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November 21st - National Feeder & Stocker Cattle Summary
USDA-MO Dept of Ag Market News

RECEIPTS:   Auctions   Direct    Video/Internet     Total
This Week     264,600      45,300           600         310,500 
Last Week     266,300     26,900        27,500        320,700 
Last Year       298,100     35,000         6,000         339,100

Compared to last week, steer and heifer calves sold steady to 5.00 higher with instances 8.00-10.00 higher on calves throughout the Southern Plains and Northern Plains.  A light test of yearling feeder cattle continued to sell fully steady to 3.00 higher.  Demand remains very good on all weights of calves and true yearlings.  Harvest is winding down across the Corn Belt and the cheapest corn prices in four years is causing many Midwestern and Northern Plains farmer feeders to consider "walking off" a portion of their crop to town.  This has farmer feeders anxious to get their cattle bought and placed in their yards with the record corn crop near harvested.  Last week’s cold front also boosted calf interest with widespread hard-freezes which will eliminate many airborne viruses plaguing new calf purchases this fall.  

Optimism remains high at this time as buyers continue to be eager bidders to replace the fed cattlethey have sold at historically high prices.  The calf market has come through the heavy auction offerings and the deliveries in October and November of prior video and direct sales relatively unscathed as country deliveries are mostly complete.  Lighter auction runs are upon the market with the onset of holiday schedules and there seems to be plenty of demand to push feeder and stocker cattle prices even higher.  At the St. Joseph, MO Stockyards on Wednesday a part load of fancy yearling steers weighing 715 lbs sold at 267.00.  Also on Wednesday in Torrington, WY 105 head of fancy steer calves averaging 503 lbssold with a average price of 322.54.  Very high feeder cattle prices have left producers questioning the high risk that is being encountered, however the high fed cattle market has followed suit.  

Last Friday’s impressive gains in the fed cattle market by short bought packers reinforced bullish psychology as the market carved out territory north of 170.00 at 172.00.  Historically small fed cattle numbers will remain quite bullish with strong support hopefully sparking additional follow through buying.  Last week packers were not allowed to set one week out and had to procure inventory to do business and it appeared to be a chase between packers to fill their needs.  Boxed beef prices have found some support, posting gains as business has seemed to pick up looking past Thanksgiving, and right after, Christmas is just around the corner with ham as its main entrée.  The beef market will have to battle these two holidays, as beef is still the preferred meat and also at its highest price level ever.  Friday’s afternoon Cattle on Feed Report was mostly neutral as November 1 inventory was at 100 percent of a year ago; placements at 99 percent of a year ago; marketings at 92 percent of a year ago.  October marketings are lowest since series began in 1996.  This week’s auction volume included 44 percent over 600 lbs and 39 percent heifers. 

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November 21st - Closing Futures Summary

Cattle traders anticipated Friday’s cash strength. Cattle futures traded sideways to lower since their bullish Monday reaction to last week’s cash market strength. Persistent wholesale gains probably provided support, but late Friday gains almost surely reflected trader expectations for the steady-higher cash trading that occurred later in the day. December live cattle futures lifted 0.65 to 170.90 cents/pound at Friday’s close, while April futures gained 0.12 to 170.42. Meanwhile, January feeder cattle futures advanced 0.77 cents to 236.35 cents/pound, and March feeders ran up 0.72 to 234.45.

The grain markets proved rather changeable Friday. China’s central bank announced last night that it is cutting interest rates. Stock markets and the U.S. dollar surged in response, while crop markets dipped. However, ideas that the move will spur Chinese commodity demand and the fact that they keep the yuan in a tight range versus the dollar seemed to spark a surprising grain and soy comeback. Prices fluctuated around unchanged later in the day. December corn futures slipped 0.5 cent to $3.7275/bushel at Friday’s close, while May sagged 0.5 to $3.9425.

The soy complex posted an impressive late-week surge. Given its voracious appetite for U.S. beans and meal, the overnight China move and the dollar reaction undercut the CBOT complex in early morning trading. However, rising Asian palm oil prices supported soyoil and bean futures, with late talk of increased Chinese economic activity and the tight dollar-yuan relationship supporting prices around midday. Word of strong cash quotes reportedly powered the late advance. January soybean futures jumped 18.5 cents to $10.39/bushel at late Friday trading, while December soyoil crept up 0.02 cents to 32.69 cents/pound, and December meal rebounded $7.6 to $378.4/ton.

The wheat markets moved generally higher. The China news and surging value of the dollar also seemed to weigh on wheat futures Thursday night. Forecasts for wet and warm weekend conditions in the central U.S. didn’t help the bullish cause. Nevertheless, golden grain markets also rebounded from early lows, thereby likely reflecting hopes for increased global demand on the China stimulus. December CBOT wheat ended Friday unchanged at $5.4725/bushel, while December KC wheat inched 1.75 cents higher to $6.04/bushel, whereas December MWE wheat dipped 1.25 to $5.8325.

Spot market weakness once again undermined bulls in the CME hog pit. Thursday’s pork quotes showed signs of firming, but the cash markets gave back a portion of their recent gains at that time. The various pork cuts seemed to be trading mixed at noon Friday, thereby providing support as well. The market ended the week in mixed fashion. December hog futures slid 0.12 cents to 90.65 cents/pound in closing Friday action, while April hogs rose 0.20 to 92.95.

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October 24th - November Cattle on Feed Report:

United States Cattle on Feed Up Slightly

  • Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 10.6 million head on November 1, 2014. The inventory was slightly above November 1, 2013.
  • Placements in feedlots during October totaled 2.36 million, 1 percent below 2013. Net placements were 2.26 million head. During October, placements of cattle and calves weighing less than 600 pounds were 690,000, 600-699 pounds were 570,000, 700-799 pounds were 462,000, and 800 pounds and greater were 635,000. For the month of October, placements are the second lowest since the series began in 1996.
  • Marketings of fed cattle during October totaled 1.69 million, 8 percent below 2013. October marketings are the lowest since the series began in 1996.
  • Other disappearance totaled 97,000 during October, 28 percent above 2013.
Analysts regarded the report as neutral to slightly bearish because of the placement total and the weight distribution. October placements were 3.4% higher than analysts’ average forecast and marketings were 0.4% below the average forecast. This meant the Nov 1 COF total was 0.3% above the analysts’ average forecast and the first time this year it was above a year ago (by 48,000 head).

The trend of feeding more cattle up north continued. Minnesota, Nebraska and South Dakota each had COF totals above a year ago, while Iowa’s was the same as last year. Washington had 11% more cattle on feed while California had 15% fewer cattle on feed. Texas had the most cattle on feed (2.550M head). Nebraska was second with 2.450M head and Kansas was third with 2.080M head. 

Five states, Idaho, Iowa, Minnesota, Nebraska and South Dakota, placed more cattle than a year ago. The weight breakdown showed the only year-on-year increase was in the heaviest weight category. The under 700 lbs category saw a 2.9% or 38,000 head decline. The 700-799 lbs category saw an 8.5% or 43,000 head decline. But the 800 lbs and over category saw a 10.4% or 60,000 head increase.

Only Iowa, Minnesota and South Dakota marketed more cattle in October than a year earlier. Kansas marketings were down 20% while Texas marketings were down 2%. Nebraska marketed 10,000 more cattle than Texas in the month. 
 

Cattle on Feed Inventory in 1,000+ Capacity Feedlots as of November 1st
Millions of Head
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Number of Cattle Placed on Feed in 1,000+ Capacity Feedlots in October
Millions of Head
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Number of Cattle Marketed from 1,000+ Capacity Feedlots in October
Millions of Head
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Cattle on Feed by State as of November 1st
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November 7th - Canadian Weekly Cattle Report

U.S. fed cattle hit record

  • A few cash fed cattle sales in the United States fetched a new record high of US$171-$172 per hundredweight.
  • Alberta direct cattle sales were too few to allow a market trend to establish. The Alberta cash market has now shifted to a bi-monthly flush of sales with packer bids generally based off contracts.However, a handful of dressed sales were reported with prices at $290-$292 per cwt. delivered, generally steady with the previous week.
  • U.S. buyers showed interest, but sales did not develop.
  • The fed basis is weak for this time of year at around -$19.50.
  • Weekly western Canadian slaughter to Nov. 8 fell 14 percent to 30,307 head.
  • Weekly exports to Nov. 1 fell six percent from the previous week’s strong level to 10,976 head. Exports for the two weeks were about double the pace of last year at the same time.
  • Cattle futures established new record highs but may soon face the risk of a profit taking liquidation.
Cow prices up
  • The volume at auction increased, but prices edged higher.
  • D1, D2 cows ranged $116-$135 to average $126.50. D3 cows ranged $104 -$120 to average $110.67
  • Western Canadian cow slaughter totalled 7,670 head, up 15 percent from the previous week but 22 percent smaller than the same week last year. Feeder cows averaged slightly more than $135 per cwt.
  • Export volumes to the U.S. have been brisk, but there is speculation that domestic supply could begin to build if Canadian slaughter does not increase.
Feeders stabilize
  • Light stockers found stability following four consecutive weeks of lower prices, while feeders heavier than 800 pounds traded mixed.
  • Replacement or breeding quality heifers are fetching premiums similar to last year at five to 10 cents a lb.
  • Prices in the yearling trade are being dictated more by quality than quantity.
  • In Manitoba, 450 to 650 lb. heifers are trading at a premium over Alberta and Saskatchewan, while steers in the same weight range are trading at steady prices across the West.
  • Given the freight costs, few Manitoba calves are likely to go to Alberta feedlots.
  • Weekly feeder exports to Nov. 1 totalled 15,181 head, which was more than double the pace last year.
  • More pregnancy checked open replacement quality heifers will soon be on the market, and the steer-heifer price spread might narrow on feeders heavier than 900 lb.
Beef edges higher
  • The Choice cutout was US$251.35, up 83 cents, and Select was $238.93, up $1.68. The Montreal wholesale price for delivery this week rose to C $308-$310 per cwt.
Prairie cattle on feed
  • There were 861,518 cattle on feed in Alberta and Saskatchewan feedlots, down three percent from last year.
  • Placements in October were 318,138, up six percent, thanks to a heavy run of calves and a significant number of forward sold calves being delivered.
  • The placements tended to be lighter calves. Heavier placements weighing 700 lb. or more fell 12 percent.
  • Marketings in October were 148,284, up 13 percent over last year.
  • Market-ready supply will start to tighten. Total placements over the past four months were 43,500 head fewer than last year, and many of the cattle will not be at market weight for several months.
This cattle market information is selected from the weekly report from CanFax, a division of the Canadian Cattlemen’s Association.
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November 21st - Beef & Corn Exports Higher

Beef:

  • Net sales of 13,500 MT for 2014 were up 69 percent from the previous week and 26 percent from the prior 4-week average.  Increases were reported for Hong Kong (7,400 MT), Japan (2,000 MT), Canada (1,300 MT), South Korea (1,200 MT), and Mexico (1,100 MT).  Net sales of 3,700 MT for 2015 were reported for Hong Kong (3,000 MT), South Korea (300 MT), and Japan (300 MT).  Exports of 12,900 MT were up 3 percent from the previous week, but down 4 percent from the prior 4-week average.  The primary destinations were Japan (3,700 MT), Hong Kong (2,600 MT), South Korea (2,200 MT), Mexico (1,600 MT), and Canada (1,100 MT). 
Corn:
  • Net sales of 908,700 MT for 2014/2015 were up 80 percent from the previous week and 45 percent from the prior 4-week average.   Increases were reported for Japan (447,500 MT, including 40,800 MT switched from unknown destinations and decreases of 1,900 MT), Mexico (159,600 MT), Peru (149,400 MT, including 35,000 MT switched from Colombia), Taiwan (149,100 MT), and Canada (28,800 MT). 
  • Decreases were reported for unknown destinations (58,600 MT), Colombia (21,400 MT), and Vietnam (4,700 MT).  Exports of 386,900 MT--a marketing-year low--were primarily to Japan (139,800 MT), Mexico (94,900 MT), Colombia (56,600 MT), Peru (34,800 MT), Guatemala (22,600 MT), and Honduras (14,800 MT).
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November 21st - Quietly Higher Futures and Big Cattle

There’s not much new news for live cattle futures this morning which is reflected in a very quiet, small range trade, flirting with both sides of steady. Feeders retreated to the 10-day moving average, stymied again by strength in corn which began yesterday and has continued this morning.

Weights Set Another Record

With fed cattle weights at record highs, steer carcasses now over 900 pounds, there is increasing conversation this week regarding discounts on “heavy” carcasses. On grids, some discounts start on carcasses weighing over 1000 pounds while others begin over 1050 pounds and the amounts seem to range from$5/cwt to $35/cwt depending on the packer, the weight break and the plant.

But if a packer is buying in the negotiated market on a dressed basis, discounts are not being applied because cattle feeders have the upper hand in negotiations due to such tight supplies. This morning a major packer is creating a minor stir in Nebraska by communicating to some cattle feeders a more stringent discount on heavies purchased dressed- with the packer standing the first 10% of carcasses weighing 1000 pounds or more and a $20/cwt-discount on any remainder. This edict is being viewed mostly as an effort to “slow down” the bullish rise in cash prices more than anything else.

Are Big Cuts a Problem?

During this time of scarce cattle numbers, high priced replacements and attractive COG’s, it’s well known cattle feeders have been extending days on feed and increasing out-weights. The last couple of weeks it has been rumored food service and retailers have been complaining the size of primals and sub-primals are too big for their needs. For the grinding community it’s a plus (and fed cuts continue to hit the grinder) while on the steak and roast side it’s a challenge.

These unique times have resulted in a historically unique fact. The need for pounds of beef is greater than any negative baggage that comes with it. Until the economics dictate otherwise, it will be very difficult to turn extra tonnage into a bearish market factor. Mother Nature will take care of some it, as weights will begin to decline in Q1 and Q2 2015.

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November 20th - Tight Supplies Drive Predictions For Even Stronger Beef Prices

Hog and broiler production is sneaking up, threatening to steal beef's thunder.

Cattle supplies remain squeaky-tight and will continue that way.

September feedlot placements showed a larger-than-normal seasonal uptick from August. On-feed placements showed the first year-on-year rise since February. Still, September's 2.007 million placements were 314,000 below the 2008-12 average for September.

Despite higher placements, the Oct. 1 feedlot inventory was down 1.5% from a year earlier. It was still 6.3% smaller than the 2009-2013 average. October marked the fifth time in the last five years that cattle on feed were the lowest for that calendar month.

Steve Meyer of Paragon Economics in Adel, Iowa, says marketing patterns could create some price pressure on fed cattle in late winter and early spring.

"Lighter early summer 2014 placement weights and heavier weights of August and September will likely cause a bunching effect of fed cattle in late winter and early spring, narrowing the spread between April and June live cattle futures," Meyer explains. "Supplies will certainly not be burdensome during that period, but may be larger relative to autumn's light levels."

USDA budget sequestration canceled the 2013 mid-year cattle inventory survey. Lack of those numbers makes pace of beef cow herd expansion more of a guessing game.

However, October's Cattle on Feed Report provides a clue. Heifers and heifer calves in commercial feed yards on Oct. 1 totaled 3.55 million head, down 3% from Oct. 1, 2013. Total cattle on feed were down 1%. Relatively fewer heifers entering feedlots suggests more heifers are staying on ranches and farms to expand beef breeding herds as one would expect given recent cow-calf profits.

Beef prices should hold

USDA projects the 2015 annual average five-area direct choice steer price will fall in the $149 to $162 range, compared with about $153 this year and $126 in 2013 and $123 in 2012.

Oklahoma City feeder cattle are projected to average $215 to $228, up from this year's average of just over $200 and well above 2013's $147 and 2012's $146.

By comparison, next year's annual average Iowa-southern-Minnesota barrows and gilts are projected to average in the $63 to $68 range. That's down from this year's annual average near $77.50.

Next year's 12-city broiler price is projected to average $1 to $1.08 a pound, up from this year's roughly $1.05.

Pork is getting cheaper. The price spread between beef and chicken will widen. Hopefully, U.S. economic growth will maintain consumers' appetites for beef.

Still, beef increasingly looks like premium-priced product. Analysts will continue to fret over whether consumers will look elsewhere for better meat protein value. Pork and broiler producers and promoters will certainly be working to lure customers away from beef.

On breaking even

An acquaintance asked a feedlot operator if he was buying feeder cattle. "No," he replied. "Despite much lower corn prices, feeder cattle have gotten so pricy that the best I could do is break even."

Here's the punch line. Despite the fact that cattle feeders hate to see empty pens, the not-so-aggressive feeder cattle buyer added, "I can break even doing nothing."

That exchange reminds me of another acquaintance, who, when asked in a previous high-risk time if he had any surefire ways for someone to double their money.

"Yes," he replied, "Fold it over and put it back in your pocket."

John Otte

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 November 20th 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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November 20th - Packers Begin Securing Q1 Inventory With Big Basis Trade

No one’s sat down for Thanksgiving dinner yet and a basis trade was sewn up late yesterday on a very large string of cattle for delivery in January and February at more than $3.00 over Feb futures. This transaction indicates that mid-$170s is seen as value by at least some packers intent on maintaining inventory and underscores tight fed cattle supplies are with us for months, not weeks to come.

This type of trade is nothing new to the market, but the fact that it has extended 2-3 months into the future signals to the market that packer competition, the heart of the Bull of 2014, is as relevant as ever, even above $170.

OI Up

Yesterday saw a 3k contract increase in live cattle futures open interest, occurring on a day of quiet mostly sideways action. That takes OI to the highest level since mid-September, where that time it retreated. If OI continues to build from here that would give the bull more teeth going into year’s end.

Waiting on Cash

Packer interest this week so far has been muted with the USDA reporting very small numbers trading $265 to $270 dressed, steady to higher. Trade may not occur until tomorrow, leaving traders with little new to inspire today giving cattle futures an excuse for a modest intra-day correction. Boxes are about $3 higher compared to a week ago and downside is expected to be limited until early December.

Another Big Up

Where this market is headed during the next 3 weeks will once again boil down to the chase by packers to fill kills before the quarter runs down and whether packer competition for limited numbers adds another $3-4 to cash prices as we head into the final month of 2014. And where cash leads, futures will follow.

The Beef

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November 19th - How Long Will High Cattle Prices Continue?

A common question of late is, "How long will the high cattle prices continue?" The November WASDE report gives an overview of how the current and expected production of beef related to prices. From a supply perspective, beef production for 2014 is expected to be less than in 2013. The expectation for 2015 is for even less beef production than for 2014. Prices in 2015 are also expected to be higher than during 2014.

The demand side is clouded by other meats. Broiler production for 2014 is expected to be higher than during 2013. Looking at 2015, production is expected to be higher for broilers again and for pork and turkey. Thus there will be slightly less beef, but more competing meats. The upside price potential for beef is limited. That does not say when the impact on other prices, such as for feeder cattle or calves, will occur.

The lower production levels and duration hinge on the pace of expansion. Several indicators are suggesting that cattle herd expansion is occurring. In the July 1 Cattle report there were 29.7 million beef cows and 4.1 million replacements in the U.S.

Matthew A. Diersen, South Dakota State University Department of Economics

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November 18th - The Elephant in the Room

While new records were being set all year in fed prices, other records were going on the books. In a area most important to all of beef production, corn was setting some records of its own. This year's corn crop will likely be the largest ever and is almost on the books. The 14.4 billion bushel crop will face increasing use from poultry and pork and flat use from the cattle sector.

Amidst this huge crop harvest, corn prices have been moving higher. Corn prices for this winter based on futures prices are close to $4 a bushel. This is certainly a large decline from the drought plagued previous years but it is almost a dollar higher than recent lows.

Apart from demand from the meat industry, ethanol continues as the single largest user of corn. As a purchaser of 40% of the corn crop, ethanol demand makes a major impact on corn prices notwithstanding Ag Secretary Vilsack's assertion that it has little to no impact. Part of today's demand for ethanol is based on a burgeoning export market. Today U.S. ethanol is finding markets in Brazil where our subsidized ethanol can be sold cheaper than Brazilian based ethanol made from sugar cane plants.

The price of corn has always been a major factor in beef production and today it plays a determinative role in marketing weights for cattle. With cattle selling for $170, half of that price is direct feed cost leaving the other half for margin for cattle feeders. This has resulted in record live and carcass weights with current carcass weights 27# over prior year. Live weights have moved towards 1450# from 1350# for steers. Genetics has helped make this possible and the extra tonnage has helped shore up the beef shortage during this period of herd rebuilding. Adding this extra weight in the face of winter weather might prove more risky that many feeders are anticipating.

The heavier carcasses also are proving to be problematic for retailers. Retooling from traditional cuts tailored to a lighter carcass are presenting problems for portion control at the retail level. Some retailers are asking for lighter carcasses in order to maintain traditional and more popular cuts.

The recent run up in corn prices is not all negative for the meat industry. Corn selling at $3 will not encourage farmers to select corn for a cash crop. A drop in corn acreage will mean higher corn prices down the road. Even $4 per bushel for corn in many irrigated areas will not yield a profit.

Ag Center Cattle Report

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November 18th - USDA’s Livestock, Dairy, & Poultry Outlook

Beef and cattle prices continue to move higher, the October all-milk price fell just short of the record set in September, and hog prices are high due to tight supplies.

While some areas remain under severe drought, particularly in California, most parts of the United States experienced a good growing season this year, resulting in lower feed prices and more productive pastures. Cow-calf producers likely have kept calves on pasture longer than in recent years, resulting in smaller numbers of calves shipping to feedyards early this fall and heavier placement weights. Likewise, lower corn and soybean prices have allowed cattle feeders to cost-effectively feed cattle to heavier weights.

Dressed weights in September averaged over 820 pounds, according to the report, about 20 pounds heavier than one year ago. The ratio of steers to heifers on feed also has contributed to heavier average slaughter weights. As of October 1, the number of heifers on feed was down 3 percent from a year ago, compared with a 1 percent decline in steers on feed.

Heavier slaughter weights have helped offset an overall reduction in slaughter numbers, and USDA projects 2014 beef production to drop slightly compared with 2013.

Other key points from the report include:

  • The third-quarter 2014 five-area price of steers averaged $158.49 per hundredweight, with an expected increase to $163 to $167 in the fourth quarter.
  • Third-quarter 2014 composite prices for retail choice beef climbed to $6.15 per pound, boosted by September’s record $6.26 per pound, while the third quarter All-Fresh beef averaged $5.76 per pound, both new record quarterly averages.
  • U.S. cattle imports for the third quarter were 34 percent higher than last year, driven by record-high feeder-cattle prices. Combined with higher imports during the first half of the year, cumulative-year imports were up 17 percent from Mexico and 12 percent from Canada.
  • U.S. beef imports during the third quarter were 48 percent higher than the third quarter of 2013, driven by strong demand for lean processing beef.
  • U.S. beef exports were up 1 percent from last year through September 2014. While exports during the first half of the year were up 5 percent from the same period a year earlier, third-quarter exports were 5 percent lower than last year.
  • USDA projects U.S. beef exports for 2014 at 2.599 billion pounds. Exports are expected to fall 3 percent in 2015 to 2.525 billion pounds due to lower U.S. beef production.
  • The October all milk price of $25.30 per hundredweight was second only to the record-high September price of $25.70 per hundredweight.
  • As the U.S. pork industry recovers from the outbreak of PEDv, fourth-quarter pork production is expected to be almost 5 percent below a year ago, and hog prices are likely to average $68 to $70 per hundredweight.
  • September pork exports were more than13 percent below a year earlier.
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89% of Corn Crop Harvested

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November 17th - USDA Projects Lower Beef Supply

USDA projects total beef supply down 1 billion pounds in 2015

  • Beginning beef stocks in 2015 are projected at 495 million pounds, down 89 million pounds from 2014.
  • Beef production in 2015 is projected at 23.736 billion pounds, down 794 million pounds from 2014.
  • Beef imports in 2015 are projected at 2.7 billion pounds, down 123 million pounds from 2014.
  • Total beef supply (production + imports) in 2015 is projected at 26.931 billion pounds, down 1 billion pounds from 2014.
  • Beef exports in 2015 are projected at 2.525 billion pounds in 2015, down 74 million pounds from 2014.
  • Beef consumption in 2015 is projected at 23.921 billion pounds in 2015, down 922 million pounds from 2014.
  • Beef consumption per capita in 2015 is projected at 52.2 pounds, down 2.4 pounds from 2014.
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November 15th - Market Seasonality Should Return Next Year

Although calf and feeder markets are defying seasonal trends this year, and in recent times, analysts with the Livestock Marketing Information Center expect historically familiar patterns next year. For calves, that likely means achieving the annual price summit in the second quarter of the year rather than the fourth as expected this year.

“In 2014, the average calf price in the fourth quarter of the year is projected to be the highest of the year,” LMIC analysts say. “Normally, calf prices are lowest in the fourth quarter of the year, but that normal seasonal pattern has not held in recent years. In fact, in both 2013 and 2011, calf prices were highest in the last quarter of the year. Further, in 2012, the fourth quarter average was above the third quarter.”

LMIC analysts note the last ‘normal’ year for seasonal calf prices peaking in the second quarter came in 2010.

“Three major factors have driven calf prices to record highs: 1) tighter cattle supplies; 2) record high fed cattle prices; and 3) lower corn costs. Those factors, in turn, have impacted seasonal price patterns,” LMIC analysts explain.

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November 14th - Weather & Tight Supplies Drive Slaughter Cattle to a New High

Prices for slaughter-ready or cash cattle in the U.S. Plains hit an all-time high on Friday, fueled by an early winter storm at a time of the smallest herd since the early 1950s.

Some beef packers paid record cattle prices of $171 to $172 per hundredweight (cwt) in parts of Kansas and Nebraska. That topped the previous high of $170 set three weeks ago and was up as much as $5 from last week's sales.

This week, early wintry weather blew across the Midwest packing heavy snow in the northern Plains along with bitterly cold temperatures that stretched as far south as Texas.

"We got an added boost from the weather market," said Jim Robb, director of the Colorado-based Livestock Marketing Information Center.

Frigid temperatures made it difficult to sort cattle, said analysts. And, treacherous driving conditions snarled transportation of cattle to packing plants, they said.

Inclement weather forced packers to spend more for cattle after they tried to by them hand-to-mouth in recent weeks to realign their deeply red margins, said Robb.

Beef packer margins were a negative $83.95 per head, compared with a negative $83.00 on Thursday and a negative $109.70 a week earlier, according to Colorado-based analytics firm Hedgersedge.com.

The storm crimped already scarce supplies, the result of several years of drought that damaged crops for feeding, which shrunk the herd to its lowest level in 63 years.

"Packers are chasing the market that has these very tight cattle supplies. And, in the big picture, packer margins are struggling but they still need cattle," said Robb

Reuters

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November 14th - "Shootin' the Bull" Weekly Analysis

In my opinion, there has been little change in the market this week.  Futures firmed this week from discounts they held and with the basis nearly even on fats, and still just slightly positive on feeders, there appears no advantage to doing one thing or the other.  The new contract highs this week in fats remain at the levels that were posted by the October contract at expiration.  Feeders have yet to post new contract highs as the cash market appears to be cooling slightly.  Input costs for feed yards increased this week and last.  This is perceived as putting a damper on wanting to bid up for inventory. 

Our US dollar has remained inordinately strong and this continues to make every exported item more expensive to the importing country.  Of significance this week has been the reappearance of financial crisis from '07 and '08.  Here is my opinion on that. For what it is worth, I read an article yesterday that said bank foreclosures on houses rose 22% in October. This is troublesome as also this month, it was noted that both Fannie Mae and Freddie Mac would begin collection of debts still owed from houses sold or foreclosed on years ago. The financial crisis that broke such huge companies and produced the now 6 trillion dollars of quantitative easing debt still remains. The mask that the money produced has had most, either forget that event ever happened, or they just don't know how dire that situation was or is. The allowance of a home mortgage to become a derivative is in my opinion wrong. As the demand for that derivative became more popular, so to did the need for loans that were the derivative. As more loans were needed, short cuts were taken and false information provided just to fill the demand for mortgage backed securities. When these short cuts and false information were exposed, the market collapsed and caused what is referred to as the financial crisis. So, as I have stated many times before, the analogy of the work horse broke his leg, was given no time to heal and pumped full of drugs to keep it working remains. 

Hints of the Fed to slow quantitative easing tends to send equities south as it is needed to continue to fund the higher and higher stock prices. When the Fed sees the potential that the horse is going to slow down, here comes another round of drugs to keep it working. I have no idea how much longer the horse can go on the proverbial liquidity drug, but I perceive that it is not much longer. In my opinion, the lower interest rate environment has created significant expansion of energy production, grains, and metals. Hence, the sharply lower prices now, due to this increase of infrastructure to produce, but no increase in demand from a public that is not at the same income level as prior to the crisis. I anticipate rates to rise as the Fed is perceived as thinking that the unemployment rate has declined. While it may have from the statistics they produce, but my analysis suggests that employment has not increased income to the levels prior to the collapse. Just something to chew on as revenue streams from energy, metals and grains continue to decrease. 

Whether my opinion is correct or not, the instance that took place was real and caused problems that still very much exist today.  While this has little to do with whether cattle prices are going to go up or down, if the problem rears its ugly head again, recall that cattle is the only market at the tip top of a historical price range with tremendous room to go down.  This doesn't negate the potential for tremendous room to rise, but a rising market is not presumed as damning as a declining one. 

Christopher B. Swift is a commodity broker, market analyst, and sole proprietor of 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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November 14th - EIA's 2015 Energy Price Projections

U.S. Energy Information Administration's recently released November Short-Term Energy Outlook (STEO) projects that Brent crude prices will average $83/barrel in 2015, $18/barrel lower than last month’s outlook for 2015. STEO projects prices to remain in the $80 to $90 per barrel range next year, bottoming out under $82/barrel in the second quarter when balances are loosest and then increasing during the second half of 2015 to average $86/barrel in the fourth quarter. Even with the downward revision to the STEO price forecast, second to fourth quarter 2015 oil price projections remain within the market-derived 95% confidence interval published in the September STEO before the recent fall in oil prices.

The lower price forecast in the November STEO reflects significant changes to the global oil balance. Compared to last month’s outlook, 2015 global liquid fuels demand in the November STEO declines by 200,000 barrels per day (bbl/d) to average 92.5 million bbl/d, reflecting a weaker global macroeconomic outlook. In the November STEO global production increases by 200,000 bbl/d to 92.9 million bbl/d in 2015, primarily due to a smaller forecast decline in Saudi production.

.

October 23rd - Beef Production Down Slightly from Last Year
  • Commercial red meat production for the United States totaled 3.96 billion pounds in September, up 1 percent from the 3.94 billion pounds produced in September 2013.
    • Beef production, at 2.07 billion pounds, was slightly below the previous year. Cattle slaughter totaled 2.53 million head, down 3 percent from September 2013. The average live weight was up 31 pounds from the previous year, at 1,344 pounds.
    • Veal production totaled 7.2 million pounds, 16 percent below September a year ago. Calf slaughter totaled 42,300 head, down 33 percent from September 2013. The average live weight was up 57 pounds from last year, at 291 pounds.
    • Pork production totaled 1.87 billion pounds, up 2 percent from the previous year. Hog slaughter totaled 8.83 million head, down 2 percent from September 2013. The average live weight was up 10 pounds from the previous year, at 283 pounds.
USDA
.

October 22nd - Cold Storage Report
  • Total red meat supplies in freezers were up 3 percent from the previous month but down 8 percent from last year. 
    • Total pounds of beef in freezers were up 8 percent from the previous month but down 16 percent from last year. 
    • Frozen pork supplies were up slightly from the previous month but down 4 percent from last year. 
    • Stocks of pork bellies were down 26 percent from last month but up 44 percent from last year.
  • Total frozen poultry supplies on September 30, 2014 were down 2 percent from the previous month and down 10 percent from a year ago. 
    • Total stocks of chicken were down 2 percent from the previous month and down 9 percent from last year. 
    • Total pounds of turkey in freezers were down 2 percent from last month and down 10 percent from September 30, 2013.
.

October 22nd - Cold Storage Report
  • Total red meat supplies in freezers were up 3 percent from the previous month but down 8 percent from last year. 
    • Total pounds of beef in freezers were up 8 percent from the previous month but down 16 percent from last year. 
    • Frozen pork supplies were up slightly from the previous month but down 4 percent from last year. 
    • Stocks of pork bellies were down 26 percent from last month but up 44 percent from last year.
  • Total frozen poultry supplies on September 30, 2014 were down 2 percent from the previous month and down 10 percent from a year ago. 
    • Total stocks of chicken were down 2 percent from the previous month and down 9 percent from last year. 
    • Total pounds of turkey in freezers were down 2 percent from last month and down 10 percent from September 30, 2013.
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May 21st - As Fundamental Change Moves an Industry

It doesn't feel any different as you walk around but beneath the surface some large and monumental plates are shifting and the foundations of an industry are undergoing change. The day to day business continues and we wake every morning to new bids and offers, new grain prices, the drought, and other continuing influences but there are some big picture developments that are occurring while we move day to day.

  • Climate: There are major changes occurring in the climate. Extreme weather patterns are more severe and long lasting. Drought in some areas continues. Flooding in other regions is causing its own problems. We can debate whether it is man made or not, but large and serious weather patterns are at work and no one impacted more than agriculture.
  • Geography: Nebraska took over Texas's spot as top feeding state. The image below clearly demonstrates the loss of feeding capacities in Texas and increases else where. Processing plants follow the feeding locations for cattle and the southern plains has lost processing capacity to the northern plains -- but both have suffered plant closings and slow downs as the herd grows smaller.
  • Basis: Cattle and grain are moving towards cash markets trading basis the futures. Cattle cash trading has ceased to be reported in Texas and lightly reported elsewhere. Poor grain basis pricing, south of Amarillo, is pressuring south plains feedyards in competitiveness.
  • Sustainability: This is a term used by everyone and understood by no one. Beef retailers are being pressured to act on assuring the industry is observing best management practices to deliver a sustainable agriculture.
  • Mandatory ID: Whether it is a trading scandal involving phantom cattle or a disease threat that can't be traced, animal ID won't go away. International trade and exports will demand it or penalize our products without it.
Downsizing is no fun and lots of money has been lost in processing and feedings. Downsizing is always painful but it also can build a better and stronger industry through change.


The Cattle Report

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May 5th - 2012 Census of Agriculture Reveals Trends

There are now 3.2 million farmers operating 2.1 million farms on 914.5 million acres of farmland across the United States, according to the 2012 Census of Agriculture, released today by the U.S. Department of Agriculture. The agriculture census presents more than 6 million pieces of information, which provide a detailed look at the U.S. farm sector at the national, state and county levels.

"Once every five years, farmers, ranchers and growers have the unique opportunity to let the world know how U.S. agriculture is changing, what is staying the same, what's working and what we can do differently," said Dr. Cynthia Clark, the retiring head of USDA's National Agricultural Statistics Service, which administered the survey. "Today, we can start to delve into the details." 

Census data provide valuable insight into the U.S. farmer demographics, economics and production practices. Some of the key findings include:
 

  • Both sales and production expenses reached record highs in 2012. U.S. producers sold $394.6 billion worth of agricultural products, but it cost them $328.9 billion to produce these products. 
  • Three quarters of all farms had sales of less than $50,000, producing only 3 percent of the total value of farm products sold while those with sales of more than $1 million - 4 percent of all farms - produced 66 percent. 
  • Much of the increased farm income was concentrated geographically or by farm categories. 
  • California led the nation with 9 of the 10 top counties for value of sales. Fresno County was number one in the United States with nearly $5 billion in sales in 2012, which is greater than that of 23 states. Weld County, Colorado ranked 9th in the top 10 U.S. counties. 
    • The top 5 states for agricultural sales were California ($42.6 billion); Iowa ($30.8 billion); Texas ($25.4 billion); Nebraska ($23.1 billion); and Minnesota ($21.3 billion). 
  • Eighty-seven percent of all U.S. farms are operated by families or individuals. 
  • Principal operators were on average 58.3 years old and were predominantly male; second operators were slightly younger and most likely to be female; and third operators were younger still. 
  • Young, beginning principal operators who reported their primary occupation as farming increased 11.3 percent from 36,396 to 40,499 between 2007 and 2012. 
  • All categories of minority-operated farms increased between 2007 and 2012; the Hispanic-operated farms had a significant 21 percent increase. 
  • 144,530 farm operators reported selling products directly to consumers. In 2012, these sales totaled more than $1.3 billion (up 8.1 percent from 2007). 
  • Organic sales were growing, but accounted for just 0.8 percent of the total value of U.S. agricultural production. Organic farmers reported $3.12 billion in sales in 2012, up from $1.7 billion in 2007. 
  • Farms with Internet access rose from 56.5 percent in 2007 to 69.6 percent in 2012. 
  • 57,299 farms produced on-farm renewable energy, more than double the 23,451 in 2007. 
  • 474,028 farms covering 173.1 million acres were farmed with conservation tillage or no-till practices. 
  • Corn and soybean acres topped 50 percent of all harvested acres for the first time. 
  • The largest category of operations was beef cattle with 619,172 or 29 percent of all farms and ranches in 2012 specializing in cattle. 
Conducted since 1840, the Census of Agriculture accounts for all U.S. farms and ranches and the people who operate them. The Census tells a story of how American agriculture is changing and lays the groundwork for new programs and policies that will invest in rural America; promote innovation and productivity; build the rural economy; and support our next generation of farmers and ranchers.
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February 14th - USDA Long-Term Projections

Despite lower prices for many agricultural products in the near future, USDA is projecting U.S. farm income to remain historically high through 2023. Analysis for the report was conducted prior to completion of the Agricultural Act of 2014, and was based on the assumption of continuation of policies in the 2008 Farm Bill. Projections range from long-term economic growth, global production and consumption trends, global trade trends, commodity prices, farm income and more.

USDA projects global economic growth to average 3.2 percent annually over the next decade, with stronger growth projected in developing countries, including China, India, and countries in Africa and Latin America. The U.S. economic growth is projected to average 2.6 percent over the next decade. “Steady global economic growth supports longer term gains in world food demand, global agricultural trade, and U.S. agricultural exports,” according to the report.

While prices for many of the major crops are projected to decline in the next few years, long-term growth in global demand, a low-valued U.S. dollar, and demand for biofuel, will hold prices for corn, oilseeds and other major crops above pre-2007 levels, according to the report.

As a result of recovering from high feed prices in recent years and drought, USDA is projecting livestock production and per capital red meat consumption to increase through 2023.
While beef production is projected to decline through 2016 as producers retain heifers to grow the overall herd, production is expected to begin increasing in 2016. USDA is projecting that beef cow numbers will increase from 29 million today to more than 33 million in 2022-2023. The total cattle inventory is projected to expand to approximately 96 million in 2023, and increasing slaughter weights add to increased beef production projections. USDA is projecting beef cattle prices to increase through 2017, then fall but increase again through 2023.

With regard to global beef trade, USDA is projecting world meat consumption to increase by about 1.9 percent annually from 2014-2023 and world meat trade to increase by 22 percent during that same period. Stagnate beef export projections from Australia resulted in the top four beef exporting nations, according to USDA, to be Brazil, India, the United States and Australia. On the import side, China and Hong Kong are projected to increase beef imports by 55 percent in the next decade as China’s middle class grows from 300 million today to an expected 640 million by 2020.

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February 13th - USDA Projects Net Farm Income to Fall in 2014

While USDA’s latest farm income projections indicate an overall decline in net farm income of around 26.6 percent in 2014, there are some positive projections in the report, especially for livestock producers.

“Livestock receipts are up marginally,” said USDA Chief Economist Joe Glauber. “They’re up at $183.4 billion. It’s the first time in a long while that we’ve seen livestock and crop receipts at around roughly the same magnitude.”

Crop receipts are projected at $189.4 billion in 2014, down more than 12 percent and back to pre-2011 levels. According to the report, declines in cash receipts are expected for almost all major crop categories, including food grain, feed, oil, fruits/tree nuts, and vegetables/melons. Large anticipated declines in the 2014 price for corn are impacting farmers’ decisions regarding other major crops. According to the report, use of corn for ethanol is expected to rise in 2014. Additionally, USDA is projecting declines in hay, wheat and soybeans receipts as well.

USDA is projecting a 0.7 percent increase in livestock receipts in 2014. For cattle and calves, steady receipts are projected due to lower production levels. Additionally, USDA is forecasting a decline in beef and veal export quantities in 2014.

Overall, net farm income, earnings only from current year production, is forecast to be $95.8 billion in 2014, down 26.6 percent from 2013 and projected to be the lowest since 2010. Net cash income, which includes income from carryover stocks from 2013, is forecast at $101.9 billion, down 22 percent from 2013.

For just the second time in the last 10 years and the first time since 2009, USDA is projecting a decline in production expenses, with an expected $3.9 billion decrease in 2014.

“Expenses are down,” Glauber said. “We’re forecasting them at $310 billion. That’s down almost $5 billion from last year, and that’s largely lower feed costs.”

Feed expenses are expected to decline by $6.6 billion, 11.3 percent, but livestock and poultry purchases are projected to increase, driven by an expected double-digit increase in the price of feeder steers due to tight supplies and strong beef demand. The overall expenses for the two major livestock-related expenses, however, are projected to fall by 6.1 percent, or $5.1 billion.

Other farm expense projections include a 4.7 percent decline for the three major crop-related expenses – seed, fertilizer and pesticides; a 9.6 percent decline in net rent to non-operators; a 4.6 percent increase in total labor; and a 3.2 percent increase for miscellaneous expenses, including things like animal health and breeding expenses, contract production fees, irrigation water, and general production and management decisions.

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All Cattle & Calves... State Rankings & Change
.
January 1, 2014 Inventory vs. 2013 Inventory... Compiled from USDA National Agricultural Statistical Service Data
Rank
State
2014
2013
% Change
2014 as
% of Total
 
1
Texas
10,900,000
11,300,000
-3.54%
12.42%
2
Nebraska
6,150,000
6,300,000
-2.38%
7.01%
3
Kansas
5,800,000
5,850,000
-0.85%
6.61%
4
California
5,250,000
5,300,000
-0.94%
5.98%
5
Oklahoma
4,300,000
4,200,000
+2.38%
4.90%
6
Missouri
3,800,000
3,650,000
+4.11%
4.33%
7
Iowa
3,700,000
3,850,000
-3.90%
4.22%
8
South Dakota
3,650,000
3,850,000
-5.19%
4.16%
9
Wisconsin
3,350,000
3,450,000
-2.90%
3.82%
10
Montana
2,550,000
2,600,000
-1.92%
2.91%
11
Colorado
2,480,000
2,600,000
-4.62%
2.83%
12
Minnesota
2,280,000
2,390,000
-4.60%
2.60%
13
Idaho
2,190,000
2,370,000
-7.59%
2.50%
14
Kentucky
2,090,000
2,240,000
-6.70%
2.38%
15
North Dakota
1,770,000
1,790,000
-1.12%
2.02%
16
Tennessee
1,760,000
1,830,000
-3.83%
2.01%
17
Arkansas
1,660,000
1,600,000
+3.75%
1.89%
18/19
Florida
1,620,000
1,660,000
-2.41%
1.85%
18/19
Pennsylvania
1,620,000
1,610,000
+0.62%
1.85%
20
Virginia
1,530,000
1,610,000
-4.97%
1.74%
21
New York
1,450,000
1,400,000
+3.57%
1.65%
22
New Mexico
1,290,000
1,340,000
-3.73%
1.47%
23
Oregon
1,280,000
1,280,000
+0.00%
1.46%
24
Wyoming
1,270,000
1,290,000
-1.55%
1.45%
25
Ohio
1,250,000
1,230,000
+1.63%
1.42%
26
Alabama
1,240,000
1,220,000
+1.64%
1.41%
27
Illinois
1,130,000
1,120,000
+0.89%
1.29%
28
Michigan
1,120,000
1,120,000
+0.00%
1.28%
29
Washington
1,100,000
1,150,000
-4.35%
1.25%
30
Georgia
1,000,000
1,020,000
-1.96%
1.14%
31
Mississippi
930,000
910,000
+2.20%
1.06%
32
Arizona
920,000
900,000
+2.22%
1.05%
33
Indiana
870,000
810,000
+7.41%
0.99%
34
North Carolina
810,000
820,000
-1.22%
0.92%
35
Utah
800,000
770,000
+3.90%
0.91%
36
Louisiana
790,000
780,000
+1.28%
0.90%
37
Nevada
455,000
460,000
-1.09%
0.52%
38
West Virginia
380,000
410,000
-7.32%
0.43%
39
South Carolina
360,000
355,000
+1.41%
0.41%
40
Vermont
260,000
270,000
-3.70%
0.30%
41
Maryland
182,000
192,000
-5.21%
0.21%
42
Hawaii
130,000
132,000
-1.52%
0.15%
43
Maine
85,000
85,000
+0.00%
0.097%
44
Connecticut
47,000
48,000
-2.08%
0.054%
45
Massachusetts
39,000
39,000
+0.00%
0.044%
46
New Hampshire
32,000
33,000
-3.03%
0.036%
47
New Jersey
29,000
31,000
-6.45%
0.033%
48
Delaware
16,000
18,000
-11.11%
0.018%
49
Alaska
10,000
12,000
-16.67%
0.011%
50
Rhode Island
5,000
4,600
+8.70%
0.006%






-
Total
87,730,000
89,299,600
-1.76%
 100.00%
.

Beef Cows... State Rankings & Change
.
January 1, 2014 Inventory vs. 2013 Inventory... Compiled from USDA National Agricultural Statistical Service Data
. Rank
. State
2014
2013
. % Change
2014 as
% of Total
 
 
 
 
1
Texas
3,910,000
4,015,000
-2.62%
13.46%
2
Missouri
1,820,000
1,757,000
+3.59%
6.27%
3
Oklahoma
1,805,000
1,754,000
+2.91%
6.22%
4
Nebraska
1,797,000
1,805,000
-0.44%
6.19%
5
South Dakota
1,635,000
1,688,000
-3.14%
5.63%
6
Montana
1,476,000
1,506,000
-1.99%
5.08%
7
Kansas
1,414,000
1,328,000
+6.48%
4.87%
8
Kentucky
1,012,000
1,028,000
-1.56%
3.48%
9
North Dakota
943,000
922,000
+2.28%
3.25%
10
Iowa
885,000
925,000
-4.32%
3.05%
11
Arkansas
882,000
851,000
+3.64%
3.04%
12
Florida
877,000
908,000
-3.41%
3.02%
13
Tennessee
864,000
912,000
-5.26%
2.97%
14
Colorado
700,000
715,000
-2.10%
2.41%
15
Wyoming
694,000
694,000
+0.00%
2.39%
16
Alabama
671,000
651,000
+3.07%
2.31%
17
Virginia
657,000
686,000
-4.23%
2.26%
18
California
600,000
610,000
-1.64%
2.07%
19
Oregon
516,000
527,000
-2.09%
1.78%
20
Georgia
480,000
490,000
-2.04%
1.65%
21
Mississippi
477,000
486,000
-1.85%
1.64%
22
Louisiana
450,000
454,000
-0.88%
1.55%
23
Idaho
445,000
510,000
-12.75%
1.53%
24
New Mexico
387,000
390,000
-0.77%
1.33%
25
North Carolina
360,000
364,000
-1.10%
1.24%
26
Illinois
359,000
360,000
-0.28%
1.24%
27
Minnesota
350,000
375,000
-6.67%
1.21%
28
Utah
325,000
315,000
+3.17%
1.12%
29
Ohio
293,000
290,000
+1.03%
1.01%
30
Wisconsin
240,000
260,000
-7.69%
 0.83%
31
Nevada
226,000
231,000
-2.16%
 0.78%
32
Washington
209,000
221,000
-5.43%
 0.72%
33
Indiana
192,000
191,000
+0.52%
 0.66%
34
West Virginia
191,000
200,000
-4.50%
 0.66%
35
Arizona
178,000
175,000
+1.71%
 0.61%
36
South Carolina
174,000
174,000
+0.00%
 0.60%
37
Pennsylvania
170,000
155,000
+9.68%
 0.59%
38
Michigan
114,000
113,000
+0.88%
0.39%
39
New York
105,000
90,000
+16.67%
 0.36%
40
Hawaii
68,800
69,900
-1.57%
0.24%
41
Maryland
38,000
41,000
-7.32%
 0.13%
42
Vermont
12,000
12,000
+0.00%
 0.041%
43
Maine
11,000
11,000
+0.00%
0.038%
44
New Jersey
8,000
9,000
-11.11%
0.028%
45
Massachusetts
6,000
6,500
-7.69%
0.021%
46
Alaska
4,300
4,900
-12.24%
0.015%
47
Connecticut
4,000
6,000
-33.33%
0.014%
48
New Hampshire
3,000
3,500
-14.29%
 0.010%
49
Delaware
2,800
4,000
-30.00%
 0.010%
50
Rhode Island
1,500
1,500
+0.00%
0.005%






-
Total
29,042,400
29,295,300
-0.86%
100.00%
.

February 4th - Rabobank Report: Structural Changes Needed to Keep U.S. Beef Industry Competitive

Consumption shift requires better cost control as U.S. becomes a “Ground Beef Nation”

Rabobank has published a new report on the U.S. cattle industry, calling for changes in the way beef is produced in order for the industry to remain competitive. In the new report, “Ground Beef Nation,”, Rabobank says that changing consumer preferences and a production model tailored to production of top-shelf steaks has put the U.S. cattle industry in a position of losing market share to competitive proteins.

“Under the existing business model, the U.S. cattle industry manages all fed beef as if it were destined for the center of the plate at a white table cloth restaurant,” notes Rabobank cattle economist Don Close. “The industry is, essentially, producing an extraordinarily high-grade product for consumers who desire to purchase a commodity. More than 60% of U.S. beef consumption is ground product. If the U.S. cattle industry continues to produce ground beef in a structure better suited to high-end cuts, the result will be continued erosion of market share.”

The report goes on to explore the trend of changing consumer preferences and the role pricing plays in the notable decline in beef consumption. The industries that produce competitive proteins such as pork and chicken have grown and become more efficient, making the products more readily available at competitive prices.

“The industry must change to a production model that determines the best end use of an animal as early as possible, in order to compete in a ‘ground beef nation’,” notes Close. “A new system for end-use categorization that influences calf selection, cattle management, production costs, and feeding regimen throughout the life of the animal is vital to keeping beef competitive with other choices at the meat counter.”

.

USDA Cattle Inventory Report... January 1 Cattle Inventory Down 2 Percent

All cattle and calves in the United States as of January 1, 2014 totaled 87.7 million head, 2 percent below the 89.3 million on January 1, 2013. This is the lowest January 1 inventory of all cattle and calves since the 82.1 million on hand in 1951.

All cows and heifers that have calved, at 38.3 million, were down 1 percent from the 38.5 million on January 1, 2013. This is the lowest January 1 inventory of all cows and heifers that have calved since the 36.8 million head in 1941.

  • Beef cows, at 29.0 million, were down 1 percent from January 1, 2013. 
  • Milk cows, at 9.2 million, unchanged from January 1, 2013. 
Other class estimates on January 1, 2014 and the change from January 1, 2013, are as follows:
  • All heifers 500 pounds and over, 18.8 million, down 2 percent. 
  • Beef replacement heifers, 5.5 million, up 2 percent. 
  • Milk replacement heifers, 4.5 million, unchanged. 
  • Other heifers, 8.7 million, down 5 percent. 
  • Steers weighing 500 pounds and over, 15.4 million, down 3 percent.
  • Bulls weighing 500 pounds and over, 2.0 million, down 1 percent. 
  • Calves under 500 pounds, 13.3 million, down 4 percent. 
  • Cattle and calves on feed for slaughter in all feedlots, 12.7 million, down 5 percent. 
  • The combined total of calves under 500 pounds, and other heifers and steers over 500 pounds outside of feedlots was 24.7 million, down 3 percent. 
 Calf Crop Down 1 Percent

The 2013 calf crop was estimated at 33.9 million head, down 1 percent from 2012. This is the smallest calf crop since the 33.7 million born during 1949. Calves born during the first half of 2013 are estimated at 24.7 million, down 1 percent from 2012.


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November 2

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