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December 6th: Overview of U.S. Cattle Imports From Canada
Livestock Marketing Information Center

To follow up on the previous monitor article, we will review live cattle imports from Canada. Preliminary weekly data are used which are collected by USDA-APHIS and published by USDA-AMS.

Starting with feeder cattle, year-to-date (through mid-November) the U.S. had imported almost 176,000 head. This is 108,000 fewer head (a 40% decrease) compared to the same time frame in 2015. In 2015, a total of almost 290,000 head of feeder cattle were imported from Canada.  For the last few weeks of 2016, imports are expected to be above a year ago; still the annual total will be down dramatically year-over-year. Those animals eventually are placed into U.S. feedlots.  The Livestock Marketing Information Center (LMIC) forecasts imports will increase in 2017, largely due to the closure of the largest cattle feeding operation in Canada this year as a result of poor returns. 

The U.S. also imports slaughter steers and heifers from Canada (note that these animals are not included in the marketing number on our monthly Cattle on Feed report as they did not go through a U.S. feed yard). So far in 2016, we have imported just over 280,000 head, up almost 50% from the year ago level.  In 2015 the U.S. imported over 215,000 slaughter steers and heifers from Canada.  Still, imports have been much smaller than a few years ago, largely because the Canadian herd has shrunk. LMIC is expecting imports in 2017 to be similar to 2016’s.

Additionally, the U.S. imports slaughter cows and bulls from Canada. Year-to-date, through mid-November, a total of almost 221,000 slaughter cows and bulls have been imported, this is down 10% from the year ago total. In 2015, annual slaughter cow and bull imports totaled just over 290,000 head. 

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December 6th: British Farmer Whose Cows Trampled Man to Death Gets Suspended Sentence
The Guardian

Mike Porter was killed while out walking dogs on a public footpath through one of Brian Godwin’s fields in Wiltshire, England.

A farmer who was warned repeatedly over the course of more than a decade to improve safety on his land has been spared jail after a retired university professor was trampled to death by cows at the farm.

Mike Porter died after being trampled by the herd while he and his brother John walked their two dogs on a public footpath through one of Brian Godwin’s fields. John Porter was also injured but survived.

After previous incidents in which people were injured by cattle on his farm, health officials had told Godwin to put in segregating fencing or signs saying “cows with calves” to let people know the protective animals were dangerous, a court heard.

But sentencing him on Monday after Godwin admitted at a previous hearing to breaching his general duty to control his livestock, the judge said he had “quite blatantly failed to ensure the safety of people who came on your land”.

Tim Mousley QC, sitting at Swindon crown court, said: “You could have prevented his [Mike Porter’s] untimely death.” He handed Godwin a 12-month prison sentence, suspended for two years. The judge said Godwin would have to pay £30,000, which would be covered by insurance.

In May 2013 the Porter brothers had been rambling with their dogs, who were leashed, through a field on Godwin’s 400-acre farm near Bradford on Avon in Wiltshire.

About 30 “highly excited, jostling” continental beef cattle surrounded them and repeatedly trampled on Mike Porter, who curled up in a ball to protect himself. John Porter told an inquest into his brother’s death that the herd knocked them down repeatedly and seemed to deliberately trample on them “as if it was something they really wanted to do”.

Mike Porter, who was a father of two, managed to scramble out of the field but collapsed later and was airlifted to hospital. He later died from internal bleeding.

On Monday the judge told Godwin: “I’m quite satisfied that the way you managed your livestock created an obvious risk to people on public footpaths and a risk of serious injury. That was a risk that you failed to take reasonable steps to rectify and led to the terrible death of one man and serious injuries to another.

“There was an incident in 2004, two incidents in 2008 after which the health and safety executive required you to make some changes. Two further incidents in 2011 after which the health and safety executive required you to make further changes.

“It must have been clear at that stage, the warning signs were obvious. By May 2013, you were aware of all the previous incidents. You had made some improvements to farming practice. But what you did obviously was not enough. I’m satisfied you could have done more and you say you now realise that you could.

“Simply the expedient of installing a fence that would not have provided 100% safety but certainly would have reduced the risk. Mike Porter, by everyone’s account, was a devoted family man. He knew the importance of his family and their loss is immeasurable.”

In a statement issued after the hearing, Mike Porter’s family said they hoped lessons would be learned to help make the countryside safer for walkers.

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December 2nd: Commodity Market Comments
  • “Shootin’ The Bull” -- Christopher B. Swift.
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    Live Cattle: The decline from $113.22 February is perceived as the C wave of an irregular A,B, C correction.  The irregular comes from the B wave exceeding what is perceived as the orthodox high of wave 3 at $112.52.  This made the C wave look a little bigger because of the higher price it fell from.  Upon completion of the C wave, I anticipate a continuance of the move higher with an upside target to $116.50 February.  It will take something much more than a few weeks of higher trading to turn cattle negative.  Numbers are no longer the issue they once were.  Although they are most likely going to remain elevated for sometime to come, the packer kills above 600K should keep the numbers at bay.  What the real issue is the overweight problem producers have with their inventory.  While pounds do make dollars, those additional pounds decrease the price everyone gets for their inventory.  This is where I perceive the last decline from August to contract low came from.  It appears the decline was methodical and nearly mechanical in the way it declined to rectify a specific issue.  The work to be done now is keeping an issue from developing again.  As discussed in Utah last week, I do not know how to unify an industry.  What I do know is that with the most recent subtle changes are such that expansion may slow greatly going forward.  Since the packer kill is pretty much contained to under 630K for the foreseeable future, then keeping finished weights down appears to be the quickest way to reduce finished beef production.  Although many continue to have new contact lows in their sights, I do not.  I perceive the market to continue higher until we are through the worst of winter.  After that, I can see some room for sideways trading.

    Feeder Cattle: Whether one was able to lay off inventory at the targets recommended or not, I anticipate another opportunity to present itself.  One may still want to lay off a portion of risk as futures move back to the most recent highs.  However, the next level to reach before sales will be recommended again will be closer to the $130.00 area for the spring months.  The wave count on the feeders is the same at this time.   An irregular A, B, C correction appears to have unfolded in the feeders with the most recent decline from last weeks high to today’s low is a wave C decline.  With 5 waves perceived already made down, I anticipate the up trend to resume sooner rather than later.

    Corn: And just like that, corn is everyone’s friend again.  I have no idea why corn is trading higher today.  Potentially off the beans strength, but I would not write that on the barn door.  Corn is anticipated to continue to flitter around until some of the glut begins to be worked into.  Not so for the beans though.  They pushed higher today with meal on its heels.  Oil was the lager, but not by much.  I anticipate the beans and complex to continue to firm.  The majority of my friendliness in beans is technical.  The chart pattern looks bullish to me, but it looks bullish for a long term move.  This is where I am having difficulty.  I don’t know of a long term bullish factor or factors in the beans.  If you do, I would greatly appreciate sharing that information.

    Crude: Crude has pushed back to the high end of the stagnant price range.  I do not know if there is enough strength left to push through just yet.  Regardless of whether it does or not, I would not anticipate much until a correction of some form materializes.

    Gold: Gold remains weak.  I remain wrong on my previous analysis and will not attempt much more on this market for the time being.

    Bonds: Bond blew to new contract lows last week.  In my opinion, this was the “get me out” phase.  Therefore, even if the Fed does raise rates on the 14th of this month, I would not anticipate bonds to do much.  With the significance in the drop, one may want to let it idle for a few weeks to see if traders don’t push the yield down just slightly before they move higher.  This suggests bond prices may move higher before they resume the down trend.

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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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    December 5th: Closing Futures Summary

    U.S. cattle futures ended the session mixed on Monday, pressured by a recent surge in beef production.  December live-cattle futures declined 0.4 cent, or 0.4%, to $1.07825 a pound on the Chicago Mercantile Exchange, after a 2.3% drop over the past week. February live-cattle futures rose 0.1 cent to $1.08975 a pound. 

    Producers have fetched higher prices for their livestock in the cash markets for three straight weeks, amid strong demand for steaks, short ribs, and other beef items typically featured prominently by grocery stores and restaurants for the end-of-year holidays. However, traders have kept a close watch on the number of cattle being sent to market, as beef supplies soar over year-ago periods, and pork and poultry productions are record-large.

    Through the week ending Saturday, meatpackers produced 517.5 million pounds of beef, from 616,000 head of cattle, which was 10.8% more than the same time in 2015. For the year, total beef output is up 5.7% from this point last year, raising concerns about how the market will fare after the holiday buying slows.

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    December 5th: Meat Supplies & the Holidays
    CME Group

    With Thanksgiving behind us and Christmas just a few weeks from now, retailers and food service operators have a bevy of proteins to pick from and feature into the holidays.  Robust export demand, a much improved employment picture and the end of a contentious election season so far appear to have positively contributed to demand for most proteins. 

    If we make some conservative estimates about production numbers for poultry last week, combined protein supplies last week were over 1.9 billion pounds,  93 million pounds  (+5.1%) higher than a year ago.  And last week was not an aberration.  For the last six weeks, weekly red meat and poultry production has averaged 1.865 billion pounds, +5.3% higher than last year.  All proteins have contributed to the surge in supplies but beef has by far provided the largest growth in total pounds. 

    Beef production in the last six weeks has averaged 508 million pounds/week, 49 million pounds (+11%) more than a year ago.  Beef production has been constrained for so many years and retailers have been forced to raise prices in order to ration out demand.  The increase in supply has provided opportunities to once again feature beef but the challenge is that demand is not distributed evenly. 

    Going into the holiday demand for beef ribs has been excellent  and some other cuts also have performed quite well, allowing packers to run slaughter quite aggressively, matching the levels we saw in 2013 (see steer/heifer slaughter chart).  But some of the round cuts have not fared quite as well, in part because they have to compete not just with regular holiday items but also very inexpensive pork and chicken.  Fat beef trimmings received a bit of a boost from pre-holiday party manufacturer buys and some food service promos but have slumped in recent days given the sheer amount of product not just in the fresh market but also sitting in freezers. 

    For now, holidays have offered much needed support  to clean up  the beef market but we  think some product continue  to flow into refrigerated storage.  And this could limit demand going into Q1, especially as consumers tend to become a bit more frugal in their spending after  the  holiday splurge.   Fed cattle futures reflected some of this uneasiness on Friday, selling off quite aggressively and breaking through some key support levels. 

    Chicken and pork production also have bolstered the total supply of protein, but the growth rate has been a bit more modest than beef.  Pork production in the last six reported weeks has averaged 514 million pounds/wk, 19 million pounds (+4%) more than a year ago.  Last week pork production was an all time  record  537 million pounds,  3.5% more than a year ago.  As with beef, some items have performed better than others.  Hams have benefited from both holiday demand and exports, with prices up 20% despite the surge in supply. 

    What happens with the ham market two weeks from now is certainly a source of worry for packers and producers.  Seasonally hog slaughter drifts lower into the spring but traditionally hog numbers remain large through January and it appears there will be a lot of competition for inexpensive protein in the retail meat counter.  Total chicken production in the last six weeks has averaged 733 million pounds, 21 million pounds (+3%).  Leg quarters are up 40% from last year on robust exports and wings are the perennial favorite at this time of year.  Breast meat is languishing. 

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    December 5th: How Current Are The Feedyards?
    Ag Center Cattle Report

    Cattle feeders have enjoyed several consecutive weeks of improving prices and some are expecting the rally to continue but late week futures trading cast doubts on the price direction in year end trading. Futures prices are guesses and they can be wrong just as individual traders can err in their forecast. There are many complex forces at work on the market and little science to be applied to price forecasting.

    Carcass weights is important in evaluating both currentness of fed offerings and supplies of beef on the market. The last report from November 19th showed average weights for steers 5# under prior year but that is expected to change and weights will likely exceed last year in the next couple weeks. This is not so much related to the current nature of offerings as to excellent feeding weather. There remains and will continue to be more heifers in the slaughter mix tending to reduce total average carcass weights.

    The quality grade on cattle this year is 1-2% higher grade than last year. This continues a long string of years in which the quality grade has improved each year. This is in part genetics, part heavier cattle placed on feed, and part cattle fed longer. With larger supplies of cattle on hand, and corn prices low, the inclination of feeders is to lower the breakeven by feeding cattle longer.

    Show list numbers continue to run well above prior year but those numbers are driven by larger monthly placements, year on year, except for the most recent October number. Show lists tend to be noise when taken in isolation. There is little question that the cash trade has been larger for the past few weeks but that does not necessarily mean we are digging into future supplies leaving a gap in the upcoming weeks.

    Regardless of the current nature of fed offerings, the demand side of the business will determine the future of prices for cattle. Beef features by retailers between now and Christmas will set the stage for beef movement and consumer demand at the stores. There is support for the notion that retailers with generous margins on beef will sponsor specials in the coming weeks and those specials will find good reception among consumers. Winter may not be prime time for beef but a respite from turkey is always welcome.

    Not to be excluded from the mix is the important but often overlooked factor of the dollar index. Subsequent to Trump's election, the dollar has been in major rally mode as interest rates have posted the largest short term advance in years. An advance in the value of the dollar makes our exports more expensive and our imports cheaper -- not good for beef. It is too early to assess the new administration's trade policy but an isolationist policy would not be good for beef exports.

    In the final analysis the current nature of fed cattle is assisted and encouraged by a heavily discounted futures board. The need to market cattle now for fear of lower prices in the future is the number one adversary of overfed cattle. Stubbornness and fighting the market also is illogical when the option is to replace with another set of cattle with a still lower breakeven.

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    December 2nd: National Feeder & Stocker Cattle Summary

    RECEIPTS:    Auctions     Direct    Video/Internet     Total
    This Week      275,900     40,100        22,400         338,400 
    Last Week        95,900     27,500        22,700         146,100 
    Last Year        227,900     16,000        23,000         266,900 

    Compared to last week, steers and heifers traded 2.00 to 6.00 higher with most steer calves under 600 lbs up to 10.00 higher.  Several mid and late week auctions were called sharply higher and while they were in fact much higher, many were looking back two weeks due to last week’s Thanksgiving holiday.  Those sale barns had some catching up to do with last week’s early auctions, many of which had held specials before the holiday break.  Demand was very good for all classes of cattle this week, but still exceptionally good for light cattle suitable for wheat.  Winter weather curtailed receipts in parts of the Dakotas but elsewhere across the country the supply was heavy.  The volume that was lagging in the early fall is being caught up now. 

    The cash feeder market has re-energized, with several weeks of steady gains being convincing enough for owners to finally bring their stock to town.  In some parts of the country, the supply was so heavy that by mid-week competition for available trucks was just as intense as the rivalry ringside.  Weaned calves continue to make up a larger percentage of the offering each week and in most places, the competition to own anything that could be placed in an extended winter grazing program is fierce.  Buyers seem to have a renewed confidence in the market, evident by their willingness to chase some cattle to prices that haven’t been seen in months. 

    Colder weather moved into the Midwest mid-week which will help harden and “green up” fleshier cattle.  Fed cattle traded as much as 3.00 higher Wednesday, 114.00-115.50 live and northern dressed sales at 175.00.  Futures prices are now lagging cash by quite a few dollars, as the market moves in a more fundamental direction with cash cattle leading the board and not the other way around.  Cash trade has tacked on 10.00 in just three weeks and fats are as close to break evens as they’ve been in quite some time.  Big kills over an extended period has cleaned up the front end, giving cattle feeders a little leverage they’d needed. 

    It is rumored though that some pockets of heavy cattle are still standing around in parts of Nebraska and Iowa, areas where packer needs aren’t as urgent and show lists aren’t always cleaned up.  Packers will push to keep kills large and are clearly willing to pay up a bit, giving up a bit of margin even, as they have fewer formula cattle available in the short term.  Optimism is bountiful as the entire cattle complex has recovered remarkably from early November lows.  Cattlemen are fully aware of the fickle nature of their market and while there’s no assurance this six week rally will hold it has brought a little relief to an industry that badly needed it. 

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    December 2nd: Record-Large Meat & Poultry Production in 2017
    CattleFax

    Record-large meat and poultry production combined with recent feedlot currentness issues are adding to the pressure on today’s cattle market, said CattleFax Chief Executive Officer Randy Blach. His comments came during yesterday’s Beef Industry University session at the Kansas Livestock Association Convention in Wichita, sponsored by the Farm Credit Associations of Kansas.

    Blach estimates supplies will continue to be large as an additional 800,000 to 900,000 fed cattle are expected to be harvested in 2017. He encouraged producers to begin reducing beef tonnage on the market.

    “One of the best ways to combat these increasing numbers is to get weights under control, and that’s something you can do as producers,” he told KLA members and guests.

    U.S. beef exports are expected to increase 5% in 2017, which Blach said will be another important factor in helping to offset larger supplies.

    Blach thinks the industry has made it through the worst of the equity drain. He believes positive margins at the feedyard level would benefit others in the supply chain.

    “For those cow-calf and stocker operators, you need to see the cattle feeder get profitable,” he said. “He gets profitable, and you’ll start to see some stability come back into your business.”

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    December 2nd: Proposed Tax Regulation Threatens Multigenerational Cattle Operations
    NCBA

    The Internal Revenue Service hosted a public hearing on Thursday on a Department of Treasury proposed rule that would eliminate or greatly reduce available valuation discounts for family-related entities. Kevin Kester, National Cattlemen’s Beef Association vice president, said the regulation would effectively discourage families from continuing to operate or grow their businesses and passing them on to future generations.

    Many cattle operations are family-owned small businesses, facing the same concerns as other small-businesses – making payroll, complying with numerous federal and state regulations, and paying bills, loans, and taxes. However, cattle producers face a number of unique challenges specific to agriculture.

    “Ranching is a debt-intensive business, making the U.S. livestock industry especially vulnerable to the estate tax,” said Kester. “Beef producers largely operate an asset-rich, cash-poor business model: a cattleman’s biggest asset is his land. In the event of the death of a principal family member, illiquid assets are often sold in order to meet the costs associated with the estate tax. As a result, many families are unable to keep their estates intact.”

    For more than two decades, livestock producers have utilized legitimate valuation discounts as a means of maintaining family ownership. These discounts, which accurately reflect the actual market value of minority ownerships in closely-held businesses, reduce the tax burden at death allowing agricultural operations to maintain family ownership from one generation of producers to the next.

    “Should the discounts be eliminated, a significant number of farmers and ranchers will face an even greater tax burden during the difficult task of transferring minority interests to the next generation,” said Kester. “Having dealt with the death tax on multiple occasions, I can assure you that it’s not easy to settle the estate of a loved one while coping with the loss of that loved one. To add insult to injury, the proposed rule will upend succession plans, halt planned expansion and growth, and require a majority of livestock operations to liquidate assets in order to simply survive from one generation to the next.”

    The proposed regulations under Section 2704 will have a profoundly negative impact on the business climate for farmers and ranchers, ultimately dis-incentivizing a new generation of cattle producers from carrying on the family business. For that reason, NCBA calls for the IRS to formally withdraw the proposed rule.

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    December 1st: Positive Outlook for Beef & Pork Exports
    CME Group

    USDA/FAS released today its weekly update on US beef and pork exports and the data continues to paint a very positive picture for both proteins.  Keep in mind that the weekly report only covers sales of beef and pork muscle cuts while the monthly statistics include all fresh/frozen meat exports plus they will also included exports of cooked and  processed items.  The weekly export numbers will always be quite a bit lower than the monthly trade but the benefit is that they  are much more current than the monthly statistics that often have a 5  week lag. 

    The challenge often is that weekly numbers can be volatile and add to the overall noise in the marketplace.  Also, many of the forecasts that USDA and private analysts put together are on a quarterly basis and so it is hard to put the weekly numbers in the proper context.  With that in mind, let’s look at some of the details from today’s numbers and what the  implications are for the month of November. 

    Beef:  Exports of beef muscle cuts in the past two weeks have averaged 16,808 MT, the highest two week average at any point this year or last year for that matter. Beef exports in the last four reported weeks have averaged 15,750 MT, 28% higher than the same four week period a year ago.  Extremely strong demand from a number of Asian markets continues to drive exports of US beef this fall.  And it is quite impressive that the robust export pace so far has not been impacted much by the strong US dollar  (remember a strong US dollar raises the effective price world buyers have to pay for US  products). Exports to South Korea in the last four reported weeks averaged  4,279 MT, 80% higher than a year ago.  Exports to Japan averaged 3,894  MT, +34% while exports to Taiwan  averaged 1,999 MT/wk, +75%.  There is one Asian market where US beef exports have been struggling and that is Hong Kong, with sales there in the last four weeks down 17% from last  year.  It is not a coincidence that the markets where we have gained ground are also markets that normally buy from Australia but do not allow Brazilian beef.  With Australian slaughter down in double digits from a year ago, Korean and Japanese buyers have had to bid more aggressively on US  product.  Lower prices for US beef in October also helped considerably to increase the pace of shipments to these markets. Exports to Mexico and Canada were up +6% and +23%, respectively, accounting for about 20% of overall shipments.  Asia is by far the major destination for US beef, however.  At this point we are projecting US fresh/frozen monthly exports in November at +21% compared to a year ago and a significant improvement over October levels. 

    Pork:  US pork exports also have recovered nicely in the last few weeks.  Low prices for a number of pork items in October likely set the stage for a major rebound in November.   Mexico has become the top market for US pork recently and exports to that market in the last four weeks averaged  9,705  MT,  8% higher than a year ago.  There is  speculation that Mexican buyers have accelerated their purchases due  to the expected change in the US administration in January.  However,  any changes to NAFTA will likely take time so it is curious that this could  be the motivation for the jump in exports.  The rise in exports to Mexico helps explain the firm market for hams so far this fall despite very large slaughter.  Exports to China have been quite low so  far but if they are buying carcasses  those numbers would not show up in the weekly update and we will have to wait for the monthly statistics.  At this point we are projecting November fresh/frozen pork exports at +16% Y/Y.

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    December 1st: EPA Increases Biofuel Mandate for 2017
    AgriPulse

    The Environmental Protection Agency gave a lift to the renewable fuels industry by finalizing biofuel usage mandates for 2017 higher than originally proposed. 

    The agency is requiring19.28 billion gallons of total renewable fuel to be blended with conventional fuel under the renewable volume obligation (RVO). That includes 15 billion gallons of conventional corn ethanol, a 200-million gallon increase from EPA's May proposal and the same level set as the annual target in the 2007 energy law. The May proposal called for total usage of 18.8 billion gallons with the potential for 14.8 billion gallons of corn ethanol. 

    EPA's final rule, released November 23rd, also requires usage of 2 billion gallons of biodiesel, up from 1.9 billion this year, and 311 million gallons of cellulosic biofuels. There is a total requirement for 4.28 billion gallons in advanced biofuels, which includes biodiesel, cellulosic biofuels and other biofuels that have 50-percent lower carbon emissions than conventional fuels, including sugarcane ethanol produced in Brazil.

    The final RVO for advanced biofuel is 280 million gallons higher than what the agency proposed in May.  In addition, the EPA also set an RVO for biodiesel in 2018 of 2.1 billion gallons. The other mandates for 2018 will be determined later. 

    This announcement is the final RVO determination under the Obama administration, but it could spark a new debate about the RFS as Donald Trump moves into the White House next year.

    The president-elect signaled support for the RFS during the presidential campaign, but the adviser leading the transition at EPA, Myron Ebell, has been critical of the mandates.

    The chairman of the House Science, Space and Technology Committee, Lamar Smith of Texas, today called on Trump to work with Congress to reform the RFS, which is under the jurisdiction of the Energy and Commerce Committee. “More unrealistic mandates won't benefit the environment or lead to innovation in biofuels technology,” Smith said.

    The American Petroleum Institute criticized EPA's final rule as a “step backward.”

    “We are disappointed that EPA has taken a step backwards with this final rule,” said Frank Macchiarola, API's downstream group director. “The RFS mandate is a bad deal for the American consumer. Today's announcement only serves to reinforce the need for Congress to repeal or significantly reform the RFS. Democrats and Republicans agree this program is a failure.”

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    "Click Here to view a Slide Show of Drought Monitor maps for the last 12 weeks
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    November 23rd: USDA Livestock Slaughter Report

    Commercial red meat production for the United States totaled 4.43 billion pounds in October, up 3 percent from the 4.31 billion pounds produced in October 2015.

    • Beef production, at 2.21 billion pounds, was 4 percent above the previous year. Cattle slaughter totaled 2.64 millionhead, up 5 percent from October 2015. The average live weight was down 9 pounds from the previous year, at 1,381 pounds.
    • Veal production totaled 6.6 million pounds, 8 percent below October a year ago. Calf slaughter totaled 48,300 head, up 20 percent from October 2015. The average live weight was down 67 pounds from last year, at 237 pounds.
    • Pork production totaled 2.20 billion pounds, up 1 percent from the previous year. Hog slaughter totaled 10.4 million head, up 2 percent from October 2015. The average live weight was down 1 pound from the previous year, at 282 pounds.
    • Lamb and mutton production, at 11.7 million pounds, was down 2 percent from October 2015. Sheep slaughter totaled 181,600 head, 2 percent below last year. The average live weight was 128 pounds, unchanged from October a year ago.January to October 2016 commercial red meat production was 41.5 billion pounds, up 3 percent from 2015.
    Accumulated beef production was up 5 percent from last year, veal was down 8 percent, pork was up 1 percent from last
    year, and lamb and mutton production was down 1 percent. 
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    November 22nd: USDA Cold Storage Report

    U.S. beef supplies in October rose to the highest on records dating back to 1915

    • Total red meat supplies in freezers were down 3 percent from the previous month but up 1 percent from last year. 
      • Total pounds of beef in freezers were up 3 percent from the previous month and up 5 percent from last year. 
      • Frozen pork supplies were down 7 percent from the previous month and down 1 percent from last year. 
      • Stocks of pork bellies were down 17 percent from last month but up 16 percent from last year
    • Total frozen poultry supplies on October 31, 2016 were down 9 percent from the previous month and down 3 percent from a year ago. 
      • Total stocks of chicken were up 1 percent from the previous month but down 10 percent from last year.
      • Total pounds of turkey in freezers were down 22 percent from last month but up 13 percent from October 31, 2015.
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    November 18th: Cattle on Feed Report
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    United States Cattle on Feed Down 1 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 November 1, 2016. The inventory was 1.33 percent below November 1, 2015.
    • Placements in feedlots during October totaled 2.17 million head, 5.02 percent below 2015. Net placements were 2.11 million head. During October, placements of cattle and calves weighing less than 600 pounds were 610,000 head, 600-699 pounds were 525,000 head, 700-799 pounds were 471,000 head, and 800 pounds and greater were 565,000 head.
    • Marketings of fed cattle during October totaled 1.71 million head, 4.60 percent above 2015.
    • Other disappearance totaled 57,000 head during October, 24 percent below 2015.
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    Cattle on Feed Inventory in 1,000+ Capacity Feedlots as of November 1st
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    Number of Cattle Placed on Feed in 1,000+ Capacity Feedlots in October 
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    Number of Cattle Marketed from 1,000+ Capacity Feedlots in October 
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    Cattle on Feed by State as of November 1st
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    September Seasonal Drought Outlook
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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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    November 9th: USDA World Agricultural Supply & Demand Estimates

    The 2016 forecast of total red meat and poultry production is increased from last month as higher fourth quarter beef and pork production forecasts more than offset reductions in broiler and turkey production. Beef production is increased on the pace of slaughter and heavier carcass weights. 

    Pork production for 2016 is raised based on the current rate of slaughter. Broiler production is lowered based on September slaughter data. Turkey production is reduced based on the pace of slaughter. For 2017, higher forecast beef production more than offsets lower pork and broiler production. Turkey production is unchanged. 

    The increase in beef production reflects slaughter of cattle placed in late-2016 and early-2017 as well as slightly higher carcass weights. Pork production is lowered on slower expected gains in carcass weights. Broiler production for 2017 is lowered from last month on slower second-half growth. 

    The beef import forecast in 2016 is lowered due to expected tightness in supplies from Oceania. Beef exports are expected to decline modestly in 2016 based on recent trade data. Beef imports and exports are unchanged for 2017. U.S. pork imports for 2016 and 2017 were lowered as increases in domestic pork production and lower prices are expected to limit demand for imports. Pork exports in 2016 are lowered from last month on recent trade data. Exports are raised in 2017 on lower hog prices which are expected to make U.S. product more competitive. Broiler exports are raised for 2016 and 2017 on strong demand in a number of countries.

    Cattle prices are forecast lower for the remainder of 2016 and for 2017. Large supplies of fed cattle are currently weighing on prices and are expected to carry into next year. Hog prices are lowered for 2016 and early 2017 on supply pressure. However late-2017 prices are expected to reflect demand from new slaughter facilities. Broiler prices are lowered for 2016 and 2017 as supplies of broilers and competing meats pressure the markets. 

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    Estimated Cow-Calf Returns Lowest Since 2009

    The LMIC has consistently ratcheted-down estimated cow-calf returns this year as forecast calf prices for the fourth quarter were lowered.  As of early in the third quarter, fourth calf prices were estimated to be 15% below a year ago.  That fourth quarter forecast has been lowered to 25% below year ago prices.  Most U.S. operations sell their calves in the fall and prices at that time of the year heavily influence profitability.  Note that these calculated returns do not include all economic costs of production; they are used in market analysis and estimated cash costs plus pasture rent.  Of course, every operation has different resources and costs.  Year-over-year changes in calculated returns are more insightful than the specific numeric levels.

    As of late September’s revisions, the LMIC’s 2016 estimate was a return over cash costs plus pasture rent of about $15.00 per cow, which is the lowest since 2009. That is a huge one-year decline of about $285.00 per cow (2015 was about $300.00 per cow) and was even more disappointing when compared to 2014’s record high level (about $550.00 per cow).  Returns this year will not cover the total economic costs for most cow-calf operations.  While estimated costs of production have decreased slightly in 2016, based on cheaper fuel, feed, and slight drops in pasture cost, it has not been enough to offset declining calf prices. 

    Huge returns in recent years provided the economic foundation to aggressively grow the U.S. beef cowherd.  The economic stage has quickly changed, but the adjustment in cattle numbers is just starting.




    Chart does not reflect the September downward revision to $15 per cow

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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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    December 6th: Overview of U.S. Cattle Imports From Canada
    Livestock Marketing Information Center

    To follow up on the previous monitor article, we will review live cattle imports from Canada. Preliminary weekly data are used which are collected by USDA-APHIS and published by USDA-AMS.

    Starting with feeder cattle, year-to-date (through mid-November) the U.S. had imported almost 176,000 head. This is 108,000 fewer head (a 40% decrease) compared to the same time frame in 2015. In 2015, a total of almost 290,000 head of feeder cattle were imported from Canada.  For the last few weeks of 2016, imports are expected to be above a year ago; still the annual total will be down dramatically year-over-year. Those animals eventually are placed into U.S. feedlots.  The Livestock Marketing Information Center (LMIC) forecasts imports will increase in 2017, largely due to the closure of the largest cattle feeding operation in Canada this year as a result of poor returns. 

    The U.S. also imports slaughter steers and heifers from Canada (note that these animals are not included in the marketing number on our monthly Cattle on Feed report as they did not go through a U.S. feed yard). So far in 2016, we have imported just over 280,000 head, up almost 50% from the year ago level.  In 2015 the U.S. imported over 215,000 slaughter steers and heifers from Canada.  Still, imports have been much smaller than a few years ago, largely because the Canadian herd has shrunk. LMIC is expecting imports in 2017 to be similar to 2016’s.

    Additionally, the U.S. imports slaughter cows and bulls from Canada. Year-to-date, through mid-November, a total of almost 221,000 slaughter cows and bulls have been imported, this is down 10% from the year ago total. In 2015, annual slaughter cow and bull imports totaled just over 290,000 head. 

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