's price at this time by $39.30.

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May 14th: Brazil Close to Exporting Fresh Beef to U.S.

Brazil is "closer than it had ever been" to exporting fresh beef to the United States, the chief executive of Brazilian meat packer JBS SA said on Thursday, adding that he expects shipments to start later this year.

The Brazilian agriculture ministry expects a formal announcement on meat exports to the United States when President Dilma Rousseff visits Washington next month.

But even if the accord is concluded it would not be a "transformational event" for Brazil's beef industry, said JBS chief executive Wesley Batista, who heads the world's largest meat seller.

"Without any doubt this would benefit the flow of volumes from Brazil but today markets are global. It's not like in the past," he said.

Little impact would be felt until next year because of likely delays in protocols and approval needed for individual plants, added Batista.

Brazil already exports canned beef and other cooked beef to the United States. The anticipated deal would cover fresh beef, such as meat exported in refrigerated containers.

Batista spoke on a conference call to discuss JBS's record first-quarter earnings, which surged nearly 20-fold from a year ago to a 1.39 billion reais ($457 million), up from 70 million reais in the first quarter of 2014.

Currency hedging helped reverse net financial expenses of 869 million reals a year earlier.

"We had an impact from exchange rate variation and captured revenue from derivatives that cover this exposure," Batista said. More than 80 percent of the JBS sales are in dollars.

Profit margins improved in all the regions where JBS operates, including the United States and Australia, but it faced a "challenging quarter" in South American unit JBS Mercosul, Batista said. High cattle prices in Brazil pressured margins and exports also fell, he added.

JBS grew from a family-run butcher in Brazil's interior to become the country's largest private company by revenue. Now, it is seeking to become a global processed foods giant as well.

After years of aggressive acquisitions, the company plans to focus on consolidation after finalizing the acquisition of Australia's Grupo Primo Smallgoods for $1.125 billion this year.

Reuters

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May 12th: WASDE: 2015 Meat Production Raised

The USDA's World Agricultural Supply and Demand Estimates Report forecasts total U.S. red meat and poultry production in 2016 is projected to be above 2015.  Beef production is forecast higher as gains in the 2014 and 2015 calf crops support year-over-year increases in cattle placements in late 2015 and early 2016.  Marketings of fed cattle are forecast to increase during 2016, while carcass weights are expected to reflect incentives to keep cattle weights high.  Pork production is expected to increase as pig crops expand; reflecting moderate increases in farrowings during late 2015 and early 2016 and a continued recovery in growth in pigs per litter.  Broiler and turkey production are forecast higher as the more rapid expansion in production which began in late 2014 continues.  Egg production for 2016 is forecast to expand as producers respond to favorable egg prices and moderate feed costs. 

The total red meat and poultry production forecast for 2015 is raised from last month on higher beef, pork, and broiler production.  Beef production is raised on heavier dressed weights.  Pork production is forecast higher as the pace of slaughter in the second quarter remains heavy and supplies of slaughter hogs in the second part of the year are expected to remain ample.  Broiler production is raised from last month as producers continue to expand egg sets and chicks placed.  Turkey production is lowered from last month as previously forecast production growth is expected to be limited.  Egg production for 2015 is lowered as recent discoveries of HPAI will constrain production growth. 

Red meat and poultry exports are expected to increase in 2016 with expanding production.  Imports of beef and pork are expected to decline.  For 2015, export forecasts for beef, pork, and broiler meat are raised from last month on March export data and larger production forecasts.  Beef imports are forecast higher on strong processing-grade beef demand and tight supplies of domestic processing beef.  Pork imports are lowered with expected increases in production.

For 2016, fed cattle prices are forecast near 2015 levels as supplies increase but demand for fed cattle remains robust.  Hog prices are forecast to be lower than 2015 as hog supplies increase.  However, broiler and turkey prices are forecast higher despite increased production as demand improves and beef supplies remain tight.  Egg prices are forecast higher on firm demand.  The fed cattle price forecast for 2015 is lowered from last month.  Hog prices are reduced slightly.  Broiler prices are forecast higher as demand remains strong.  Turkey prices are raised based on current strength in prices and reduced production

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May 11th: U.S. Beef Imports Soar

The U.S. has already imported more than 875 million pounds of beef through March. This is 47% higher than 2014 compared to the same time period. Additionally, U.S. beef imports in 2014 were up 31% from 2013.

The United States imported more than 325 million pounds of beef in March.  This is the most beef that the U.S. has imported in one month in the last 10 years (since July 2005).  The U.S. has not imported more than 300 million pounds in the last 97 months (since July 2007). 

If the United States maintains this pace, it is projected that more than 3.5 billion pounds of beef will be imported in 2015. If realized, this will be the 3rd highest on record. The United States has only imported more than 3.5 billion pounds of beef twice in history (2004 & 2005).

The United States has only imported over 3 billion pounds of beef eight times (2000 – 2007). The United States had never imported more than 3 billion pounds of beef until 2000 and hasn’t since 2007. However, the U.S. was close in 2014 when beef imports reached 2.9 billion pounds. U.S. beef imports were barely over 2 billion pounds in 2011.

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May 8th: World Food Prices Fall but Meat Bucks the Trend

Global food prices fell in April to their lowest since June 2010, as dairy led most commodities down, the United Nations food agency said on Thursday.

The U.N. Food and Agriculture Organization's (FAO) price index, which measures monthly changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 171 points in April, 1.2 percent below its reading in March.

High global production, a strong U.S. dollar and cheaper crude oil have helped cap food prices for the past year and the index has been declining since April 2014.

There are no major concerns about supply, so external factors are likely to have more influence over price developments in the near future, FAO senior economist Abdolreza Abbassian said.

"My gut feeling is that the exchange rate would have the biggest influence, and if the dollar does get weaker this could be supportive to prices," Abbassian said.

Meat prices bucked the trend, rising in April for the first time since August 2014.

The FAO forecast world cereal production in 2015 would fall by 1.5 percent from the previous year, with overall output reaching 2.509 billion tonnes. Most of the decrease would come from reduced planting of maize, the agency said.

Cereal stocks at the end of the 2015-16 season are forecast to reach 626.6 million tonnes and world wheat output is due to hit 719.1 million tonnes, the FAO said.

Reuters

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May 7th: Unusual Cattle Markets

Unusual market conditions lead to unusual incentives that result in unusual market behavior.  This makes markets unusually difficult to figure out.  There is considerable variability in views across the industry about the current and coming fed cattle market for the remainder of 2015.  And for good reason; we are seeing extremes in conditions and behavior that are clouding the picture.

The April 1 cattle on feed inventory was essentially unchanged from one year ago.  However the makeup of that inventory was unique in several respects.  The number of heifers on feed was not only down 10.1 percent from one year ago, it was the lowest quarterly heifer on feed number since 1996.  This is not surprising given the anticipated heifer retention and herd expansion that is underway.  Fewer heifers in feedlots would naturally suggest that steers make up a bigger percentage of total cattle on feed.  More than that however, the number of steers on feed actually increased in April, up 5.4 percent year over year, to the highest quarterly steers on feed total since January, 2008.  As a result, the April 1, 2015 steers on feed total was 69 percent of total cattle on feed, 2.4 percent higher than one year ago and a new record level.  Until now, the 2014 total was tied for a record percentage of steers on feed that only occurred once prior (in 2005) in data back to 1996.  It appears that feedlots have drawn heavily from available steer supplies to maintain feedlot inventories so far this year.

Variability in placement weights also adds to the challenge of determining the timing of fed cattle production.  For many months, monthly feedlot placements have tended to swing between large proportions of lightweight cattle (less than 600 pounds) and placements of heavy feeders (over 800 pounds), often with fewer cattle in the traditional feeder placement weight categories of 600 to 800 pounds.  The “tails” of the placement weight distribution add to the difficulty because there is no way to estimate the average weight in the category, especially for the heavy feeders.  Average placement weights vary because of changes in average animal size and because of changes in the steer to heifer mix.

March placements consisted of 39.4 percent of placements over 800 pounds, the highest monthly level for the weight category in available data back to 1996.  The average of January through March placements has the 800-plus pound category averaging 35.8 percent of total placements compared to 31 percent for the same period one year ago.  A 12 month moving average of placements by weight group confirms that placements of 800-plus pound feeder cattle are at a record level at the current time.  The average weight of this group could vary from just over 800 pounds to over 900 pounds and change the timing of marketings of these animals by a month.  A casual review of auction reports suggests that significant numbers of steers up to and exceeding 1,000 pounds have been marketed this spring. This may suggest a somewhat bigger seasonal increase in feedlot marketings into the third quarter and a bigger tightening of fed cattle supplies late in the year.  However, variability in the total number of placements and in the weight distribution in recent months makes this anything but a clear picture.

Steer and heifer carcass weights continue to push well about year ago levels as a result of several factors.  On the one hand, heavier carcass weights offset declining cattle slaughter to reduce the impact of declining beef production in response to high beef prices.  Steer and heifer slaughter is down 7.1 percent so far this year while total beef production is down only 5.2 percent, due to increased carcass weights.  Both feedlots and packers are complicit in pushing slaughter cattle to heavier weights as a result of this general market incentive.

Feedlots continue to have additional production incentives to feed cattle longer and to bigger weights, as they have had for several months.  Limited supplies of feeder cattle, record high feeder cattle prices and lower feed costs all contribute to feedlot incentives to hold cattle longer, which keep feedlot inventories higher despite declining feedlot production.  Data from several Kansas feedlots confirms that average days on feed are at record levels.  The increase in days on feed for heifers is even more pronounced than for steers, contributing to the lack of seasonal decline in heifer carcass weights so far this year.

In pursing market incentives to delay cattle marketings and push cattle to bigger weights, feedlots are trading animal performance on the animals currently in the feedlot for the costs of replacing inventories with new animals.  The Kansas feedlot data has shown for several months that average daily gains are lower year over year and feed conversions are higher; both expected outcomes of feeding heavier animals longer.  As a result, feedlot cost of gain has not decreased as much as lower corn prices would suggest because poorer performance is offsetting some of the cheaper feed cost.  This tradeoff suggests there is a limit to how far feedlots can push fed cattle weights.  It also suggests that the incentive could change abruptly if feed prices were to increase.

Finally, the relative role of dairy animals in total feedlot production is at an unprecedented level.  Declining beef cattle inventories and declining veal slaughter (most of which is dairy calves) mean that dairy animals accounted for nearly 26 percent of the net (adjusted for veal slaughter) 2014 calf crop; a record level.  Dairy calves are typically placed on feed at very light weights and stay in feedlots up to a year.  This means that relatively large numbers of dairy calves are impacting fed cattle markets in 2015.  Analysts often uses measures such as estimated cattle on feed over 120 days to assess the currentness of feedlot marketings.  However. such measures are difficult to interpret when dairy calves play a proportionately larger role in cattle feeding as they do now.

Derrell S. Peel -- Oklahoma State University

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April 24th: 90 Day Precipitation & Temperature Probabilities
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March 17th - Annual Sales Data for Cattle Farms & Ranches

The USDA’s National Agricultural Statistics Service has compiled data from the 2012 Census of Agriculture Farm Typology report profiling family farms/ranches in the United States.  For farms/ranches raising cattle or calves, the report lists a total of 740,978 operations...

  • Of those, 202,047 are listed as retirement farms, where the operators report they are retired, although they continue to farm on a small scale. 
  • On 266,250 cattle operations, NASS reports the operator has an off-farm occupation. 
  • Of the cattle farms where the operator’s primary occupation is farming, 
    • 130,774 are listed as having annual sales less than $150,000
    • 47,648 have sales of $150,000 to $349,999
    • 51,301 have sales from $350,000 to $999,999
    • 20,142 have sales from $1 million to $4,999,999
    • 2,609 have sales of more than $5 million
  • Non-family farms account for the remaining 20,207 cattle operations.
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February 27th - Comparison by State of Heifers Retained for Replacements
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January 1, 2015 Inventory vs. 2014 Inventory... Compiled from USDA National Agricultural Statistical Service Data
.
Rank
State
2015
2014
% Change
2015 as
% of Total
.      
 
1
Texas
710,000
660,000
7.58%
12.29%
2
Montana
425,000
430,000
-1.16%
7.36%
3
Oklahoma
405,000
325,000
24.62%
7.01%
4
Nebraska
390,000
400,000
-2.50%
6.75%
5
South Dakota
380,000
340,000
11.76%
6.58%
6
Missouri
310,000
305,000
1.64%
5.37%
7
Kansas
260,000
240,000
8.33%
4.50%
8
Wyoming
183,000
175,000
4.57%
3.17%
9
Iowa
170,000
160,000
6.25%
2.94%
10
North Dakota
164,000
170,000
-3.53%
2.84%
11
Colorado
160,000
150,000
6.67%
2.77%
12
Arkansas
141,000
137,000
2.92%
2.44%
13/14
Kentucky
135,000
150,000
-10.00%
2.34%
13/14
Tennessee
135,000
130,000
3.85%
2.34%
15
Florida
125,000
115,000
8.70%
2.16%
16
California
120,000
110,000
9.09%
2.08%
17/18
Idaho
110,000
110,000
0.00%
1.90%
17/18
Oregon
110,000
105,000
4.76%
1.90%
19
Alabama
110,000
110,000
0.00%
1.90%
20
Virginia
105,000
115,000
-8.70%
1.82%
21
Mississippi
95,000
91,000
4.40%
1.64%
22
Minnesota
85,000
80,000
6.25%
1.47%
23
Georgia
83,000
82,000
1.22%
1.44%
24
New Mexico
80,000
70,000
14.29%
1.38%
25
Utah
 78,000
70,000
11.43%
 1.35%
26
Wisconsin
75,000
70,000
7.14%
1.30%
27
Louisiana
73,000
84,000
-13.10%
1.26%
28
North Carolina
69,000
72,000
-4.17%
1.19%
29
Illinois
64,000
63,000
1.59%
1.11%
30
Washington
51,000
50,000
2.00%
0.88%
31/32
Ohio
50,000
55,000
-9.09%
0.87%
31/32
Pennsylvania
50,000
50,000
0.00%
0.87%
33
Indiana
45,000
39,000
15.38%
0.78%
34
New York
40,000
45,000
-11.11%
0.69%
35
Nevada
37,000
36,000
2.78%
0.64%
36
Arizona
34,000
30,000
13.33%
0.59%
37
West Virginia
32,000
35,000
-8.57%
0.55%
38
South Carolina
30,000
30,000
0.00%
0.52%
39
Michigan
23,000
29,000
-20.69%
0.40%
40
Hawaii
11,000
9,000
22.22%
0.19%
41
Maryland
8,000
9,500
-15.79%
0.14%
42/43
Vermont
4,000
4,500
-11.11%
0.07%
42/43
Maine
4,000
3,000
33.33%
0.07%
44/45
Connecticut
2,000
1,500
33.33%
0.03%
44/45
Massachusetts
2,000
2,000
0.00%
0.03%
46
New Jersey
1,300
1,000
30.00%
0.02%
47
New Hampshire
1,000
1,000
0.00%
0.02%
48
Alaska
900
800
12.50%
0.02%
49
Delaware
700
500
40.00%
0.01%
50
Rhode Island
500
500
0.00%
0.01%






-
Total
5,777,400
5,551,300
+4.07%
 100.00%
.

February 27th - Beef Cows: State Rankings & Change
.
.January 1, 2015 Inventory vs. 2014 Inventory... Compiled from USDA National Agricultural Statistical Service Data
.
. Rank
. State
2015
2014
. % Change
2015 as
% of Total
 
 
 
 
1
Texas
4,180,000
3,910,000
6.91%
14.08%
2
Oklahoma
1,900,000
1,795,000
5.85%
6.40%
3
Missouri
1,881,000
1,820,000
3.35%
6.33%
4
Nebraska
1,786,000
1,807,000
-1.16%
6.01%
5
South Dakota
1,632,000
1,635,000
-0.18%
5.50%
6
Montana
1,506,000
1,476,000
2.03%
5.07%
7
Kansas
1,477,000
1,414,000
4.46%
4.97%
8
Kentucky
1,007,000
992,000
1.51%
3.39%
9
Iowa
920,000
895,000
2.79%
3.10%
10
Florida
916,000
907,000
0.99%
3.08%
11
North Dakota
904,000
923,000
-2.06%
3.04%
12
Tennessee
883,000
864,000
2.20%
2.97%
13
Arkansas
863,000
862,000
0.12%
2.91%
14
Colorado
745,000
710,000
4.93%
2.51%
15
Wyoming
694,000
694,000
0.00%
2.34%
16
Alabama
672,000
681,000
-1.32%
2.26%
17
Virginia
637,000
637,000
0.00%
2.15%
18
California
600,000
600,000
0.00%
2.02%
19
Oregon
525,000
516,000
1.74%
1.77%
20
Georgia
489,000
500,000
-2.20%
1.65%
21
Idaho
481,000
465,000
3.44%
1.62%
22
Mississippi
468,000
477,000
-1.89%
1.58%
23
Louisiana
466,000
450,000
3.56%
1.57%
24
New Mexico
407,000
407,000
0.00%
1.37%
25
Illinois
376,000
355,000
5.92%
1.27%
26
North Carolina
363,000
355,000
2.25%
1.22%
27
Minnesota
350,000
340,000
2.94%
1.18%
28
Utah
324,000
340,000
-4.71%
1.09%
29
Ohio
282,000
293,000
-3.75%
0.95%
30
Wisconsin
275,000
250,000
10.00%
 0.93%
31
Nevada
217,000
231,000
-6.06%
 0.73%
32
Indiana
199,000
187,000
6.42%
 0.67%
33
Washington
198,000
214,000
-7.48%
 0.67%
34
West Virginia
185,000
191,000
-3.14%
 0.62%
35
Arizona
175,000
178,000
-1.69%
 0.59%
36
South Carolina
170,000
169,000
0.59%
 0.57%
37
Pennsylvania
150,000
160,000
-6.25%
 0.51%
38
New York
115,000
105,000
9.52%
0.39%
39
Michigan
112,000
119,000
-5.88%
 0.38%
40
Hawaii
69,800
71,800
-2.79%
0.24%
41
Maryland
41,000
38,000
7.89%
 0.14%
42
Vermont
12,000
12,000
0.00%
 0.040%
43
Maine
11,000
11,000
0.00%
0.037%
44
New Jersey
7,500
7,000
7.14%
0.025%
45
Massachusetts
5,500
6,000
-8.33%
0.019%
46
Connecticut
5,000
4,000
25.00%
0.017%
47
Alaska
4,300
4,300
0.00%
0.014%
48
New Hampshire
3,000
3,000
0.00%
 0.010%
49
Delaware
2,500
2,800
-10.71%
 0.008%
50
Rhode Island
1,500
1,500
0.00%
0.005%






-
Total
29,693,100
29,085,400
+2.09%
100.00%
.

February 27th - All Cattle & Calves: State Rankings & Change
..
January 1, 2015 Inventory vs. 2014 Inventory... Compiled from USDA National Agricultural Statistical Service Data
.
Rank
State
2015
2014
% Change
2015 as
% of Total
.      
 
1
Texas
11,800,000
11,100,000
6.31%
13.14%
2
Nebraska
6,300,000
6,250,000
0.80%
7.02%
3
Kansas
6,000,000
5,800,000
3.45%
6.68%
4
California
5,150,000
5,250,000
-1.90%
-5.73%
5
Oklahoma
4,600,000
4,300,000
6.98%
5.12%
6
Missouri
4,000,000
3,850,000
3.90%
4.45%
7
Iowa
3,900,000
3,800,000
2.63%
4.34%
8
South Dakota
3,700,000
3,700,000
0.00%
4.12%
9
Wisconsin
3,500,000
3,400,000
2.94%
3.90%
10
Colorado
2,600,000
2,550,000
1.96%
2.90%
11
Montana
2,500,000
2,550,000
-1.96%
2.78%
12
Minnesota
2,330,000
2,300,000
1.30%
2.59%
13
Idaho
2,300,000
2,240,000
2.68%
2.56%
14
Kentucky
2,060,000
2,110,000
-2.37%
2.29%
15
Tennessee
1,730,000
1,760,000
-1.70%
1.93%
16
Florida
1,700,000
1,670,000
1.80%
1.89%
17
North Dakota
1,650,000
1,750,000
-5.71%
1.84%
18
Arkansas
1,640,000
1,650,000
-0.61%
1.83%
19
Pennsylvania
1,530,000
1,610,000
-4.97%
1.70%
20
Virginia
1,470,000
1,510,000
-2.65%
1.64%
21
New York
1,450,000
1,450,000
0.00%
1.61%
22
New Mexico
1,340,000
1,310,000
2.29%
1.49%
23
Oregon
1,300,000
1,280,000
1.56%
1.45%
24
Wyoming
1,300,000
1,270,000
2.36%
1.45%
25
Ohio
 1,250,000
1,250,000
0.00%
 1.39%
26
Alabama
1,220,000
1,270,000
-3.94%
1.36%
27
Washington
1,150,000
1,110,000
3.60%
1.28%
28/29
Illinois
1,140,000
1,130,000
0.88%
1.27%
28/29
Michigan
1,140,000
1,130,000
0.88%
1.27%
30
Georgia
1,040,000
1,040,000
0.00%
1.16%
31
Mississippi
910,000
930,000
-2.15%
1.01%
32
Arizona
880,000
920,000
-4.35%
0.98%
33
Indiana
870,000
860,000
1.16%
0.97%
34
North Carolina
800,000
810,000
-1.23%
0.89%
35
Louisiana
790,000
790,000
0.00%
0.88%
36
Utah
780,000
810,000
-3.70%
0.87%
37
Nevada
435,000
460,000
-5.43%
0.48%
38
West Virginia
370,000
385,000
-3.90%
0.41%
39
South Carolina
335,000
335,000
0.00%
0.37%
40
Vermont
260,000
260,000
0.00%
0.29%
41
Maryland
185,000
182,000
1.65%
0.21%
42
Hawaii
135,000
133,000
1.50%
0.15%
43
Maine
85,000
85,000
0.00%
0.095%
44
Connecticut
47,000
47,000
0.00%
0.052%
45
Massachusetts
38,000
39,000
-2.56%
0.042%
46
New Hampshire
30,000
32,000
-6.25%
0.033%
47
New Jersey
28,000
27,000
3.70%
0.031%
48
Delaware
17,000
16,000
6.25%
0.019%
49
Alaska
10,000
10,000
0.00%
0.011%
50
Rhode Island
5,000
5,000
0.00%
0.006%






-
Total
89,800,000
88,526,000
+1.44%
 100.00%
.

January 19th - Mixed Cattle Outlook for 2015

Tight margins and lower grain prices are encouraging cattle feeders to feed to heavier weights, helping offset lower numbers of cattle available for feeding and slaughter, according to the latest Livestock, Dairy and Poultry Outlook report from the USDA. At the same time, improved forage conditions appear to be encouraging ranchers to retain more heifers for breeding, which could further reduce supplies of feeder cattle in the near term.

Milk prices, meanwhile, are dropping, which could result in a pickup in culling of dairy cows. The average all-milk price for 2014 was a record high of $23.97 per hundredweight, up 19.6 percent from the 2013 price of $20.05 per hundredweight. But for 2015, USDA now projects an average all-milk price of  $17.75 to $18.55 per hundredweight, down from last month's forecast of $18.45 to $19.25.

Pork will become more competitively priced as the U.S. industry rebounds from the effects of Porcine Epidemic Diarrhea. USDA reports producers have increased breeding inventory increases express strong farrowing intentions, suggesting higher pork production and lower hog prices in 2015. Hog prices are expected to average $60 to $65 per hundredweight this year, almost 18 percent below prices in 2014.

Other key points in the report include:

  • Drought continues in the Southern Plains and Southwestern United States, although its intensity has abated somewhat. The U.S. Drought Monitor, released December 30, 2014, showed an improved situation for cattle country compared with last month.
  • Despite continuing drought, the limited precipitation has allowed wheat pasture to remain in relatively good condition, providing some opportunity for weight gains in feeder cattle being pastured on Southern Plains wheat.
  • Placements in 1,000-plus-head feedlots during November dropped 4 percent below 2013. November placements were the lowest and marketings were the second lowest for the month since the series began in 1996.
  • Any significant retention of heifers for rebuilding the cow herd would offset increases in beef production due to heavier slaughter weights. However, cow-calf operators face significant incentives to sell heifers as feeder cattle sooner rather than waiting for income from their calves at least two years later.
  • Commercial red meat production for the United States in November 2014 was down 9 percent compared with November 2013. Further, Livestock Slaughter showed a 10-percent drop in commercial beef production through the month of November 2014 compared with this time last year.
  • Average live weights of commercial cattle continue higher than last November, up by 24 pounds. Since September 2014, 5-Area Fed Steer live weights have consistently exceeded 1,420 pounds.
  • November 2014’s All-fresh beef retail value was $5.98 per pound, up nearly a dollar from a year earlier. Estimated average monthly Choice retail beef prices for January 2014 through November 2014 were $5.97 per pound, 13 percent above the same-period average of $5.28 for 2013.
  • For 2015, average annual retail beef prices are expected to be slightly higher than they were in 2014. Recent drops in gas prices have given some indication of additional spending power at the grocery store. Larger supplies of pork and poultry may limit beef price increases this year.
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May 21st - As Fundamental Change Moves an Industry

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

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


The Cattle Report

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May 2

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