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June 24th: National Feeder & Stocker Cattle Summary
USDA-MO Dept of Ag Market News

RECEIPTS:    Auctions    Direct    Video/Internet     Total
This Week     126,900     32,400         1,400           160,700 
This Week     124,000     20,100        83,000          227,100 
Last Year       130,100     65,500        59,200          254,800  

Compared to last week, feeder steers and heifers continued mostly 5.00-10.00 lower throughout the week.  The only bright spot was Wednesday when things looked to be turning around with a couple Wednesday auctions showing some strength, despite the CME board closing slightly lower after trending higher Monday and Tuesday.  The mid-week weakness in the futures was a the spark that ignited the fire, confirming that early week gains would be short lived, as Thursday the board open lower and finish sharply lower.  

Friday’s afternoon Cattle on Feed Report had April 1 inventory 0.5 percent higher than last year at 10.85 million head; placements at 104.6 percent and marketing’s at 107.1 percent.  Inventory was slightly lower than expected, with placements lighter than expected and marketing were higher than expectations.  The report was more bullish than expected, but was not enough for the bearish outlook.  A combination of decreased imports and the fed cattle futures decline appeared to play a role in placement during the month of March, as profit outlooks for late summer and fall looks bleak.  USDA’s Cold Storage report showed total beef in storage down from last year and just slightly under the 5 year average, which can be viewed as a positive moving into grilling season.  

However, even the few supportive signs than can be gleamed from those two reports are certainly not enough to change the current market’s bearish position.  Protein sources are plentiful and beef demand is modest at best.  Fed cattle trade was pretty much wrapped up by late afternoon Thursday with live sales at 124.00, 3.00 lower than last week’s trade and northern dressed sales at 196.00, 4.00 lower than last week and losing 20.00 in just two weeks.  Some packers appear to be bought up through the month of May and asking for extended delivery.  With the last two week’s estimated weekly cattle harvest numbers coming in as the two biggest weeks so far this year, indicates packer margins are favorable.  

A large portion of the field work in the Corn Belt has been slowed as a result of wide spread thunderstorms early in the trading period.  This should change early next week and allow planting to resume.  Despite the temporarily slowed planting progress, we should still be able to maintain our near record planting pace.  The early start to corn planting likely brought some additional acres into production. At the same time, we are hearing reports that the rally in soybeans has encouraged some production of that crop.   Auction volume this week included 52 percent weighing over 600 lbs and 41 percent heifers. 

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June 24th: Closing Futures Summary

Pressure in the cattle markets mounted through the day amid a "risk-off" attitude. For the week, live cattle posted moderate losses and feeders ended with slight gains. Bears clearly have momentum on their side heading into next week. The path of least resistance remains down and given uncertainties created by the United Kingdom's vote to exit the European Union, markets will be on edge next week. This afternoon's Cattle on Feed Report, however, will not add to the bearish tone, as the On Feed category met expectations

Corn futures settled mostly 2 to 3 cents lower today, which was more than a dime off session lows. For the week, July corn futures plunged 52 1/2 cents, while the December contract plummeted 53 3/4 cents. Focus next week will be divided between weather, outside markets and USDA's Acreage and Quarterly Grain Stocks Reports on Thursday. Focus on outside markets will be on the U.S. dollar after today's surge.

Soybean futures closed 21 1/2 to 23 cents lower through the January contract, finishing near their lows of the day. August futures closed around 53 cents lower and November finished around 65 cents lower for the week. Futures are poised to start the week under pressure. The extent of that pressure will be determined by the amount of followthrough strength in the U.S. dollar index and fallout from this week's UK vote to exit the EU. In addition, traders will start to look ahead to Thursday's Grain Stocks and Acreage Reports. 

SRW July wheat futures closed a half-cent higher with other SRW contracts down 3/4 to 2 3/4 cents. HRW futures finished around 4 to 5 cents lower and HRS futures closed 3 to 4 cents lower. For the week, September SRW futures lost nearly 30 cents. Wheat futures will likely face pressure next week from the advancing harvest in the Plains and Midwest. Additional pressure could come if the U.S. dollar sees followthrough strength from Friday's sharp gains due to the shock of the UK's "Brexit" vote. 

Lean hog futures closed 20 to 75 cents lower with December futures leading the decline. August futures closed $4.20 lower for the week. Hog prices could face pressure next week as the Hogs and Pigs Report came in at the high end of expectations, suggesting there will be a few more marketings in the near term than expected. In addition, packers may ease back on purchases due to tightening profit margins and reduced operations around the July 4 holiday. 

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June 24th: Cattle on Feed Report
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United States Cattle on Feed Up 2 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 10.8 million head on June 1, 2016. The inventory was 2 percent above June 1, 2015.
  • Placements in feedlots during May totaled 1.88 million head, 10 percent above 2015. Net placements were 1.81 million head. During May, placements of cattle and calves weighing less than 600 pounds were 305,000 head, 600-699 pounds were 250,000 head, 700-799 pounds were 479,000 head, and 800 pounds and greater were 850,000 head.
  • Marketings of fed cattle during May totaled 1.79 million head, 5 percent above 2015.
  • Other disappearance totaled 74,000 head during May, 4 percent below 2015.
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Cattle on Feed Inventory in 1,000+ Capacity Feedlots as of June 1st
Millions of Head
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Number of Cattle Placed on Feed in 1,000+ Capacity Feedlots in May
Millions of Head
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Number of Cattle Marketed from 1,000+ Capacity Feedlots in May
Millions of Head
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Cattle on Feed by State as of June 1st
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June 24th: USDA Cold Storage Report

As of May 31st:

Total red meat supplies in freezers were down 2 percent from the previous month and down 5 percent from last year.

  • Total pounds of beef in freezers were down 1 percent from the previous month and down 6 percent from last year. 
  • Frozen pork supplies were down 4 percent from the previous month and down 6 percent from last year. 
  • Stocks of pork bellies were up 7 percent from last month and up 20 percent from last year.
Total frozen poultry supplies were up 4 percent from the previous month and up 7 percent from a year ago.
  • Total stocks of chicken were down slightly from the previous month but up 9 percent from last year. 
  • Total pounds of turkey in freezers were up 14 percent from last month and up 3 percent from May 31, 2015.
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June 24th: Shootin' the Bull Weekly Analysis
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In my opinion, the market action dictated by the British vote to exit the Eurozone is perceived inconsequential to cattle.   Little of significance changed in the fat cattle market this week.  The move off the low came very close to negating some technical issues, but was unable to seal the deal before weeks end.  So, the weekly, close only, continuation chart continues to reflect the fats to be in the 5th wave.  The August contract will need to close above $114.35 or below $110.25 to set the stage for the next most probable move.  A close above $114.35 will begin to overlap previous waves, that should not be overlapped, in order to continue to anticipate further downside price movement.  A trade under $110.25 August will suggest that the 5th of the 5th wave is in progress.  I continue to perceive that if a new low were to materialize, it would lead me to believe the bottom was closer to being made than to anticipate an extended move lower.  Therefore, for the time being, the fat cattle futures are perceived to be in limbo.  This is a very confusing place to be in a business.  However, due to the severity of capital loss, decisions need to be made with the best information available.  At this time, I do not perceive that information to be available. 

Feeders were able to do something different that the fats did not.  That was breaking a rule of the Elliott wave that leads me to anticipate something different. The rule broken was that a wave 4 correction can not exceed the top or bottom of the wave 1 of the same magnitude.  In this case, the close only chart on the August feeders had 3 waves in this last move down from the previous high close of $147.37 on June 8th.  Then, this current rally started, that was first perceived as a wave 4 with a wave 5 lower anticipated.  However, on Thursday of this week, August closed above two previous lows of significance.  The first low overlapped was what was perceived as the wave 2 in this decline at the close of $141.05.  This is where the overlapping of waves comes in that broke a rule of Elliott.  This now suggests that the move from $147.37 to contract low close at $136.67 is a 3 wave move.  More often than not, I would not conclude a top or bottom complete on a 3 wave move. 

However, in rare instances in moves of significance, there can develop a pattern in which the 5th wave consists to 5 lesser waves that consists of only 3 sub-waves each.  This may be the case on the August feeder cattle.  A chart for viewing this is available on my website.  The next point that was exceeded this week was the previous low close of $142.10 on 5/24.  This was a significant low as it produced the last rally from which a new contract low was spawned from.  So, some changes are noted on the feeder cattle that are not quite note worthy yet for fats.  Lastly on the feeders, there is significant divergence between technical indicators and price on both the weekly continuation chart and feeder cattle index chart.  This leads me to be overly cautious about pushing the down side of this market. These factors combined lead me to anticipate a reversal in feeder cattle. 

Corn fooled me.  I did not anticipate this sharp of a decline.  Having recommended old crop sales to be finalized, and half of new crop sales helped some, but this is not what was anticipated.  So, from here, with the chart pattern appearing like a sharp cliff that prices fell off, I anticipate a long slow grind back up the price scale to equal or exceed the current high. 

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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June 23rd: Monthly Livestock Slaughter Report

  Record High Pork Production for May

  • May 2015 contained 21 weekdays (including 1 holiday) and 5 Saturdays.
  • May 2016 contained 22 weekdays (including 1 holiday) and 4 Saturdays.
  • Commercial red meat production for the United States totaled 4.00 billion pounds in May, up 5 percent from the3.81 billion pounds produced in May 2015.
  • Beef production, at 2.03 billion pounds, was 5 percent above the previous year. Cattle slaughter totaled 2.51 million head, up 6 percent from May 2015. The average live weight was up 1 pound from the previous year, at 1,333 pounds.
  • Veal production totaled 6.0 million pounds, 9 percent below May a year ago. Calf slaughter totaled 35,500 head, up 7 percent from May 2015. The average live weight was down 49 pounds from last year, at 286 pounds.
  • Pork production totaled 1.95 billion pounds, up 5 percent from the previous year. Hog slaughter totaled 9.18 millionhead, up 5 percent from May 2015. The average live weight was down 1 pound from the previous year, at 283 pounds.
  • Lamb and mutton production, at 13.0 million pounds, was up 9 percent from May 2015. Sheep slaughter totaled 185,300 head, 9 percent above last year. The average live weight was 140 pounds, down 1 pound from May a year ago.
  January to May 2016 commercial red meat production was 20.2 billion pounds, up 3 percent from 2015. 
  Accumulatedbeef production was up 4 percent from last year.
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"Click Here"to view a Slide Show of Drought Monitor maps for the last 12 weeks
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June 22nd: Testing the Elasticity of Beef Demand

It is no secret that the past year has witnessed a rapid increase in the nation's beef herd. Producers responded to record breaking calf prices by ramping up the nation's cow herd and now the results are beginning to filter into the marketplace. Starting this spring placements into the nation's feedyards reflected the increasing numbers of replacement cattle outside feedyards and the placement trend is unlikely to change in the near future.

The million dollar question is how beef demand responds to the inevitable increase in supplies of beef. No one questions the fact that more beef will tend to lower prices for beef but few understand by how much. Will beef prices crash with a weekly slaughter of 650,000 cattle -- a number common in recent years? Will box prices for choice cuts pushed well under $200, as futures prices are implying, stimulate demand for beef. Will a weaker dollar encourage more exports?

Starting with the food service, the industry needs help to encourage and enlighten restaurants of the new availability and price declines of beef prices. Restaurants are interested in price stability. Menus, during the past two years, have changed at restaurants across the country offering less beef dishes and more alternative meats. This happened out of necessity and because of price, and beef's story needs to be re-told in order to win back more beef offerings. Steakhouses that traditionally offered selections of multiple types of beef options now offer multiple alternative meat entrees like fish, poultry and pork. Burger shops now have a number of chicken sandwiches as well as other meat offerings. Changing menu options is a big job and will take time.

Retail beef sales in supermarkets is more straight forward. Retailers will go where the money is. If they can build more and better margins into beef sales and beef features, they will. True elasticity is at work in grocery stores where consumers will always look for the best buys and beef is a popular item. Pork prices have been rising while beef prices have been crashing. Winning back counter space on the meat counter should occur naturally and benefit from healthy margins promised the retailer by lower beef prices and plentiful supplies.

A weaker dollar should influence expanded beef exports. China is a large emerging buyer of U.S. beef. Most beef enters China through Hong Kong but changes in trade policy may allow more direct exports and a larger middle class in China may create a growing market for our beef. Good news also is possible on the import side as the source for much of our imported beef, Australia and New Zealand, are suffering following drought and engaged currently in rebuilding their herds making supplies for export less plentiful.

Fighting beef consumption are the foodies. The food reform movement is engaged in a publicity campaign to discourage beef consumption. The movement is short on the facts but has the ear of young people and it is critically important for the beef industry to counter this effort with good nutritional science and make sure the value of beef is promoted on college campuses across the country.

There is no mathematical calculation to find the right balance between beef production and price. It must be discovered over and over. Searching historic trends and production levels are never successful because they fail to include all the current factors that make this day and time different. They also fail to include those factors in demand we have not yet identified. The current decline in prices will reach back to the breeders who have been little impacted from recent volatility.

Ag Center Cattle Report

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June 21st: Corn Crop Condition

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June 21st: Muted Inflationary Pressures Keeping Food Prices in Check

Inflationary pressures in the US economy remain muted and lower food prices have played a role in keeping prices in check. May consumer prices, as reported by the US Bureau of Labor Statistics, were up only 0.2% from the previous month and up just 1.1% compared to the previous year. This is well below the 2% inflation target of the US Federal Reserve and, in part, explains why the FED has changed its stance on future interest rate increases. As to why the FED looks warily on inflation numbers that fall below the 2% threshold, here’s how they explain in their own words: “a lower inflation rate would be associated with an elevated probability of falling into deflation, which means prices and perhaps wages, on average, are falling--a phenomenon associated with very weak economic conditions.” (Source: FOMC)

Lower food prices have contributed to the deflationary environment and, judging by current trends in wholesale markets, retail prices may continue to adjust downward. The overall food CPI was down 0.2% in May from the previous month and it is up just 0.7% from last year. Lower beef and, to a lesser extent, chicken prices have been the key factors pushing down meat prices at retail. The average price of all beef products at retail in May was $6.02 per pound, 0.4% lower than the previous month and 5.2% lower than a year ago. The last time May retail prices were lower than April was in May 2012 and this was the largest year over year decline in May beef retail prices since May 2006.

But even as prices have declined from the all time records that were established a year ago, they still remain as much as 26% higher than what they were just five years ago (May 2011). Fed cattle prices in May averaged around $128/cwt, up 14% compared to May 2011 levels while the choice beef cutout for the month of May averaged $217/cwt, 22% higher than five years ago. So while it is reasonable to discuss the impact of lower beef prices relative to the expansion in supplies, it is also good to take a step back and recognize the level of price inflation that took place in the last five years in the beef complex and what we should expect in terms of retail beef prices going forward as supplies expand. 

Daily Livestock Report

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June 21st: Future of North America’s Beef Industry
Glynn T. Tonsor -- Kansas State University

I had the pleasure last week to provide a joint talk with Dr. Ted Schroder at the 2016 Beef Improvement Federation Annual Meeting & Symposium. Our presentation sketched a broad vision of how the integrated U.S. and Canadian beef industry may look in 20 years. To set the stage for our assessment, we outlined comparative advantages in comparing major global beef producers.

The key comparative advantages currently enjoyed by North America’s integrated industry include a strong trust and premium being placed on their grain-finished beef.  The presence of sound and effective infrastructure spanning from physical assets like transportation networks and sophisticate processing facilities to intellectual expertise on issues including genetics and meat quality, along with legal property rights supporting investment are additional global strengths.

Comparative disadvantages are equally important to assess and appreciate in assessing any entity or industry’s future. The North American beef industry is not the lowest price producer globally reflecting differences in production costs not only relative to pork, chicken, and other proteins but also compared to competing beef systems around the world that are not as heavily focused on grain-finished production. While these production cost differentials may well adjust, they seem unlikely to shrink substantially. This reinforces the need to appreciate the fragmented nature of many inner-industry discussions and the associated partially effective coordination and signaling that occurs both vertically and horizontally throughout the North American beef industry. One only has to examine debates around animal identification and traceability, proposed international trade deals, and generic advertising to appreciate this point and the associated challenges with pursuing immense economic opportunities with expected growing global beef demand over the next 20 years.

As noted in past articles specific to individual operations, identifying and effectively acting upon one’s comparative advantage is key for successful progression of any industry. The core goal of this article is to have each reader pause and think critically about two things: 1) how the North American beef industry can best be positioned for success over the next 20 years and 2) how individual actions of stakeholders throughout the industry can help (or inhibit) realization of this success.  It is much more enjoyable, and arguably economically rewarding over the longer-term, to work together and “build a larger pie to share” than to focus on getting the “largest slice of today’s pie.”

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June 20th: Dairy Influence on Beef Markets

Beef is a by-product of the dairy industry and rarely has a major influence on dairy industry production decisions.  However, dairy animals contribute a significant portion of total animal slaughter and beef supply.  The impact of dairy on beef markets varies over time depending on long term trends and short term market conditions in both beef and dairy markets.  This article summarizes the dairy industry’s impact on beef production in the 20 years since 1996.

The dairy cow herd has been relatively stable over the last 20 years varying less than 4 percent from 9.0 to 9.3 million head. By contrast the beef cow herd has varied by over 18 percent from 29.0 to 34.5 million head over the same period.  Dairy cows as a percent of all cows have averaged 22.3 percent but have been at a record high of 24 percent in 2014 and 2015 as a result of low beef cow inventories.

The nature of dairy production means that basic herd dynamics are very different for dairy compared to beef.  Dairy cows are culled more quickly so dairy herd turnover rates are much faster.  Dairy cow slaughter averages 30 percent of the January 1 inventory of dairy cows each year compared to less than 10 percent for beef cows. On average the number of dairy replacements held each year is about 47 percent of the cow inventory.  This represents about 48 percent of the estimated dairy calf crop and is nearly all the heifers born to dairy cows.  This compares to beef herds where replacements heifers are roughly 18 percent of the cow inventory.   About 64 percent of replacement dairy heifers enter the herd, which implies that overall about 30 percent of the estimated dairy calf crop is used for breeding.  For beef herds, an average of 10 percent of the estimated beef calf crop is used for breeding females. 

The primary contribution of the dairy industry to beef production is male calves and cull cows, along with some cull heifers.  Most veal slaughter is from dairy calves.  Adjusting for veal slaughter, male dairy calves average about 10 percent of the total (beef + dairy) calf crop.  In 2015, that percentage was a record large12.1 percent due to a low beef calf crop compared to a stable dairy calf crop and low veal slaughter.  Veal slaughter has trended down for many years but reached record low levels in recent years due to the high value of feeder cattle. 

New technology provides the dairy industry other ways to adjust relative to beef markets.  Sexed semen and genomic testing are being used to target some dairy cows for production of replacement heifers.  Conversely, cows not used to produce replacements are, in some cases,  being crossbred to beef breeds to produce a better feeder animal. Dairy feeder cattle are discounted compared to beef breeds because of differences in productivity, efficiency and yield.  However, dairy animals have some advantages in feedlots.   Because of the uniformity of dairy genetics, these animals are very predictable in finishing.  Dairy calves are often placed on feed at very light weights and may take a year to finish.  Because of the predictability, dairy cattle produce carcasses of consistent quality and, for example, typically produce Prime carcasses at two to three times the rate for beef breeds.

Although dairy cows only represent about 22 percent of all cows, they represent an average of 47 percent of total cow slaughter.  In 2015, dairy cow slaughter represented a record level of 57 percent of total cow slaughter.  Dairy cows typically have heavier carcass weights, though increased beef cow weights over time has closed that gap somewhat.  Reported cow carcass weights are an average across both beef and dairy cow slaughter and changes in cow carcass weights are sometimes more of a reflection of changing proportions of dairy and beef cows being slaughtered than changes in cow weights.

The impact of the dairy industry on beef production is always significant and has been larger than usual recently due to low beef cattle numbers.  Increased beef cattle inventories as the beef herd rebuilds will reduce this impact to more typical levels in the coming years.

Derrell S. Peel -- Oklahoma State University Extension

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June 17th: Concern About Beef Price Outlook Heading into Summer

With just two weeks to go till expiration of the June futures contract, the basis is still around $6/cwt while the basis against the August contract is around $10/cwt. And this is using the very latest cash price as reported by USDA.

When using our regular cash benchmark (the 5-day avg) the basis would be even higher. For those that do not follow markets closely basis is the difference between the cash price and the price of the futures contract. We will not wade into the minutia of basis calculations, which vary depending on what cash market you chose to track but, any way you look at it, current basis levels are at the highest in recent years.

Over time this price has served us well as an indicator of cash market conditions. But, in the current environment, with big swings in prices seemingly daily, one also needs to be aware of more recent price points.

On Wednesday, for instance, USDA quoted the spot market at $123/cwt, implying a basis of around $6 against the June futures contract and a basis of $10/cwt against the August contract. Normally the August contract basis narrows at this time of year, something that we have yet to see.

The situation in the beef complex remains quite uncertain and this is clearly reflected in the action of futures prices. While the beef cutout has been extremely firm so far, there is concern about the price outlook going into the summer months. Buying for Father’s Day features was completed a few days ago and retailers also are wrapping up any last minute buys for the 4th of July.

So far the cutout has been greatly supported by the strong gains in the value of middle meats (steaks). The beef loin primal (items like sirloin steak, tenderloins and strips) was just a little over $305/cwt at the end of April.

On Monday of this week the value of the choice loin primal was calculated by USDA at $370.24/cwt. That shift in the value of the loin primal alone has added about $14 to the value of the choice cutout.

The rib primal also has traded very firm going into the late spring and early summer holidays, benefiting from the normal improvement in foodservice business, menu upgrades to capitalise on consumer demand for higher quality and increased retail features.

In late April and early May the value of the rib primal was calculated at $310/cwt but reached as high as $373/cwt earlier this week. The +$60 gain in the value of the rib primal added another $7 to the value of the cutout. But in the last two days both the rib and loin primals show signs of softening.

It is not unusual for middle meat prices to move lower into July and August. The question is by how much. If the loin and rib primals drop under $300/cwt by late July, would that cause a complete collapse in cutout values and justify current fed cattle values.

The short answer is, probably not. Those kind of prices for middle meats and trend values for rounds and chucks still would place the choice cutout around $200/cwt.

Even allowing for a healthy packer margin, this kind of cutout value would normally correlate with fed cattle values in the $120 area. Now if loins and ribs drop in the $250 range, then current futures implied fed values would start to make sense.

CME Group

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 June 16th Seasonal Drought Outlook
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June 10th: USDA WASDE - Livestock, Poultry, & Dairy Outlook

The forecast for total red meat and poultry production in 2016 and 2017 is lowered from last month, largely as higher feed prices dampen the rate of production growth. Beef production for 2016 is reduced mostly on lower carcass weights, but the pace of second-quarter slaughter is slightly slower than previously expected. Production in 2017 is reduced on slightly lower carcass weights as higher feed prices are expected to encourage cattle feeders to minimize the amount of time cattle are on feed. Pork production for 2016 and 2017 is lowered as higher feed prices are expected to impact weights through early 2017. USDA’s Quarterly Hogs and Pigs report will be released on June 24 and provide an indication of producer farrowing intentions for the remainder of 2016. Broiler and turkey production for late-2016 and early-2017 is lowered as higher feed prices slow the expected rate of expansion. Turkey production in the second quarter 2016 is reduced on the current pace of slaughter. 

Forecasts for 2016 and 2017 beef imports are unchanged from last month; the export forecast is reduced slightly on the pace of trade to date. No change is made to pork imports or exports for 2016 or 2017. Broiler and turkey export forecasts are unchanged as well. Cattle prices for 2016 are raised from last month on prices to date, but the forecast for 2017 is unchanged. Likewise, hog prices are higher in 2016 but unchanged for 2017. Broiler prices are raised for both 2016 and 2017 as domestic demand has strengthened and the rate of production growth has slowed. Turkey prices are raised for 2016, but unchanged for 2017. Although the rate of production growth is slowed, the recovery in demand has been weaker than expected. 

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June 10th: USDA WASDE - U.S. Feed Grain Outlook

The 2016/17 outlook for U.S. feed grain supplies is lowered this month with declines for corn, sorghum, and oats beginning stocks more than offsetting an increase for barley. Projected corn production for 2016/17 is unchanged at a record 14,430 million bushels. Corn ending stocks for 2015/16 are reduced 95 million bushels as a 100-million-bushel increase in the corn export forecast more than offsets a slightly higher import projection. As of early June, total U.S. corn export commitments (accumulated exports plus outstanding sales) are above year-ago levels for the first time in the 2015/16 marketing year. Reduced corn production in Brazil and harvest delays in Argentina have improved the relative competitiveness of U.S. corn in recent weeks. The U.S. corn export projection for 2016/17 is raised 50 million bushels as U.S. supplies are expected to remain more competitive in 2016/17 with less production for Brazil. Corn ending stocks for 2016/17 are projected at 2,008 million bushels, down 145 million from last month.

Changes to 2016/17 sorghum beginning stocks reflect higher 2015/16 forecasts for sorghum use. Projected exports are raised 15 million bushels based on recent food aid shipments and increased export sales. Food, seed, and industrial use is expected 10 million bushels higher based on reported sorghum use for ethanol production in the latest Grain Crushings and Co-Products Production report. Projected feed and residual use and ending stocks are both lowered.

The season-average farm price for corn is raised for both 2015/16 and 2016/17. The 2015/16 price is forecast up 10 cents per bushel at the midpoint with a range of $3.60 to $3.80 per bushel. The 2016/17 price is projected 15 cents per bushel higher at the midpoint with a range of $3.20 to $3.80 per bushel. Price outlooks for the other feed grains in 2016/17 are also raised this month.

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May 19th: USDA April Livestock Slaughter Report

Commercial red meat production for the United States totaled 3.98 billion pounds in April, down 1 percent from the 4.02 billion pounds produced in April 2015.

  • Beef production, at 1.96 billion pounds, was 2 percent above the previous year. Cattle slaughter totaled 2.41 million head, up 1 percent from April 2015. The average live weight was up 10 pounds from the previous year, at 1,348 pounds.
  • Veal production totaled 6.0 million pounds, 10 percent below April a year ago. Calf slaughter totaled 34,800 head, down
  • 2 percent from April 2015. The average live weight was down 25 pounds from last year, at 293 pounds.
  • Pork production totaled 2.00 billion pounds, down 3 percent from the previous year. Hog slaughter totaled 9.37 million head, down 3 percent from April 2015. The average live weight was up 1 pound from the previous year, at 285 pounds.
  • Lamb and mutton production, at 12.8 million pounds, was down 6 percent from April 2015. Sheep slaughter totaled 189,000 head, 5 percent below last year. The average live weight was 135 pounds, down 2 pounds from April a year ago.
January to April 2016 commercial red meat production was 16.2 billion pounds, up 2 percent from 2015.

Accumulated beef production was up 4 percent from last year, veal was down 6 percent, pork was up slightly from last year, and lamb and mutton production was down 1 percent. 

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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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May 10th: 2017 U.S. Red Meat & Poultry Production Projected Higher
USDA: WASDE

Total U.S. red meat and poultry production in 2017 is projected to be above 2016. Beef production is forecast higher as larger 2015 and 2016 calf crops are expected to support year-over-year increases in cattle placements in late 2016 and early 2017. Marketings of fed cattle are forecast higher during 2017 while carcass weights are expected to increase with good forage conditions and lower feed costs. 

Pork production is expected to increase with larger hog supplies and heavier carcass weights. A modest expansion of farrowings is expected during the latter part of 2016 and early 2017, and continued growth in pigs per litter will support larger pig crops. 

Broiler production is forecast higher as the industry continues its current expansion path. Turkey production will continue to increase during 2017, but not at the rate of growth expected for 2016 when the sector is rebuilding following the outbreak of Highly Pathogenic Avian Influenza (HPAI) in 2015.

The total red meat and poultry production forecast for 2016 is lowered from last month as production forecasts for beef, and poultry are reduced. Pork is raised on the pace of slaughter, but beef production is reduced on lowered first-half carcass weights. Broiler production is adjusted to reflect first quarter data. Turkey production is reduced on a slower expected pace of recovery from HPAI. Egg production for 2016 is raised on higher expected first-half production.

Red meat and poultry exports are expected to increase in 2017 with expanding production and moderating prices; conversely, imports of beef are expected to decline. For 2016, the beef trade forecast is adjusted to reflect March trade data; no change is made to the forecast. The pork export forecast is adjusted to reflect March data; imports are reduced on the slow pace of trade to date. Broiler exports are forecast weaker on a slower expected pace of recovery in the first half of the year. Turkey exports are adjusted for March data.

For 2017, prices of fed cattle, hogs, broilers, and turkeys are all forecast below 2016 as supplies of meat are forecast higher. Egg prices are forecast higher on firm demand. As for 2016, the fed cattle price forecast is lowered from last month as prices have weakened and cattle supplies remain relatively large. The annual average hog price is unchanged from last month. Broiler and turkey prices are fo

For 2017, prices of fed cattle, hogs, broilers, and turkeys are all forecast below 2016 as supplies of meat are forecast higher. Egg prices are forecast higher on firm demand. As for 2016, the fed cattle price forecast is lowered from last month as prices have weakened and cattle supplies remain relatively large.  The annual average hog price is unchanged from last month. Broiler and turkey prices are forecast higher as prices remain strong with slower expected growth in production. 

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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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