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July 25th: Cattle Markets Can Recover

Lower cattle prices have been the story this spring and summer. Beef supply has been large due to heavy placements of heavy calves and the beginning of more females coming to market as herd expansion may be slowing. Retail beef prices have been slow to come down and this has limited consumer purchases of beef in relation to abundant pork and poultry supplies.

Finished cattle prices have been on the skids since mid-March when prices reached near $140 per hundredweight. By last week, prices had fallen to around $115. Noticing the bearish theme in the cash market, the futures market has suggested prices will drop another $5 by the end of this year and proceed downward to near $100 by next summer.

There are plenty of reasons why prices have fallen, the biggest being a large number of cattle coming out of feedlots in recent months. That story goes back even further to abundant grass which encouraged cow-calf operations and backgrounders to add more weight to calves before they entered the feedlot. As a result, there has been a shift to heavier weight placements. In the first half of this year, placements weighing 800 pounds and more represented a record 40 percent of all placements, compared to a longer-term average around 27 percent.

Rapid placements of heavy calves meant that marketings were going to rise sharply. Marketings out of feedlots were up five percent in May and then up a sharp ten percent in June. Contributing to higher recent marketings has been a shift to lower slaughter weights since May which has served to "pull cattle forward." This shift to lighter weights is probably related to the falling finished cattle prices and the desire of feedlot managers to get cattle to market before prices dropped even more.

Because of these heavy marketings, beef production was up five percent in May and ten percent in June compared to the same month in the previous year. The rapid marketings in recent months has reduced the total number on feed to just one percent higher than year-ago according to USDA. This should help ease the burdensome volume of cattle and encourage upward price movement.

There are early signs that the expansion phase of this cattle cycle could be in the process of slowing. Lower finished cattle prices and extremely weak futures prices may be causing cattle producers to re-think any additional expansion plans. The calf prices implied by $100 finished cattle is simply not profitable for most cow-calf operations. If producers slow the rate of expansion, then this means more females move to market providing added beef supply pressures to already declining cattle prices.

The signs of slowing expansion are in the rate of increased female slaughter. In June, the number of heifers processed was up relative to year previous levels for the first time in several years. In addition, the number of beef cows processed in both May and June was up about 18 percent. For June, total females (heifers and all cows) processed were up 7 percent compared to year earlier numbers.

The total number of females in the processing mix remains low, so it is still too early to say this expansion phase has come to an end. However, these signs of higher numbers of females in the processing mix may be the first clues of what is to come.

Retail beef prices have been slow to fall as much as needed to encourage consumers to buy the added beef supplies. In June, USDA reported the composite retail beef price was $6.20 per pound. This compares to a record high price of $6.41 per pound in May of 2015. Thus, recent retail prices were just three percent lower than the record high. In contrast, June retail pork prices were down 11 percent from their high.

Farm level prices normally drop quickly, but retail prices are much slower to decline. This means the current margin between the farm price and the retail price is at a record wide level. Packer margins are likely at record high levels as well. As retail prices adjust downward over time, consumers will have more price incentives to buy beef and this could actually help strengthen farm level prices.

With the number of cattle on feed only up one percent on July 1, there should be renewed hope for recovery in cattle prices. The fact that marketing weights have come down is also an encouragement that feedlot managers are more current in their marketings. In addition, over coming months, retail beef prices should also come down which will serve to narrow packer margins, but improve farm prices.

Prices of finished cattle are expected to be in the mid-to-higher teens in the third quarter then move upward to the high teens to low $120's this fall.

Recent live cattle futures prices have been extremely depressed, sending signals of much lower cash prices next year. While prices are expected to be lower next year, they may not be as low as suggested by futures. Still, cow calf managers will want to continue to be cautious about further expansion of the brood cowherd.

Chris Hurt -- Purdue University Extension

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July 25th: Closing Futures Summary

Live cattle futures closed $2.42 1/2 to the $3.00 limit higher in the front three contracts. Trading limits expand to $4.50 for Tuesday. Live cattle futures gapped higher in reaction to the friendly Cattle on Feed Report released by USDA Friday. The strong opening triggered buy stops, driving prices still higher on short-covering. The surge ignored this morning's continued slide in wholesale beef prices. Choice boxed beef fell $1.43 and Select slipped 17 cents. But movement was solid at 80 loads, hinting that the price plunge may be attracting more retailer buying. 

Corn futures settled fractionally lower, finishing midrange after spending much of the morning trading lower. For the second trading session in a row, funds were net even for the day. A less-threatening weather scenario sent traders to the sell side in the day session. Rains appeared over the weekend with more sweeping across the southern Corn Belt from Kansas/Missouri eastward to Lake Erie. Generally favorable weather conditions are expected into early August. 

Soybean futures settled 22 to 22 3/4 cents lower through the January contract. March through August contracts ended 25 3/4 to 27 1/2 cents lower. That was in the lower end of today's range, but off session lows. Soybean futures were pressured by weather as forecasts signal non-threatening conditions will be seen into early August. With next month being the make or break month, traders used the weather outlook as a reason to further lighten long positions. 

Wheat futures closed mostly 4 to 8 cents higher in winter wheat markets, while spring wheat futures were 1 to 2 cents higher. Wheat futures bucked the trend and traded higher today, ignoring weakness in the soybean and corn markets. Support for wheat's price strength came from concerns with the European wheat crop amid heavy late-season rains. In addition, the U.S. dollar was weaker today. That combination was enough to encourage short-covering in wheat futures.

It was a two-sided day of trade in the hog market. In the end, hog futures settled with gains of 40 to 77 1/2 cents through the January contract. Hog futures were supported by heavy spillover from the cattle market, though that wasn't the case for the entire day. In fact, hog futures traded lower for much of the day on pressure from the cash hog market, but firmed late on spillover support.

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

RECEIPTS:    Auctions     Direct    Video/Internet    Total
This Week     105,700     50,600       265,100        421,400 
Last Week     162,200     62,300       104,600        329,100 
Last Year          93,700     29,000         39,900        162,600 

Compared to last week, feeder steers and heifers sold mostly steady with instances of 3.00 lower to 3.00 higher.  The real summer heat moved in this week as we hit the dog days of summer, with extremely hot and humid weather curtailing receipts across much of cattle country, including some major auction barns.  It’s difficult and dangerous for both man and beast to move cattle in such conditions.  Heat stress and weight loss make handling and transporting cattle very unappealing and the risk of death loss skyrockets when the heat index is so high. 

Demand was still good for the cattle that did make it town even as the cash market remained under pressure.  Cattle futures were extremely volatile with nearly all months hitting contract lows throughout the week but as has been proven over and over, strong fundamentals no longer have any sway over futures activity.  The bulk of this week’s fat cattle trade was pretty much wrapped up on Wednesday, with live sales mostly 2.00 lower at 115.00-115.50 (for extended delivery) and dressed sales 2.00 lower as well, 184.50-186.00, the lowest prices seen in four years. 

It has been frequently discussed that negotiated sales make up only a small percentage of fat cattle sales as so much of the packers supply is already captive.  The lack of competition this creates really hurts slaughter cattle trade as packers simply don’t have huge needs to fill anymore.  Last week’s slaughter numbers ended up being larger than expected at 594,000 head.  July kill levels have been huge because it was profitable for the packer, and the weekly kill will stay high as long as packer margins remain positive.  Fundamentally, this will help feedlots stay current and at some undetermined point will mean a better fat market.  Instead of feeding cattle too long like many feedlots did last summer, many are now pulling green cattle forward. 

As expected, boxed beef made new lows for the year but since packers are still enjoying impressive margins, seasonally weaker box prices aren’t an issue so long as their supply is replaced at lower prices.  The high heat that was discussed earlier in this report also hurts demand at the meat counter, and with lots of beef in the channel, prices at the supermarket will have to stay competitive with other proteins to keep beef cuts moving.  It is generally hard to find much optimism for the beef complex in July, but one bit of positive news for the feeder market this week was Monday’s Crop Progress Report which rated 76 percent of the nation’s corn and 71 percent of beans in good to excellent condition. 

Hot weather and timely rains have worked together to create what is expected to be another outstanding crop.  The monthly Cattle on Feed report has not yet been released at the time of this report but analysts expect placements and marketings to be well over year ago levels.  No surprises there, but a larger number of heifers on feed is also expected, showing that herd expansion is slowing.  Moving forward, increased marketing levels will be critical to maintain feedlot currentness as feeder cattle supplies are expected to be very heavy this fall.  Auction volume this week included 54 percent weighing over 600 lbs and 36 percent heifers.

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July 22nd: Cattle on Feed Report
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United States Cattle on Feed Up 1 Percent
  • Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more headtotaled 10.4 million head on July 1, 2016. The inventory was 1 percent above July 1, 2015. The inventory included6.87 million steers and steer calves, down 1 percent from the previous year. This group accounted for 66 percent of thetotal inventory. Heifers and heifer calves accounted for 3.49 million head, up 5 percent from 2015.
  • Placements in feedlots during June totaled 1.53 million head, 3 percent above 2015. Net placements were 1.46 million head. During June, placements of cattle and calves weighing less than 600 pounds were 290,000 head, 600-699 pounds were 255,000 head, 700-799 pounds were 340,000 head, and 800 pounds and greater were 640,000 head.
  • Marketings of fed cattle during June totaled 1.91 million head, 9 percent above 2015.
  • Other disappearance totaled 61,000 head during June, 12 percent below 2015.
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Cattle on Feed Inventory in 1,000+ Capacity Feedlots as of July 1st
Millions of Head
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Number of Cattle Placed on Feed in 1,000+ Capacity Feedlots in June
Millions of Head
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Number of Cattle Marketed from 1,000+ Capacity Feedlots in June
Millions of Head
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Cattle on Feed by State as of July 1st
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July 22nd: Shootin' the Bull Weekly Analysis
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In my opinion, I anticipate fat cattle futures to begin moving higher.  The new contract low this week leads me to perceive that traders have begun to push futures to levels that would be construed as exceptionally under valued were the cash market to trade to these levels.  Traders have been brazen with their selling this week.  This may come to a quick end as the on feed report continues to show excellent movement of inventory with persistent draws in cold storage.  The lower than guessed placement figure is anticipated to lend support to the October contract.  On Monday, I will look for an opportunity to buy the October contract.

I anticipate feeder cattle futures to begin moving higher as well.  While the fall calf crop is anticipated to be larger, the number of available feeder cattle may not be as plentiful.  The movement into feed yards has been steady and at elevated levels.  This is anticipated to keep the pipeline flowing.  I would not be quick to sell or hedge on the first bounce up.  Feed yards are urged to use options to lock in purchases for October placements.  While I do not anticipate a roaring bull market to start, I do anticipate prices to begin gravitating higher as the industry is working exceptionally hard to find equilibrium.

Corn is anticipated to have made a 5th wave low this week.  While my aspirations of $5.00 corn have long been shot to pieces, a retracement of the entire decline from this summers high is anticipated.  Therefore, a 50% retracement of the decline would lead me to anticipate a trade of December up to $3.91. 

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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July 22nd: USDA Cold Storage Report

As of June 30th:

Total red meat supplies in freezers were down 2 percent from the previous month and down 6 percent from last year.

  • Total pounds of beef in freezers were up 1 percent from the previous month but down 5 percent from last year. 
  • Frozen pork supplies were down 5 percent from the previous month and down 8 percent from last year. Stocks of pork bellies were down 19 percent from last month but up 42 percent from last year
Total frozen poultry supplies were up 5 percent from the previous month and up 11 percent from ayear ago. 
  • Total stocks of chicken were up 1 percent from the previous month and up 12 percent from last year. 
  • Total pounds of turkey in freezers were up 11 percent from last month and up 9 percent from June 30, 2015.
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July 21st: June USDA Monthly Livestock Slaughter Report

Record High Red Meat Production for June

    • June 2015 contained 22 weekdays (including 0 holidays) and 4 Saturdays.
    • June 2016 contained 22 weekdays (including 0 holidays) and 4 Saturdays.
  • Commercial red meat production for the United States totaled 4.23 billion pounds in June, up 5 percent from the 4.02 billion pounds produced in June 2015.
  • Beef production, at 2.19 billion pounds, was 10 percent above the previous year. Cattle slaughter totaled 2.71 million head, up 10 percent from June 2015. The average live weight was up 3 pounds from the previous year, at 1,335 pounds.
  • Veal production totaled 6.4 million pounds, 8 percent below June a year ago. Calf slaughter totaled 37,600 head, up 7 percent from June 2015. The average live weight was down 45 pounds from last year, at 291 pounds.
  • Pork production totaled 2.01 billion pounds, up 1 percent from the previous year. Hog slaughter totaled 9.57 million head, up 1 percent from June 2015. The average live weight was down 2 pounds from the previous year, at 280 pounds.
  • Lamb and mutton production, at 13.2 million pounds, was down 2 percent from June 2015. Sheep slaughter totaled 195,200 head, slightly above last year. The average live weight was 135 pounds, down 3 pounds from June a year ago.
January to June 2016 commercial red meat production was 24.4 billion pounds, up 3 percent from 2015. Accumulated beef production was up 5 percent from last year, veal was down 7 percent, pork was up 1 percent from last year, and lamb and mutton production was up slightly. 

June Federally Inspected (FI) cattle slaughter was the largest for the month since 2013. The majority of the increase in slaughter came from an increase in FI steer slaughter, which was up 12% (up 167,000 head) year-over-year and the largest for June since 2011. FI heifer slaughter was also up year-over-year, but to a lesser extent of 5% (up 28,000 head) compared to 2015. Heifer slaughter in June was still below 2014 levels though. 

Cow FI slaughter also increased compared to last year, up 10% (up 40,000 head), with almost all of the increase coming from beef cow slaughter. For the first half of the year, FI heifer slaughter was actually down 2% (down 82,000 head) and beef cow slaughter was up 8% (or up 95,000 head). Four consecutive quarters of declines in calf prices so far are not enough to induce a significant increase in female cattle slaughter. 

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 July 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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July 20th: A Mid-Year Review of Production & Prices

Looking back at the first six months of 2016 the one word summary for beef production is “growing” compared to a year ago, especially during May and June.  The first term that immediately comes to mind regarding cattle prices is “volatile”, especially in futures markets.  A close second price descriptor was “lower” year-over-year.

For the first six months of 2016, U.S. beef production was 5.2% above 2015’s.  At 12.1 billion pounds, that was the largest tonnage for January-June since 2013’s.  Both cattle slaughter (up 4.3%) and dressed weights (rising 0.9%) posted year-over-year increases.  Most of the year-over-year gain in cattle slaughter came from steers and heifers (up 4.7%).  Cow slaughter also increased, rising about 3.5% compared to 2015’s; most which was in beef-type animals rather than dairy-type.

Increased beef production, lackluster exports, and large processor margins have translated into lower cattle prices in 2016, as would be expected.  The USDA’s Agricultural Marketing Service Market News (AMS) negotiated 5-market average slaughter (fed) steer reported prices for the first six months of this year averaged just over $131.00 per cwt. compared to a shade above $160.00 last year, as drop of 18%.  Lower fed cattle prices combined cattle feeders adapting their feeder cattle price bids after record large losses in 2015 to pressure yearling and calf process.  AMS reported auction prices for 700-to 800-pound steers in the Southern Plains to plummet 30% year-over-year in the first half of 2016.  Southern Plains prices for 500-to 600-pound steers in January through June averaged 33% below 2015’s.

Estimating per capita beef disappearance for the first half of 2016 is instructive, even if we need to use some estimates, most importantly beef imports and exports.  Here we will use the LMIC’s estimates.  On a per person basis, beef disappearance domestically in January-June 2016 was about one pound above a year earlier.  That’s not a huge increase, but the amount (27.6 pounds calculated on a retail weight equivalent basis) was the largest since 2013’s.  Of course, to increase disappearance domestically generally requires a lower price.  Also, given weak world economic conditions, trade barriers, etc., during the last two years the export tonnage that was achieved required lower prices.

The LMIC forecasts U.S. commercial beef production in calendar year 2016 at about 24.7 billion pounds, up 4% to 5% year-over-year and the largest since 2013’s.  In 2016’s last 6 months, production is forecast to rise 3% to 4% year-over-year.  As the second half of 2016 progresses, year-over-year declines in cattle prices are forecast to moderate.  As the year wraps-up, the fed steer price could match or slightly exceed the depressed level of late 2015.  Yearling and calf prices are expected to remain below 2015’s through year-end.
 

U.S. TOTAL RED MEAT AND POULTRY PRODUCTION

For the first six months of 2016, domestic production of red meat and poultry was larger than posted in any prior year.  The prior record was set in 2008.  However, the rate of change year-over-year is the important market driver not the absolute level; the year-over-year increase for the first half of this calendar year was 2.9%.  For the 20 year period beginning in 1989 through 2008, record large U.S. total red meat and poultry production for the first six months of the year occurred 17 times.

As usual in recent decades, U.S. chicken production had the largest production level; Ready to Cook (RTC) production for January-June of this year was nearly 20.3 billion pounds, 2.9% above the same timeframe in 2015.  Next was pork at 12.2 billion pounds (carcass weight), followed closely be beef at 12.1 billion pounds.  Note this is a record level of pork production in the U.S. for the January to June timeframe.  Importantly, the year-over-year gains in pork and beef tonnage were 0.9% and 5.2%, respectively.  U.S. turkey production was about 2.9 billion pounds and has been recovering from the Avian Influenza caused reductions last year and was 3.1% above 2015’s for the first six month of 2016.  At about 77 million pounds, commercial lamb production in January-June was essentially unchanged from a year ago, while veal dropped (down 6.9% year-over-year) to 37.4 million pounds.

As we did in the prior article on beef, we now shift to calculating per person disappearance of red meat and poultry for the first six months of this year.  Using LMIC’s projections on imports and exports for June, estimated per person disappearance on a retail weight basis was 105.6 pounds. That was up 3 pounds from 2015’s and the largest since 2008 (108.2 pounds).  So, even though production was record-large, product available per person in the U.S. was not.  Note that people don’t actually eat nearly that much per person because of three major factors: 1) purchased weight (retail) includes bones; 2) use by family pets is included (purchased meat and poultry in pet foods/meals); and 3) waste (uneaten food).  Of course, the estimated retail weight disappearance also is a pre-cooked amount.

Livestock Marketing Information Center

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 July 19th Crop Moisture Map
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July 19th: Corn Crop Condition

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July 19th: Retail Beef Prices Drop Slightly

USDA-ERS released June average retail meat prices on Friday

Retail prices are calculated from a very limited number of retail cuts, for each protein, using several assumptions by  USDA-ERS (those cut prices are collected by the Bureau of Labor Statistics to calculate the U.S. consumer price index).  Due to the nature of these calculations and the retail environment, people tend to  call these average retail prices “sticky” meaning, as the fundamental  live animal and wholesale markets change, the retail price changes are  slower to appear.  Additionally, to take beef for example, no consumer  buys “beef”, they buy steak, or hamburger, or roasts, etc.  To average  all of these prices together to get one value for beef can be misleading,  however these retail prices are still useful as a barometer to the  industry. 

Starting out with retail beef prices, the June average All Fresh Beef price was $5.83 per pound. This was $0.27 per pound below a year  ago (down 4%).  Within the monthly retail meat prices, roasts and  ground beef have experienced the most decline year-over-year, all  down over 6%.  Steak cuts were only down 1%-3% year-over-year.  This  is supportive of beef cutout data and weekly wholesale price levels.

Retail beef prices are moving in a seasonally normal pattern and we  expect them to slowly increase into fourth quarter, but stay below  year ago levels. 

On the pork side, retail prices were actually up year-over-year for  June.  Looking back on last year though, retail pork prices experienced  a seasonally abnormal decrease from January through June.  So far  this year, retail pork prices have moved in a more seasonally normal  fashion.  Compared to June 2015, pork was up $0.07 per pound (up  2%) to $3.77 per pound in grocery stores this year.  Bacon and ham  were the only cuts with average monthly retail prices above year ago,  but other pork cuts were only down 1%-3% year-over-year. 

Retail broiler composite prices were $0.07 per pound below their  year ago level (down 4%) at $1.92 per pound.  Retail whole fresh  chicken prices saw a steep drop in June compared to May, down $0.10  per pound, and ended up at $1.41 per pound, almost $0.11 below year  ago levels.  Average retail turkey prices tracked right on year ago levels  since February, but June’s price fell slightly below that of 2015’s, down  2% year-over-year to $1.51 per pound. 

All major proteins, except pork, averaged below their respective  2015 values in June.  Pork, although above year ago, has not  experienced a significant increase in retail prices but instead was  comparing to a seasonally abnormal price movement in 2015.  These  generally lower protein prices, including lower dairy and egg prices,  continue to show up in the Consumer Price Index data. 

The CPI,  released this past Friday by the Bureau of Labor Statistics, is a collection of items from multiple sectors of the economy to form a  singular basket of goods so prices can be compared over time and the  effect on U.S. consumers can be monitored.  The CPI for June reflected  generally lower meat prices compared to year ago levels.  This has  been a consistent trend since the start of the year.  Energy CPI  continued to increase, up 11% since January, largely on higher fuel  costs.  The “all items less food and energy” category continues to track  about 2% above year ago, with the main contributors to the year-over-year increase being housing and medical costs. 

Daily Livestock Report

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July 18th: Consolidation or Integration in the Beef Industry

The beef industry finds its origins in the gritty independence and individual perseverance of the people who moved out west to the plains and learned to survive harsh winter weather, drought, volatile markets and emerge to grow the business to produce a world class product. That independence of spirit sometimes clashed with the corporate meat processors in Chicago dominated by Swift, Cudahy, Armour and Wilson. The large beef processing corporations never ventured into the world of the cattle raisers and the two segments remained separate and in constant war with each other over price at the point of transfer of ownership.

That all changed when Currier Holman created IBP and moved the beef plants closer to the feedlots supplying the cattle. This allowed the other beef companies that followed to develop a closer relationship to the producer. The landscape changed from all arms length transactions between feeder and processor to the introduction of committed supplies sold under formulas based on the cash trade and carcass performance. Some of the processing companies ventured into cattle feeding and operated their own feedyards. Feedlots with their own cattle close to the plant provided starters for each day's slaughter and fill in needs to provide a little extra leverage in the cash market.

Meanwhile the other meat processors moved towards a fully vertical integration model covering the entire live life cycle of the animals processed. The processors owned the animals and sometimes the facilities to grow them prior to harvest. Today poultry and pork are dominated by the large corporate companies who control the process from birth to the sale out the back door of the processing plant.

The recent sale of feedlots by Cargill can be viewed in several ways. It may be the start of a movement by the processors to turn the live animal sector back over to the feeding companies. Cargill's press announcement seems to imply Cargill felt it could better use the investment to advance the meat business than the feeding of live cattle. Alternatively, it might represent a closer and more integrated relationship between the feeding companies and the processors. Under these type arrangements, the feeding companies might share in the processing margins as part of the consideration in payment for cattle at point of transfer to the plant.

It is safe to assume the beef processors will not plan to move into cattle breeding. Over half of the nation's calf crops are raised by small herd of less than 50 cows. It is also not likely the processors will engage in ranching and growing the cattle on pasture but a larger more integrated arrangement between the feeding companies and the processors is possible and probably exists in some forms today. 

Ag Center Cattle Report

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May 12th: Projected Cow-Calf Returns to Decline

Since the mid 1970’s, the Livestock Marketing Information Center (LMIC) has estimated annual cow-calf returns based on a typical commercial full-time operation.  Those estimates are for market analysis purposes and are not intended to represent an individual operation or resource base.  They are useful only in a broad context and of course LMIC makes those estimates because producer return is a key factor influencing national herd growth or contraction.  LMIC returns only include cash costs of production and pasture rent. That is, return to owner management, labor, etc., are not included.

Over the last few months, cattle prices have been lower than expected; LMIC’s price forecasts for calves to be sold this fall have been reduced and are currently about 15% below 2015’s.  Year-over-year, the percentage decline in cull animal prices is even larger (dropping 25% to 30% from 2015’s).  Those lower prices to be received by cow-calf producers have caused 2016’s expected return over cash costs plus pasture rent to be revised lower, significantly.  Costs of production are projected to decline slightly compared to 2015’s due to lower feedstuff and fuel costs.  On a per cow basis the year-on-year drop in those items will be only about 3% or roughly $25.00 on a per cow basis.

LMIC estimated return peaked in calendar year 2014, surging to just over $530.00 per cow.  In 2015, the return was just over $300.00.  That was the second highest ever calculated by the LMIC, unadjusted for inflation.  With the recent adjustment down in LMIC’s forecast cattle prices, the 2016 return was lowered to $133.00 per cow.  If realized that will be the lowest since 2013.  While that is still a positive return over cash costs of production (including pasture rent), for some relatively high-cost operations that return may not cover all economic costs.  A further decline is forecast for 2017. The rapid drop in cow-calf returns in 2016 and 2017 is likely cause for producers to ratchet-back beef cowherd expansion plans compared to those of recent years.

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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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July

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