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January 19th: Commodity Market Comments
  • “Shootin’ The Bull” -- Christopher B. Swift.
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    Live Cattle: The higher cash trade today did little to spur futures.  Of interest now is that with the perception of a large fund presence, who will take the other side when they decide to exit or slow their buying?  I can’t imagine too many producers applying the Texas hedge at this time.  Couple all of this with the fruition of the majority of previously anticipated events, and there leaves little to anticipate one way or the other.  So, at this juncture, there are perceived more questions than answers.  With that said, about the only thing to be done is secure a minimum floor using options, create a synthetic short futures, or make sales above $119.00 and prepare to potentially make a multitude of margin calls.

    Feeder Cattle: As fats continue to make new highs, the feeders continue to lag.  None of the spring months have been able to exceed their highs made earlier this month.  With option premiums remaining elevated, and no further advances in price, it appears most are only going to be hedging a worst case scenario.  If you think about a 50% retracement in price of this up move, then here are the numbers.  The rally in the April contract has been $21.45.  At today’s close of $129.35 April, if you subtract the $4.40 premium of the $129.00 put, it produces a minimum sale price of $124.60.  A 50% retracement from low to high produces a price of $119.65 or $4.95 spread between minimum sale and potential retracement level.  So, the unfortunate of this is that an at the money hedge, with a 50% retracement in price, may only net a return of $4.95 which makes this just about an even swap.  One risks $4.40 to potentially make $4.95 or better.  So, as you can see, this is not a good deal or perceived as very advantageous.  Other than this avenue though, one must consider the flip side.  We don’t know where the top is, or how long prices could remain elevated, even if they do not move any higher.   Again, more questions than answers.

    Corn: Beans softened, wheat traded lower and corn held its own today.  I apologize for not discussing corn as much as beans, but there appears little to discuss in corn and lots to consider in beans.  To give credence to corn for the day though, it has broken out to the upside from a triangular formation.  Stocks remain elevated, but demand good.  On the Association of American Railroads showed a 4.4% increase in grains moved by rail the past week.  This comes on literally no change in the exchange rate of any country.  All in all, I anticipate beans to continue higher and corn to continue to meander, wallow and repeat.

    Crude: Crude traders are  holding the bottom end of the range.  However, they are being pummeled pretty hard in an attempt to break through the bottom end.  I anticipate traders to hold the bottom and begin advancing.  This will be anticipated to accelerate once the US dollar begins trending lower.

    Bonds: Bonds remain forming a correction.  Bonds sold off sharply the past two trading days.  I am not anxious yet to get short, but this is on the front burner.  For those that will only use this information to help restructure debt, I am not sure that this minor correction will offer much in the way of reduced interest rates on the retail side.  For physical restructuring of debt, I would feel the more important aspect would be to get it done before the down trend resumes.  Ask your lender to calculate a 3 to 5 point higher bond move to what retail rates are to see how much, if any, a move of this extent would benefit you in lower retail rates.

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    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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    January 19th: Closing Futures Summary

    Live cattle futures finished 25 to 75 cents higher, closing high-range for the day. Cattle futures firmed in the last half of today's session as reports of stronger cash trades surfaced. Additional cash cattle trade took place in Nebraska and Kansas at $122 today -- up $3 from week-ago. These reports followed light trade yesterday between $120 and $121 on the Plains. 

    Corn futures closed 3/4 to 1 3/4 cents higher in narrow trading. Corn futures traded steady to firmer today even as strength in the dollar dampened prices in overnight trade. A give-back on some of the dollar's gains eased the selling pressure. Demand news boosted prices through the day. Before the open, USDA announced an unknown buyer had purchased 110,400 MT of corn for 2016-17.

    Soybean futures saw split trade today, with old-crop remaining under pressure and new-crop mixed to firmer. In the end, old-crop ended 1 3/4 to 5 1/4 cents lower and new-crop was narrowly mixed. Strength in the U.S. dollar index encouraged profit-taking after traders added some weather premium into prices due to recent flooding in Argentina. Adding to profit-taking incentive is a softening of basis levels across the country due to stepped up farmer-related selling. 

    Winter wheat futures faced pressure throughout today's session, and these markets ended near session lows. SRW posted losses of 4 3/4 to 7 1/2 cents, while HRW wheat ended 9 to 10 cents lower. HRS wheat finished narrowly mixed. Traders took a step back and corrected the overbought condition of the HRW wheat market today, based on the nine-day Relative Strength Index. That provided some spillover to the SRW wheat market.

    Lean hog futures ended the day 15 to 97 1/2 cents higher, with late-2017 contracts leading gains. Futures saw two-sided trade, but firmed on spillover from cattle futures and news of steady to $1 higher cash hog bids. While packers have seen margins tighten, they are still enjoying profits, which gives them incentive to keep lines running as full as possible. Packers are reportedly in need of supplies for a large Saturday kill. 

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    January 19th: USDA Livestock Slaughter Report

    Record Red Meat and Pork Production for December

    Commercial red meat production for the United States totaled 4.40 billion pounds in December, up 3 percent from the 4.27 billion pounds produced in December 2015.

    • Beef production, at 2.17 billion pounds, was 6 percent above the previous year. Cattle slaughter totaled 2.61 million head, up 7 percent from December 2015. The average live weight was down 7 pounds from the previous year, at 1,381 pounds.
    • Veal production totaled 6.8 million pounds, 13 percent below December a year ago. Calf slaughter totaled 48,800 head, up 8 percent from December 2015. The average live weight was down 55 pounds from last year, at 240 pounds.
    • Pork production totaled 2.21 billion pounds, up slightly from the previous year. Hog slaughter totaled 10.5 million head, up 1 percent from December 2015. The average live weight was down 2 pounds from the previous year, at 283 pounds.
    • Lamb and mutton production, at 13.1 million pounds, was down 1 percent from December 2015. Sheep slaughter totaled 197,100 head, 2 percent below last year. The average live weight was 133 pounds, up 1 pound from December a year ago.
    January to December 2016 commercial red meat production was 50.4 billion pounds, up 4 percent from 2015. Accumulated beef production was up 6 percent from last year, veal was down 9 percent, pork was up 2 percent from last year, and lamb and mutton production was down slightly. 
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    January 19th: USDA Revises Hay Acres Lower
    Katelyn McCullock -- Economist, American Farm Bureau Federation 

    The USDA NASS annual crop production report showed significant revisions to the hay acres harvested in 2016.  Changes from the October crop report indicated a 7% (1.2 million) reduction in the number of alfalfa acres harvested and a 4% (1.5 million) reduction in all other hay acres harvested.  Final acres showed South Dakota, Wisconsin and Iowa having more than 200 thousand acres taken out of alfalfa production.  North Dakota, Ohio, South Dakota, Missouri, Kentucky, all had declines of 100 thousand acres or more in other hay acreage declines. New alfalfa seedlings for the 2017/18 marketing year are also continuing the long term trend downward, posting an 11% year over year decrease. 

    Despite large acreage revisions, December 1 hay stocks moved up slightly relative to last year by 1%, and production was unchanged from last year.  Pasture and range conditions were excellent this year and very few problem areas in the plains region required supplemental feeding during the warm months.  High numbers of wheat acres and low cost of gain also contributed to ample wheat grazing opportunities over the winter.  Both of these factors allowed hay prices to continue to slip from last year’s prices.  Alfalfa prices have averaged nearly $30 per ton below last year’s price over this marketing year.  Other hay prices have been even to slightly lower, averaging $2 per ton lower.

    Alfalfa and other hay prices have posted year over year declines since the 2012/2013 marketing year, but still remain above the historical long term average prior to that drought year.  If disappearance remains light for the second half of this winter, alfalfa prices are expected to post another year over year decline in prices, while other hay prices are expected to be even.  The loss or continued loss of hay acres to other crops make it unlikely this short term trend of price declines will continue.  In the 2000’s alfalfa prices averaged $115 per ton annually, a figure prices have not seen since 2009/10.  Other hay prices averaged $91 per ton over that same decade, an annual average season price not seen since 2005/06.  Hay stocks are also much lower than they have been in previous decades. December 1 hay stocks 2001-2010 averaged about 105 million tons, compared to 2011-2016, averaging 92 million tons.  Tighter supplies mean drought or poor pasture and range conditions can aggressively move prices upward.  Cattle feeders and dairymen alike should expect hay prices to average higher, but still are very much dependent on regional weather events. 

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    January 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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    January 18th: More New Highs
    Cassie Fish... cassandrafish.com

    Both cash cattle and CME live cattle futures have carved out new highs for the move today, the FCE auction bringing $121.25 top, the highest cash has traded since late June/early July 2016.

    Spot Feb LC methodically and conservatively pushed over $120, its highest level since March and up $6.47 since its last pullback earlier this month. Today’s futures rally seems steeped with caution, despite the solid cash performance. Some technical indicators are overbought once more, quashing enthusiasm to buy the rally. There has been a massive build up in open interest on this rally, up another 3k+ yesterday.

    A combination of seasonally tighter fed cattle supplies and weather-impacted feedyards and packing plants is supporting both cattle prices and boxed beef values, which were higher again today after gains yesterday. Still the cutout is trading at the same level it was in December, a clear expression of the dramatic loss in packer margins.

    Yesterday’s USDA Comprehensive Cutout report confirmed active spot volume as well as another round of active 22+ day bookings, which will incentivize packers somewhat to slaughter 590k-600k next week. This week’s weather-shortened kill will come in around 570-585k. A resumption of a normal kill next week requires a replenishing of physical inventory. Still, packers will be treading carefully, critically examining slaughter schedules and inventory needs against sold ahead positions- hoping to avoid a dive into red ink.

    Remarkable

    One amazing statistic was released today by the USDA that’s worth mentioning. The week ended January 7, 2017, had the highest percentage of cattle grading choice than any time in history. Not just for this time frame, anytime. Obviously reflecting the great genetics of the U.S. commercial cowherd and stellar fall feeding weather, this statistic is remarkable. Throwing in the prime graders, the choice+ percentage is a touch under 79%.

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    January 16: Brighter Prospects for Beef & Cattle Markets
    Daily Livestock Report

    The USDA updated their World Agriculture Supply and Demand Estimates (WASDE) on January 12th, a monthly proceeding that integrates new developments and data into the existing outlook for agriculture commodity markets. Prospects for the cattle and beef markets are a little brighter, reflecting the improvement in beef demand that surfaced during December.

    Changes in the hog and pork market were centered on the December 1 hog population estimates that came in above expectations. Pork production in 2017 is expected to be up 5% from 2016, about 1% more than had been expected a month ago in the prior WASDE forecast release. USDA views on poultry, egg and dairy output for 2017 showed small, insignificant changes.

    The forecast of beef production in the last quarter of 2016 was adjusted upward 85 million pounds and then reduced by 95 million pounds in the first quarter of 2017. Cattle marketing rates from feedlots remained accelerated through November and December. Weather in key cattle feeding regions was favorable for cattle weight gains, leading to an efficient marketing pace at heavy weights, especially for steers. Aggressive feedlot marketings during the last quarter of 2016 should come at the expense of cattle slaughter and beef production during the first quarter of 2017.

    The WASDE executive summary also shed light on impressive beef and pork exports during November that raised the profile for exports of these products going into 2017. The average steer price for the last quarter of 2016 came in very close to the high end of the forecast range that was in place during the last half of the quarter. Some of this price strength can probably be tied to exports. WASDE made a significant upward revision to it cattle price forecast for the first quarter of 2017 based on the combined effects of less cattle and beef production along with more beef exports. The second quarter 2017 beef production got a lift from November feedlot placements that were up 15% from a year earlier, surpassing expectations. These placements should be marketed from feedlots this spring.

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    January 16th: The Long & Short Of It
    Ag Center Cattle Report

    Last week, while boxed beef prices were crashing, sometimes at the rate of $4 a day, futures prices for live cattle were soaring... So what is going on? The simple explanation is you are witnessing two differing views of the market. Retailers pulled out of the short term spot market for boxes and left prices in a free fall. Index funds, protecting customers from threats of inflation by going long cattle futures among other commodities, had more customers to serve as more optimism by business owners and large corporations entered the market.

    The macro view holds that a more favorable business climate translates into higher commodity prices caused by more employment and more disposable income as wages rise. This view is not looking for daily or weekly trends but towards a cyclical trend over a period of months. People who stake this type bet are not hedging a pen of cattle with 4-10 contracts but are investing millions of dollars on the long side of cattle contracts.

    The increase in the number of contracts owned by the index funds has contributed to an increase in the open interest in all cattle contracts. Increasing volumes of transactions in the futures market is good for the market and provides much needed liquidity. The increases are better if they are sustainable and not one time increases. If the CME moves the contract to a cash settled contract, more traders will enter the market.

    On the other side of those index transactions are the cattle feeders who, starved for a profit, see an opportunity to lock in a margin. The recent profile of the cattle feeding industry has featured a small percentage of operations working in the fully hedged mode. This is not because of optimism that prices were going to rally, but is simply because of a lack of opportunity to find futures prices at a sufficient price level allowing feeders to lock in a profit. With the recent run up in futures prices, that has changed and the percent of feeders taking protection in the futures market has increased.

    Differing views of the same market is not unusual. An investor looking at a 6 month horizon will pay less attention to the daily fundamentals of the market. Short term traders focus on the daily signals of the spot marketplace. Both are important and both have a bearing on market trends. As with any industry, the most important barometer to a sustainable cattle contract is profitability.  It is when all sectors of the beef industry can enjoy a margin, that the industry can be judged as healthy and the futures contracts function as they are designed. 

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    January 13th: National Feeder ? Stocker Cattle Weekly Summary

    RECEIPTS:  Auctions   Direct    Video/Internet   Total
    This Week     367,500     53,400        78,800          499,700 
    Last Week     211,700     44,100         2,500           258,300 
    Last Year       281,900     56,500        66,600          405,000 

    Compared to last week, calves under 600 lbs sold unevenly steady ranging from steady to 4.00 higher to 4.00 lower with some spots 6.00 to 10.00 higher throughout all regions. Yearlings trading steady to 3.00 lower with some spots up to 6.00 lower.  The first full week of direct trading occurred with most trends reported steady to 4.00 higher.  Many producers have been waiting for this week to sell their spring born calf-crop, evidenced by the showing of nearly 500K head sold though auctions, directs and video sales this week.  That is the second largest volume reported on this report in the last five years; only topped by week ending 7/17/2015 when nearly 2/3 of the reported receipts of 554,900 were video sales. 

    Producers throughout the country have not liked the prices through fall and when December finally got here, most were prepared to carry cattle until the new year.  Demand was good to very good this week in auctions as order buyers had plenty of orders to fill, especially Monday through Wednesday when several of the larger receipt auctions in the country took place.  Even though there were plenty of cattle headed to feedyards, several auctions in the North Plains had heifers marked as Replacement on their market reports.  On Wednesday in Kearney, NE at Huss-Platte Valley Livestock Auction, a half load of light 7-weight replacement quality heifers sold from 177.00-177.25 or just a tick over $1300/head average.  Wow what a ticket! 

    Fed cattle prices not established as of mid-day on Friday with feedyards wanting to push the market higher than the 117.00 to 118.00 live and 188.00 dressed market of last week.  Some uncertain weather that is to roll into the Central Plains over the weekend may just keep the packers somewhat on the sidelines due to the extreme ice forecasted.  Slaughter levels topped 600K again this week, with the packers picking up right where they left off after the holidays.   Cattle slaughter for CY2016 reported at 30.1M head; nearly 2 million more than 2015 and 1 million under the previous 5 year average. 

    CME Live Cattle futures closed the week 3.22 to 4.05 higher than last Friday, with most of the gain coming from Monday and Tuesday.  Also, the Feeder Cattle contracts were 2.13 to 5.50 higher for the week with limit or near limit move ups on the March and April on Tuesday.  Choice Boxed beef values have eroded this week to the tune of 8.01 to close at 190.80.  In addition, the Choice - Select spread has shrunk to around 4.00 after being near 10.00 at the turn of the year.  Auction volume this week included 59 percent weighing over 600 lbs and 40 percent heifers.

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    January 12th: USDA World Agricultural Supply & Demand Estimates

    The estimate for total red meat and poultry production for 2016 is raised slightly from last month. 

    • Beef production is raised on increased fed cattle slaughter and heavier carcass weights. 
    • Pork production for 2016 is raised based on slaughter data. 
    • Broiler and turkey production for 2016 is slightly lower based on the recent slaughter. 
    For 2017, red meat and poultry production is raised largely on higher forecast pork production, although forecasts of beef and broilers are raised. Higher expected cattle placements in late 2016 and early 2017 underpin higher forecast beef production in 2017.

    USDA will release its semi-annual Cattle report January 31 which will provide estimates of heifers held for breeding along with indications of the availability of cattle for placement during 2017. Pork production for 2017 is raised based on estimates from the DecemberQuarterly Hogs and Pigs report. 

    The 5 percent year-over-year increase in the September–November pig crop will be slaughtered largely in the second quarter of 2017. Producers indicated intentions to farrow 1 percent more sows in the first half of 2017 which, coupled with expected growth in pigs per litter, will support a higher level of slaughter during the second half of the year. 

    Broiler production is raised for early 2017 on recent hatchery data, but the turkey production forecast is unchanged. Egg production for 2017 is raised slightly based on hatchery data.

    Both beef and pork 2016 export estimates are raised based on November trade data and expectations of strong export demand in December. Beef imports are lowered, but no change is made to pork imports. Broiler and turkey exports are lowered on recent trade data. No change is made to the 2016 egg export estimate. For 2017, beef exports are raised as current demand strength is expected to carry into 2017. 

    Imports are forecast higher on expectations of slightly larger supplies from Oceania in early 2017. No changes are made to pork, broiler, or turkey trade forecasts. The 2017 egg export forecast is raised on expectations of stronger sales in the first half of the year.

    Livestock and poultry prices for 2016 are adjusted to reflect December price data. The 2017 cattle price forecast is increased on continued strong demand into the first part of 2017. The hog price forecast for first quarter 2017 is raised on demand strength, but price forecasts for subsequent quarters are lowered as hog supplies are expected to be large. Broiler prices are raised slightly on early-year demand strength. Turkey prices are forecast lower on relatively soft demand. Egg prices are increased. 

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    January 6th: Shootin' the Bull Weekly Analysis
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    In my opinion, the cattle market has moved higher in price as anticipated.  The subtle changes are now apparent with most recognizing the industry has moved in leaps and bounds to reverse price. With not much else on the horizon for higher prices, without a weight dropping winter storm, price for fat cattle are perceived to begin finding a home between $118.00 and $110.00.  Some producers were baffled by the futures selling off while cash cattle remained at the elevated level. This is pretty simple.  The reason futures don't react is that the previous situation that brought us here has been recognized, as well as, it's 7 weeks before delivery of the February contract.  Cash may continue to trade at the elevated levels due to current fundamentals still impacting supply/demand.  Without weight losing weather though, the future is anticipated to start seeing increases in numbers and potentially heavier weights, regardless of whether intentional or not.  After reading Friday's "Daily Livestock Review", I may begin to question how much the herd has grown and aspects of in the future.  The 31st inventory report may hold the key to the next rally.  It is possible that traders could keep February in a range between the $118.50 high and the perceived wave 4 low of $108.17.  If so, this would be perceived as a launching point for the next rally.  Winter weather or an abrupt change in the inventory report would be anticipated to produce another leg to the upside.  Upside potential is anticipated to be, the length from contract low to the December high per respective contract month, added on to what ever the low of the current correction. 

    Of most interest to me has been the staggering increase in open interest.  This increase is perceived primarily commodity and/or index funds.  Why would they have an interest?  I perceive they are looking at cattle having a higher intrinsic value than $98.00.  I perceive thinking is closer to north of $105.00 for fat cattle.  Therefore, owning discounted inventory through the June, August, and October time frame has some potential.  If not, and cash falls to $100.00 by this summer, the futures are already at $100.00.  However, if cash just remains stout at above $110.00, then a $5.00 rally in the June and $10.00 in the August, October would be anticipated.  So, I can see why the funds like owning discounted futures.  Around this time last year, I had anticipated the cattle market to trade in a sideways price range to allow for time to go by whilst producers made changes to production due to price decline.  The latter part of '16 brought in more cattle at heavier weights and tipped the scale to a lower trade, bringing cash down to the futures level.  This year, I don't have much difference of an opinion.  I anticipate cattle prices to trade sideways for a large portion of 2017 between the current weekly low up to where ever the current rally terminates.  Again, marking time until more information is garnered.  One change from last year would be to no longer anticipate the cash market to trade down to the discounts of the futures.  Instead, I recommend anticipating the basis spread to be narrowed by either a meeting in the middle, or futures trading up to cash levels. 

    On Tuesday, January 10th at 4:00pm cst, I will host a webinar on "Marketing Spring Inventory". To register, simply click HERENothing has changed in the feeder cattle market.  This is not a bull market and unless the inventory report shows a significant reduction in breeding, it is not anticipated to be a bull market for quite some time.  What it does not suggest though is that feeders will go back into a deep bear market in which new contract lows would be anticipated.  I just don't foresee producers able to continue to ramp up production at the lower price levels with little potential for an increase in slaughter capacity.  The recognition that packers are not anticipated to increase slaughter capacity to any significant rate, or new facilities anytime soon, should be factored into future decisions.   Therefore, further increase of production will do little more than back inventory up as it reaches the packer.  The beef industry looks a great deal like an hour glass.  The top bell is all production from cow/calf to feed yard that funnels into the neck of the hour glass that is the packer.  The bottom bell is wholesale, retail, consumer.  With this visual, one can see that regardless of how much demand comes from the bottom bell, without increasing the neck of the hour glass, cattle remain in the upper bell for longer.  The packer can minimally adjust the width of the neck when it serves them and reduce it when not.  At present, retail demand has been good and the neck of the hour glass nearly wide open.  Any hint of a reduction in consumption would have them tightening the neck line.  Hence, cattle remain in the top bell for longer.  So here is how this changes.  With the packer not anticipated to increase packing utilization or facilities, either the number of cattle coming into the to bell has to be reduced, or the consumer create a greater pull on cattle through the neck line. At present, I don't see the consumer increasing consumption more than what has recently been noticed, and we won't know what the cow/calf producers have done until we see what the inventory report suggests.  Hence, I anticipate a sideways trade between $118.00 and $128.00 per respective spring contract month leading up to the inventory report. 

    Grains have been an Achilles' heel for me lately.  Corn continues to meander and wallow.  Wheat may have reversed, but the steep premiums don't provide much incentive to buy out into the future.  Beans have been the most disappointing.  They and the products can't seem to terminate this correction and start higher.  I know I am fighting the strong US dollar, but the US dollar has been strong for a couple of years with the most recent move higher approximately 8%.  I perceive that there is fund buying in grains as well in anticipation of a reversal in the US dollar.  Bonds finally found a point from which to base a correction from.  This correction will be the first opportunity many will have to restructure debt after the abrupt rise in retail rates.  While I do not have an upside target for this correction, I recommend putting it on the front burner to watch for topping action. 

    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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    December 23rd: Cattle on Feed Report
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    United States Cattle on Feed Down 1.33 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 10.7 million head on December 1, 2016. The inventory was 1.33 percent below December 1, 2015.
    • Placements in feedlots during November totaled 1.84 million head, 15.04 percent above 2015. Net placements were 1.77 million head. During November, placements of cattle and calves weighing less than 600 pounds were 470,000 head, 600-699 pounds were 490,000 head, 700-799 pounds were 425,000 head, and 800 pounds and greater were 458,000 head.
    • Marketings of fed cattle during November totaled 1.79 million head, 16.64 percent above 2015.
    • Other disappearance totaled 69,000 head during November, 13 percent below 2015
    Complete December Cattle On Feed Report
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    Cattle on Feed Inventory in 1,000+ Capacity Feedlots as of December 1st
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    Number of Cattle Placed on Feed in 1,000+ Capacity Feedlots in November
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    Number of Cattle Marketed from 1,000+ Capacity Feedlots in November
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    Cattle on Feed by State as of December 1st
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    December 23rd: USDA Cold Storage Report
    • Total frozen red meat supplies on November 30th were down 8 percent from the previous month and down 4 percent from last year.
      • Total pounds of beef in freezers were down slightly from the previous month but up 4 percent from last year. 
      • Frozen pork supplies were down 13 percent from the previous month and down 7 percent from last year. Stocks of pork bellies were down 8 percent from last month and down 54 percent from last year.
    • Total frozen poultry supplies were down 13 percent from the previous month and down 4 percent from a year ago. 
      • Total stocks of chicken were up 2 percent from the previous month but down 10 percent from last year. 
      • Total pounds of turkey in freezers were down 40 percent from last month but up 25 percent from November 30, 2015.
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    November 16th: What Did it Cost to Produce a Calf This Year?
    Aaron 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 Produced

    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 records needed.

    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! 

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    All Cattle & Calves Inventory: January 1, 2016 vs. 2015
    Compiled from USDA National Agricultural Statistical Service Data
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    Beef Cows Inventory: January 1, 2016 vs. 2015
    Compiled from USDA National Agricultural Statistical Service Data
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    Replacement Heifers Inventory: January 1, 2016 vs. 2015
    Compiled from USDA National Agricultural Statistical Service Data
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    January 29th: 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, 2016 totaled 92.0 million head. This is 3 percent above the 89.1 million head on January 1, 2015.

    • All cows and heifers that have calved, at 39.6 million head, are 3 percent above the 38.6 million head on January 1, 2015.
    • Beef cows, at 30.3 million head, are up 4 percent from a year ago. Milk cows, at 9.32 million head, are up slightly from the previous year.
    • All heifers 500 pounds and over as of January 1, 2016 totaled 19.8 million head. This is 3 percent above the 19.3 million head on January 1, 2015. 
    • Beef replacement heifers, at 6.29 million head, are up 3 percent from a year ago. 
    • Milk replacement heifers, at 4.82 million head, are up 2 percent from the previous year. 
    • Other heifers, at 8.71 million head, are 3 percent above a year earlier.
    • All Calves under 500 pounds in the United States as of January 1, 2016 totaled 14.1 million head. This is 4 percent above the 13.5 million head on January 1, 2015. 
    • Steers weighing 500 pounds and over totaled 16.3 million head, up 4 percent from one year ago. 
    • Bulls weighing 500 pounds and over totaled 2.14 million head, up 2 percent from the previous year.
    Calf Crop Up 2 Percent
    • The 2015 calf crop in the United States was estimated at 34.3 million head, up 2 percent from last year's calf crop. 
      • Calves born during the first half of 2015 were estimated at 24.8 million head. This is up 2% from the first half of 2014. 
      • The calves born during the second half of 2015 were estimated at 9.50 million head, 28% of the total 2015 calf crop.
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