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February 24th: National Feeder & Stocker Cattle Weekly Summary

RECEIPTS:  Auctions   Direct  Video/Internet  Total
This Week     235,200     57,700         1,400          294,300 
Last Week     257,000     35,200        26,000        318,200 
Last Year       232,300     51,500             700         284,500  

Compared to last week, steers and heifers traded mostly steady to 4.00 higher with instances 6.00 to 10.00 higher in areas where the calves are headed south for grazing.  Active trading this week in the major marketing areas as the feeder cattle market continues to rally and following the fed cattle trading arena.  Demand remains good for calves and stocker cattle weighing 500-700 lbs with the best demand for those that are long time weaned and good weighing conditions.  There have been some big feeders coming off wheat earlier than the typical March 15 date due to the dryness in Oklahoma (especially western Oklahoma) and the unappetizing toughness of the wheat plant itself.  Cattle have been gaining well on wheat and now with the focus turning to grain production, some good rains have come at opportune times and have covered most of the major wheat areas in Oklahoma.  

Auctions in Nebraska on Friday this week came to a screeching halt as a result of a blizzard sweeping across the Northern Plains.  Reports of measuring snowfall in feet from eastern Wyoming and throughout the northern third of Nebraska is commonplace and after three consecutive days of temperatures in the 70's in the middle of Nebraska.  Pen conditions in northern tiered feedlots will be fodder for speculation in the coming week as that moisture creates tag on the hide.  Packers did spend more money this week on procurement as live sales sold 4.00 to 5.00 higher at 124.00-125.00 and dressed sales were 6.00 higher at 196.00 in Nebraska.  There are still plenty of ranchers willing to pay up for top quality replacement heifers and as a pretty shrewd rancher would say "It takes the same amount of money to feed a good one as a mediocre one".  Last Friday in Ft. Pierre, SD a load of 695 lb top notch heifers sold at 171.00 while two loads weighing 707 lb heifers rung the bell at 167.00 and last but certainly not least, a load of 769 lb heifers sold at 169.00/cwt or near $1300 per head.  

Cattle on Feed Report was released Friday afternoon with February 1st at 101 percent; Placements at 111 percent and Marketings at 110 percent all coming in close to industry analyst estimates.  On Thursday, the Cold Storage Report was released with the largest January cold storage inventory on record for total beef supplies. Total red meat and poultry supplies reported at 2.222 billion lbs or 5 percent lower than last year, with pork attributing the most decline.  Beef stocks in cold storage was estimated at 537.5 million lbs, 1 percent higher than last year.  Pork stocks came in at 526.7 million lbs 11 percent lower than a year ago while chicken inventories for January came in at 774.9 million lbs, 6 percent less than last year.  Cold storage is generally not a market mover but can give analysts another segment to refer to. Auction volume this week included 61 percent weighing over 600 lbs and 42 percent heifers.

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February 24th: 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 head totaled 10.8 million head on February 1, 2017. The inventory was 1 percent above February 1, 2016.
  • Placements in feedlots during January totaled 1.98 million head, 11 percent above 2016. Net placements were 1.93 million head. During January, placements of cattle and calves weighing less than 600 pounds were 380,000 head, 600-699 pounds were 445,000 head, 700-799 pounds were 585,000 head, 800-899 pounds were 410,000, 900-999 pounds were 116,000, and 1,000 pounds and greater were 45,000 head.
  • Marketings of fed cattle during January totaled 1.75 million head, 10 percent above 2016.
  • Other disappearance totaled 53,000 head during January, 5 percent below 2016.
2016 Cattle on Feed and Annual Size Group Estimates: 

Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head represented 81.2 percent of all cattle and calves on feed in the United States on January 1, 2017. This is comparable to the 80.4 percent on January 1, 2016.

Marketings of fed cattle for feedlots with capacity of 1,000 or more head during 2016 represented 87.1 percent of total cattle marketed from all feedlots in the United States, down slightly from 87.2 percent during 2015.

Complete February Cattle On Feed Report

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Cattle on Feed Inventory in 1,000+ Capacity Feedlots as of Febuary 1st
Millions of Head
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Number of Cattle Placed on Feed in 1,000+ Capacity Feedlots in January
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Number of Cattle Marketed from 1,000+ Capacity Feedlots in January
Millions of Head
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Cattle on Feed by State as of Febuary 1st
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Cattle on Feed by Weight Group as of Febuary 1st
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February 24th: Shootin' the Bull Weekly Analysis
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In my opinion, I don't have a clue as to the price skew between cash, soon spot April, and back month fat contracts.  I can't recall a time when perception of such a strong cash market made for such a weak futures market.  Thursday solidified a $125.00 - $126.00 cash trade and Friday a $1.40 lower move in April, widening the basis to $9.90 with 8 weeks to go.  This is a strange environment to be in.  This is nothing like anticipating a price move from A to B, that has already materialized.  This is a fundamental function of basis that will be relegated at expiration.  The question is, will the anticipated increase of inventory be such to drive cash down $10.00 to $20.00, or futures up $10.00 to $20.00, or they meet somewhere in between?  Those that are in the camp of, the futures are correct, have been incorrect for two expiring contract months in a row as futures have come to cash.  April may be the deciding factor as to whether this continues or not.  My analysis suggests it will.  Although similar aspects were in play last year, the market had just completed the wave 3 down in December where as the wave 5 is perceived to have been completed in October of '16.  Therefore, to set a new weekly low is not anticipated. 

As stated before, the industry is in a state of transition.  A transition from excessive liquidation, to excessive expansion, to a point at present of "I don't know", a weaker financial state, and a consumer increasing consumption over pork and poultry.  If you want to add one more thing, think about our economy transitioning from a low interest rate environment to a higher one with few aspects of further government stimulus.  Although today's price action looks ugly, my analysis continues to suggest fat cattle futures to be in a wave 2 correction.  Cash is anticipated to remain elevated and futures to meet cash somewhere within the current wide basis spread.  I clearly understand that none of the above helps you make a more informed decision.  At this time, I do not perceive anyone can offer advice with any confidence. Therefore, I will be patient until we see further information made available.

The break lower in the feeder cattle actually helps to clarify the wave count.  I wrote on Thursday of the differing wave count of the wave 2.  Today's sharp sell off suggests the wave 2 remains incomplete.  Although this is disappointing to bulls, it is perceived a minor set back.  With their no enormous basis spreads in the feeders, there are fewer issues to work with.  The on feed report was only slightly higher than the trade guess on placements.  The sharp increases in placements for both December and January leads one to wonder if the big numbers are going to come in March, April, and May?  With the vacuum of demand not perceived to be impacted at all by the cattle on feed report I anticipate the suction to continue to pull cattle into the kill cycle at an elevated rate.  Consumer demand has been a long time turning back to a heavier beef diet.  With price not seemingly an impact at the retail level, I don't anticipate the potential for a lower price to stifle consumer demand.  If anything, it would be anticipated to increase it.  I would dare to say that it will take something more than an increase in production to stifle the current demand. 

Grains did nothing this week but soften.  Little news and even less movement in outside markets to cause a move.  I remain friendly towards wheat and beans with corn not anticipated to do much at all. 

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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February 23rd: Closing Futures Summary

February live cattle futures closed $1.77 1/2 higher, which was near its high for the day. Deferred contracts finished 7 1/2 to 45 cents higher through the December contract, which was low-range. Yesterday's unexpected surge in cash prices along with rising wholesale demand sent cattle futures sharply higher in early trading today. Cash trade jumped to $124 to $125 in the Southern Plains yesterday, up from last week's $119 to $120 range. 

Corn futures closed 5 to 5 3/4 cents lower, which was near their lows of the day. Funds sold a net 13,000 corn contracts (65 million bu.) today. Corn futures moved higher initially on the weaker U.S. dollar index and a friendlier-than-expected projected 2017 planting figure from USDA at its annual outlook forum. But steady erosion in soybean futures weighed on corn, pressing prices lower in late trading. 

Soybean futures faced pressure throughout the day trading session. Old-crop futures ended low-range with losses around 10 to 11 cents. New-crop futures posted slightly lighter losses. Soybean futures came under heavy followthrough pressure today, with the move to a new low for the month triggering technical sales. Another lofty crop peg for Brazil from AgroConsult and reports of record-large Brazilian soybean shipments for January and likely February reminded of looming export competition. 

RW wheat futures favored the downside today and settled 2 1/4 to 3 1/4 cents lower. HRW saw choppy trade for much of the session and settled steady to fractionally higher. HRS wheat posted gains of around a penny after favoring the upside for much of the day. Wheat futures faced a choppy day of trade amid mixed fundamental news. USDA's all wheat planting projection came in well below year-ago and a bit lighter than anticipated at its ag outlook forum today. 

Lean hog futures posted a low-range close to finish 52 1/2 cents to $1.17 1/2 lower, with the front-month leading losses. Pressure in the hog market was tied to ideas the cash market has topped, with bids softening yesterday and again this morning. On a national basis, USDA reports bids were $1.25 lower this morning as packers worked to improve margins. But futures came off session lows after this morning's pork cutout report showed carcass values improving $2.27 thanks to a surge in belly prices. 

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February 23rd: USDA Cold Storage Report

As of January 31st, 2017:

  • Total red meat supplies in freezers were up 2 percent from the previous month but down 9 percent from last year
    • Total pounds of beef in freezers were down 5 percent from the previous month but up 1 percent from last year. 
    • Frozen pork supplies were up 11 percent from the previous month but down 16 percent from last year. 
    • Stocks of pork bellies were down 22 percent from last month and down 77 percent from last year
  • Total frozen poultry supplies were up 3 percent from the previous month and up slightly from a year ago
    • Total stocks of chicken were down 4 percent from the previous month and down 6 percent from last year. 
    • Total pounds of turkey in freezers were up 22 percent from last month and up 17 percent from January 31, 2016.
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February 23rd: USDA Livestock Slaughter Report

Commercial red meat production for the United States totaled 4.29 billion pounds in January, up 6 percent from the 4.06 billion pounds produced in January 2016.

  • Beef production, at 2.12 billion pounds, was 8 percent above the previous year. Cattle slaughter totaled 2.58 million head, up 9 percent from January 2016. The average live weight was down 11 pounds from the previous year, at 1,370 pounds.
  • Veal production totaled 6.3 million pounds, 5 percent below January a year ago. Calf slaughter totaled 46,600 head, 12 percent above January 2016. The average live weight was down 39 pounds from last year, at 235 pounds.
  • Pork production totaled 2.15 billion pounds, 3 percent above the previous year. Hog slaughter totaled 10.1 million head, 4 percent above January 2016. The average live weight was down 1 pound from the previous year, at 284 pounds.
  • Lamb and mutton production, at 12.3 million pounds, was 9 percent above January 2016. Sheep slaughter totaled 177,000 head, 10 percent above last year. The average live weight was 138 pounds, down 1 pound from January a year ago.
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"Click Here to view a Slide Show of Drought Monitor maps for the last 12 weeks
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February 22nd: Slaughter Steers - Cash vs. Formula
CME Group

Market ready cattle prices, basis the USDA-AMS 5 Market average, have sustained an impressive rally from Christmas week of 2016 to early February. Price derived from formula or forward contracts topped out in the last week of January close to $123 per hundredweight. This pattern trailed the pattern in cash cattle trade by a week, which is typical. The peak in cash cattle trade was about a dollar per hundredweight under the formula and forward contract high.

The first week of February saw values for forward contracted cattle slide $6 while cattle priced off of formula maintained prior week values. Volumes of forward contracted cattle moved up to account for 12%-13% of all fat cattle market receipts in the last week of January, compared to the 9%-11% range during the first three weeks of the year.

Direct cattle sales receipts, which ran at 25%-26% of all fat cattle market receipts during the first two weeks of the year, popped up to 32% of total receipts in the third week of January, when prices for cattle in the direct sales market hit their highs. During the last few weeks, when forward contracted cattle volumes have been elevated, receipts of cattle in direct sales slipped back to a 25%-26% share of total receipts. It was interesting that last week saw the forward contract share of cattle market receipts fall back to 11% while direct cattle sales moved up to the 32% peak, similar to the third week in January. Total receipts (direct sales, formula, forward contract and negotiated grid) during the last week were the highest of the year to-date, surpassing the prior high of the third week in January.

Cattle values were stoic in the midst of large trade volumes last week. In the wake of the price peak in the third week of January, cattle prices in the forward contract market have run at a $4-$5 discount to direct cash trade and cash trade has moved very little in the last three weeks. Yet packers set a record for the year-to-date in cattle bought in the direct market. Concerns about beef or cattle supply and demand changes in upcoming weeks are not in evidence as the Lenten season approaches. February weather has been spring-like in major cattle feeding regions, which should abet excellent weight gains for cattle in feedlots. It is a blissful situation in cattle market, for the time being.

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February 22nd: Fed Cattle Cash Prices on Fire
Cassie Fish -- cassandrafish.com

Cash fed cattle prices are on fire this morning, trading as high as $125, a new high for the year. Negotiated country trade was underway simultaneously with the Fed Cattle Exchange on-line auction, where cattle brought $120.50 to $124.25. This strong cash action impressively on the heels of last week’s 125k head trade volume. $195-196 in eastern Nebraska has tripped a few cattle but is being passed, that equals $122.85-123.48 if the cattle yield 63%.

There is only one explanation for the market strength. It is the confluence of continuing improved beef demand and seasonally tight fed cattle supplies. Retail ads across the U.S. are once again full of beef promotions. Half-page full color ads showing succulent chuck roasts and T-bone steaks at attractive prices are now commonplace. One chain offered a buy one get one free chuck or round roast. After being shunned as too expensive for years, beef has regained its place on the plate.

This activity has been indicated by continued better-than-average out-front beef sales by packers. When the industry shoved 8.5% more beef through the supply chain in Q4 than the prior year at the cheapest wholesale prices since 2012, it set up 2017 with the potential to be the best beef demand year in many. Thus far this February, the kill levels are the highest since 2013.

To add to the torque of the move is the decline in weights. After month after month of huge carcasses, carcass weights are falling. This means less fat trim comes off each carcass too, supporting the beef 50s market which was so problematic for so long.

So, is this new high in the cash a blow off or a breakout? Many analysts have predicted this is all the cash market can do. But because demand has improved, it has inspired larger kills than generally expected this month and it’s clear that packers’ motivation to meet demand will support maintaining live cattle inventory. Packers are competing against one another for the first cut of cattle more and more as the offerings of market-ready fed cattle become greener. After years of plenty of fat, choice and prime cattle to pick from, cattle are being shown with fewer days on feed than in a long while.

As those in this business know, carcass weights and grading decline from now until May seasonally. With available supplies arguably more current today than in 2-3 years, which cattle a packer buys becomes more important to meet specific end user needs.

CME live cattle futures have followed the strength in live prices today, as spot Feb LC made a new high for the move, reaching the highest level since March 2016. Next resistance the Dec LC spot high of $123.70.

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February 22nd: The Demand Indexes for Beef & Pork
Daily Livestock Report

From an economist’s perspective, a demand index is a depictions changes over time compared to a base period (i.e. shifts in the demand relationship). Graphically, demand is a curve with prices on the vertical axis and quantities on a horizontal axis. A major assumption in calculation the index is that the base period relationship between price and quantity is unchanged (for the economist readers, the own-price elasticity is constant over time).

Interpreting retail meat demand indexes is rather straight forward. For example, an index value of 79 in 2012 means that relative the base year of 1990 (which has an index of 100) that the retail beef price (adjusted for inflation) was 21% below what would have occurred if demand remained at 1990’s base level. That is a reduction in demand, economically.

Today, we include two annual retail price demand index graphics, one each for beef and pork. Before we discuss those, these indexes should be interpreted with a bit of caution. Beyond the significant fixed elasticity assumption noted above, the retail prices are calculated by USDA’s Economic Research Service (ERS) from a limited scope of meats collected from grocery stores for the purpose of calculating the overall U.S. Consumer Price Index by the Bureau of Labor Statistics. Those price data are not collected to provide anything close to a full-scale assessment of demand. Second, without going into detail, the quantity data have some limitations and assumptions, too. So, to use an analogy from weather, this type of index is more like measurement from a barometer rather than the detailed scale of a thermometer to understand what is like outside and what has been happening. Evaluation should focus on direction of change and not absolute index levels. Of course, beef and pork demand are simplifications as consumers not only buy product from grocery stores but also from restaurants and they eat individual items like hamburger and not generic “beef”. 


Comparing the history of retail demand indexes for beef and pork since 1990, it’s clear that beef has moved over a wider range and that the economic environment is important. Note, for example, that the recent bottom in the beef demand index is tied to the last recession. From a historical perspective, the decline in beef demand from 1990 through 1997 was largely attributable to chicken taking market share away from beef. 

For calendar year 2016, both beef and pork retail demand indexes slipped compared to 2015’s. Still, demand was strong compared to levels posted since the early 1990’s. For both beef and pork, the nature of the retail price series calculated by ERS may have overstated the 2015 indexes some. In an aggregate sense, both beef and port items faced considerable competition from chicken in 2016, which may have contributed to the slight negative shift in demand last year. 

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February 21st: Factors Affecting Bred Cow Value
Derrell Peel, Oklahoma State University Extension

Bred cows vary in value according to a number of factors including age; quality; weight; stage of gestation; hide color; time of year and location.  Research at Oklahoma State University has examined 15 years of auction data in Oklahoma to determine the impact of these factors on commercial bred cow value.  Purebred cows are more commonly marketed by private treaty or in production sales but the general relative impact of value factors identified in the auction study is likely to be similar.

In the latest weekly combined Oklahoma auction data, bred cow values are reported in a range from $735 to $1585/head.  The research model would suggest that the base value of a four year old (fourth gestation), average quality cow, weighing 12-1300 pounds and 5 months bred is $1000-$1050/head.  This estimate is consistent with the reported market data.  Changes in any of these characteristics impact the value of the bred cow.  All value differences below are based on current average market levels.  Price adjustments are based on percentages which means that the dollar value of price adjustments will be different at lower or higher average market price levels.

Young cows have the highest lifetime production potential and thus first-calf heifers have the highest average value, about $35 /head more than the four year-old base cow. Cows show only modest price decreases through age six then drop sharply.  For example, an eight year old cow will have a value about $110/cow less than the four year-old cow.  Compared to the 12-1300 base weight, a bred cow weighing 14-1500 pounds will have an average value about $50/head higher.  In contrast, a cow weighing 900-1000 pounds will have a value $85/head less compared to the base cow.  Stage of gestation also impacts bred cow value with a first trimester bred cow valued roughly $50/head lower than a mid-trimester cow. Value increases for late gestation cows up to eight months bred by about $55/head over mid-trimester cows.  However, bred cow value drops after eight months bred when cows are extremely close to calving. 

Cow quality has a significant impact on bred cow value with high quality cows bringing about 14 percent higher value compared to average quality while low quality cows bring about 15 percent lower than an average quality cow.  In the example above, that means roughly $150/head more for high quality to $150/head less for a low quality cow compared to average quality.  Apart from quality, hide color affects value.  The auction data does not report breeds but does distinguish black colored animals from all others.  A black-hided cow brings an average premium of nearly seven percent or $70/head more in the current market. In Oklahoma, bred cow values peak in March and are seasonally lowest in October, with generally low values from June through October.  At current market levels, the seasonal swing in bred cow value would be about $140/head from the March peak to the October low.

The effects reported above are additive and it is easy to see why a wide range of bred cow values are reported.  Using the research model and current market conditions (and holding cow weight and the time of year constant) various combinations of age, quality, gestation, and hide-color result in a range of bred cow value estimates from about $730 to $1300 per head.  The research model appears to be capturing current average bred cow values reasonably accurately.  However, demand for high quality cows appears to be stronger than usual with current values for high quality cows in Oklahoma reported at roughly $1550/head or $200-$250 per head higher than the research model would predict.  This is likely another indication that herd expansion is still going strong.

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February 16th: Meat Prices Lower Due to Expanding Supplies
CME Group

Prices for all meat proteins were lower compared to the previous year in January, reflecting the impact of expanding meat supplies and the need to move more product through domestic channels.  The price of choice beef at retail in January was pegged at $5.66 per pound, 0.7% higher than the previous month but still about 5.2% lower than the previous year.   When accounting for all beef products sold at retail, including ground beef, the average beef price was $5.39 per pound, down 0.4% from the previous month and down 5.9% compared to the previous year.  Retailers were especially aggressive in trying to sell ground beef in January, capitalizing in part on the wide gap between wholesale and retail prices.  Strong margins, seasonally good consumer demand for ground beef after the  holidays and higher rings per pound for ground beef all provided incentive, in our view, to try and push more ground beef through retail channels. 

The result has been a dramatic improvement in the price of 50CL beef, with prices now in the high 70s compared to the mid 30s back in December.  The price of 90CL lean beef also is holding above $2 a pound at wholesale. The price ratio of lean and fat trim relative to cattle continues to run above normal levels at this time.  Retailers also were particularly aggressive in trying to push chuck and round cuts, with the average chuck roast price down 5% from December levels and the price of steaks made from rounds down 4% from the previous month.  Beef prices at retail continue to slide and the still fairly large gap between wholesale and retail prices should provide retailers opportunities to feature beef aggressively as we go into the spring and summer. 

Pork prices declined substantially at the wholesale level last year and this is finally catching up with retail prices as well.  The average price of pork at retail in January was reported at $3.57 per pound, 0.4% lower than the previous month and 5.9% lower than a year ago.  One of the pork items that has been getting a lot of press recently is bellies (bacon) and the retail data helps explain some of what’s been going on.  Large hog/belly supplies in the fall gave retailers enough confidence to lower bacon prices at retail in order to ramp up sales.  The average price of bacon at retail in January was $5.1 per pound, the same as it was in December but 11% lower than it was a year ago. 

Retailers are much more sensitive to the price of bellies/bacon and normally sharp runups in wholesale prices are accompanied by a lagged response at retail.  The question is not whether retail bacon prices will be much higher in March and April, it is only a question of how much they will increase and the kind of sales slowdown for bacon that will result from it.  The price of pork loins continues to slide at retail and the very wide spread of wholesale and retail prices makes one wonder why retailers are not more aggressive in featuring this product.  As we have mentioned many times before, it looks like the main challenge for this product  is that it does not conform to the current consumer desire for more robust flavors.  After all, it is not a coincidence that the price of bellies currently is 1.80 a pound and the price of pork loins is 75 cents.

And this is not just a pork issue, the price of boneless/skinless chicken breasts, the archetype of the lean, flavorless protein is stuck in the $1 per pound range while the price of chicken wings (plenty of bone and skin there) is now priced  at $1.90 per pound.  The broiler composite price at retail in January was down 2% from the previous month and it is also down 2% from a year ago.

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February Seasonal Drought Outlook
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February 15th: Comprending the Immensity of the National Debt

This does not directly pertain to the cattle market, but we recently came across the map of the United States found below that shows the proportion of Federally owned land in each state.  This prompted the question, "How much of the nearly $20 trillion National Debt could be paid if vast amounts of this land, much of which costs more to administer than it generates in lease payments, were sold and the sale proceeds applied to the debt?" -- National Debt Clock

What was found in the New Estimates of Value of Land of the United States - Bureau of Economic Analysis - April 3, 2015, is astounding and may be the most compelling and understandable way to comprehend the immensity of the National debt...

In the conclusion of this report, it is stated... "This paper presents new estimates of the value of land in the lower 48 United States from 2000 to 2009. In 2009, the value of land was approximately $23 trillion, $1.8 billion of which is owned by the federal government.  According to the National Land Cover Database, 6% of the lower 48 states is developed, and according to the estimates in this paper, this land consists of 50% of the overall land value. Land values rose until 2006 and then fell until the end of the sample in 2009."

"The estimation methodology consists of dividing the U.S. into a mosaic of parcels at the census tract level and below, assigning ownership and prices to each parcel, and tabulating.  Whereas past estimates have omitted large areas of land or have based valuation on potentially implausible estimates of structure values, this attempt instead misses no land area and uses hedonic estimates of land values."

The Bottom Line... Selling all Federally owned land and applying the sale proceeds to the National Debt would only be "a drop in the bucket" and nearly all of the land in the lower 48 states would have to be sold to pay the debt.

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February 9th: USDA World Agricultural Supply & Demand Estimates

Estimated red meat and poultry production for 2016 was adjusted to reflect December slaughter data. 

  • Total red meat and poultry production for 2017 is lowered, largely reflecting decreased pork and poultry forecasts. 
  • Beef production is raised. 
Cattle on-feed placements and marketings for the year are raised, resulting in higher cattle slaughter. The January Cattle inventory report estimated that total cattle and calf numbers on January 1, 2017 increased for the third consecutive year. Beef cow numbers were above 2016, and producers indicated they were holding more heifers for addition to the breeding herd. The report also indicated a year-over-year increase in the number of cattle outside feedlots. The January Cattle on Feed report showed higher than expected placement numbers in December, implying that larger numbers of fed cattle will be marketed during the spring quarter.

Cattle weights are reduced for 2017 as producers are expected to remain current in feedlot marketings. Pork production in the first quarter is reduced on the current pace of slaughter and slightly lighter carcass weights. 

Broiler production is lowered as increases in production in the first quarter are more than offset by reductions in the second half of the year. 

No changes were made to turkey production.

Livestock trade estimates for 2016 are adjusted to reflect December data. For 2017, forecast beef imports are raised on expectations of higher shipments of processing beef from Oceania. Robust demand for U.S. beef supports higher forecast beef
exports for the year. No changes are made to pork, poultry and egg trade forecasts.

Cattle, hog, and broiler price forecasts are raised to reflect demand strength. Turkey prices are forecast lower on current prices. 

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All Cattle & Calves Inventory: January 1, 2017 vs. 2016
Compiled from USDA National Agricultural Statistical Service Data
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Beef Cows Inventory: January 1, 2017 vs. 2016
Compiled from USDA National Agricultural Statistical Service Data
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Replacement Heifers Inventory: January 1, 2017 vs. 2016
Compiled from USDA National Agricultural Statistical Service Data
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January 31st: 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, 2017, totaled 93.6 million head. This is 2 percent above the 91.9 million head on January 1, 2016. 
  • All cows and heifers that have calved, at 40.6 million head, are 3 percent above the 39.5 million head on January 1, 2016. 
    • Beef cows, at 31.2 million head, are up 3 percent from a year ago. 
    • Milk cows, at 9.35 million head, are up slightly from the previous year. 
  • All heifers 500 pounds and over, as of January 1, 2017, totaled 20.1 million head. This is 1 percent above the 19.9 million head on January 1, 2016. 
    • Beef replacement heifers, at 6.42 million head, are up 1 percent from a year ago. 
    • Milk replacement heifers, at 4.75 million head, are down 1 percent from the previous year. 
    • Other heifers, at 8.88 million head, are 1 percent above a year earlier. 
  • Calves under 500 pounds in the United States, as of January 1, 2017, totaled 14.4 million head. This is 2 percent above the 14.1 million head on January 1, 2016. 
    • Steers weighing 500 pounds and over totaled 16.4 million head, up slightly from one year ago. 
    • Bulls weighing 500 pounds and over totaled 2.23 million head, up 4 percent from the previous year. 
  • The 2016 calf crop in the United States was estimated at 35.1 million head, up 3 percent from last year's calf crop. 
    • Calves born during the first half of 2016 were estimated at 25.6 million head. This is up 4 percent from the first half of 2015. 
    • Calves born during the second half of 2016 were estimated at 9.53 million head, 27 percent of the total 2016 calf crop. 
  • Cattle and calves on feed for the slaughter market in the United States for all feedlots totaled 13.1 million head on January 1, 2017. The inventory is down 1 percentfrom the January 1, 2016 total of 13.2 million head. 
    • Cattle on feed, in feedlots with capacity of 1,000 or more head, accounted for 81.2 percent of the total cattle on feed on January 1, 2017. This is up 1 percent from the previous year. 
    • The combined total of calves under 500 pounds and other heifers and steers over 500 pounds (outside of feedlots) is 26.6 million head. This is 2 percent above one year ago. 
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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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February 23rd: Commodity Market Comments 
  • “Shootin’ The Bull” -- Christopher B. Swift.
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    Live Cattle: Th
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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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    February
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