6th: Overview of U.S. Cattle Imports From Canada
Marketing Information Center
To follow up on the previous monitor article,
we will review live cattle imports from Canada. Preliminary weekly data
are used which are collected by USDA-APHIS and published by USDA-AMS.
Starting with feeder cattle, year-to-date
(through mid-November) the U.S. had imported almost 176,000 head. This
is 108,000 fewer head (a 40% decrease) compared to the same time frame
in 2015. In 2015, a total of almost 290,000 head of feeder cattle were
imported from Canada. For the last few weeks of 2016, imports are
expected to be above a year ago; still the annual total will be down dramatically
year-over-year. Those animals eventually are placed into U.S. feedlots.
The Livestock Marketing Information Center (LMIC) forecasts imports will
increase in 2017, largely due to the closure of the largest cattle feeding
operation in Canada this year as a result of poor returns.
The U.S. also imports slaughter steers
and heifers from Canada (note that these animals are not included in the
marketing number on our monthly Cattle on Feed report as they did not go
through a U.S. feed yard). So far in 2016, we have imported just over 280,000
head, up almost 50% from the year ago level. In 2015 the U.S. imported
over 215,000 slaughter steers and heifers from Canada. Still, imports
have been much smaller than a few years ago, largely because the Canadian
herd has shrunk. LMIC is expecting imports in 2017 to be similar to 2016’s.
Additionally, the U.S. imports slaughter
cows and bulls from Canada. Year-to-date, through mid-November, a total
of almost 221,000 slaughter cows and bulls have been imported, this is
down 10% from the year ago total. In 2015, annual slaughter cow and bull
imports totaled just over 290,000 head.
6th: British Farmer Whose Cows Trampled Man to Death Gets Suspended Sentence
Mike Porter was killed while out walking
dogs on a public footpath through one of Brian Godwin’s fields in Wiltshire,
A farmer who was warned repeatedly over
the course of more than a decade to improve safety on his land has been
spared jail after a retired university professor was trampled to death
by cows at the farm.
Mike Porter died after being trampled by
the herd while he and his brother John walked their two dogs on a public
footpath through one of Brian Godwin’s fields. John Porter was also injured
After previous incidents in which people
were injured by cattle on his farm, health officials had told Godwin to
put in segregating fencing or signs saying “cows with calves” to let people
know the protective animals were dangerous, a court heard.
But sentencing him on Monday after Godwin
admitted at a previous hearing to breaching his general duty to control
his livestock, the judge said he had “quite blatantly failed to ensure
the safety of people who came on your land”.
Tim Mousley QC, sitting at Swindon crown
court, said: “You could have prevented his [Mike Porter’s] untimely death.”
He handed Godwin a 12-month prison sentence, suspended for two years. The
judge said Godwin would have to pay £30,000, which would be covered
In May 2013 the Porter brothers had been
rambling with their dogs, who were leashed, through a field on Godwin’s
400-acre farm near Bradford on Avon in Wiltshire.
About 30 “highly excited, jostling” continental
beef cattle surrounded them and repeatedly trampled on Mike Porter, who
curled up in a ball to protect himself. John Porter told an inquest into
his brother’s death that the herd knocked them down repeatedly and seemed
to deliberately trample on them “as if it was something they really wanted
Mike Porter, who was a father of two, managed
to scramble out of the field but collapsed later and was airlifted to hospital.
He later died from internal bleeding.
On Monday the judge told Godwin: “I’m quite
satisfied that the way you managed your livestock created an obvious risk
to people on public footpaths and a risk of serious injury. That was a
risk that you failed to take reasonable steps to rectify and led to the
terrible death of one man and serious injuries to another.
“There was an incident in 2004, two incidents
in 2008 after which the health and safety executive required you to make
some changes. Two further incidents in 2011 after which the health and
safety executive required you to make further changes.
“It must have been clear at that stage,
the warning signs were obvious. By May 2013, you were aware of all the
previous incidents. You had made some improvements to farming practice.
But what you did obviously was not enough. I’m satisfied you could have
done more and you say you now realise that you could.
“Simply the expedient of installing a fence
that would not have provided 100% safety but certainly would have reduced
the risk. Mike Porter, by everyone’s account, was a devoted family man.
He knew the importance of his family and their loss is immeasurable.”
In a statement issued after the hearing,
Mike Porter’s family said they hoped lessons would be learned to help make
the countryside safer for walkers.
2nd: Commodity Market Comments
The Bull” -- Christopher B. Swift.
decline from $113.22 February is perceived as the C wave of an irregular
A,B, C correction. The irregular comes from the B wave exceeding
what is perceived as the orthodox high of wave 3 at $112.52. This
made the C wave look a little bigger because of the higher price it fell
from. Upon completion of the C wave, I anticipate a continuance of
the move higher with an upside target to $116.50 February. It will
take something much more than a few weeks of higher trading to turn cattle
negative. Numbers are no longer the issue they once were. Although
they are most likely going to remain elevated for sometime to come, the
packer kills above 600K should keep the numbers at bay. What the
real issue is the overweight problem producers have with their inventory.
While pounds do make dollars, those additional pounds decrease the price
everyone gets for their inventory. This is where I perceive the last
decline from August to contract low came from. It appears the decline
was methodical and nearly mechanical in the way it declined to rectify
a specific issue. The work to be done now is keeping an issue from
developing again. As discussed in Utah last week, I do not know how
to unify an industry. What I do know is that with the most recent
subtle changes are such that expansion may slow greatly going forward.
Since the packer kill is pretty much contained to under 630K for the foreseeable
future, then keeping finished weights down appears to be the quickest way
to reduce finished beef production. Although many continue to have
new contact lows in their sights, I do not. I perceive the market
to continue higher until we are through the worst of winter. After
that, I can see some room for sideways trading.
one was able to lay off inventory at the targets recommended or not, I
anticipate another opportunity to present itself. One may still want
to lay off a portion of risk as futures move back to the most recent highs.
However, the next level to reach before sales will be recommended again
will be closer to the $130.00 area for the spring months. The wave
count on the feeders is the same at this time. An irregular
A, B, C correction appears to have unfolded in the feeders with the most
recent decline from last weeks high to today’s low is a wave C decline.
With 5 waves perceived already made down, I anticipate the up trend to
resume sooner rather than later.
just like that, corn is everyone’s friend again. I have no idea why
corn is trading higher today. Potentially off the beans strength,
but I would not write that on the barn door. Corn is anticipated
to continue to flitter around until some of the glut begins to be worked
into. Not so for the beans though. They pushed higher today
with meal on its heels. Oil was the lager, but not by much.
I anticipate the beans and complex to continue to firm. The majority
of my friendliness in beans is technical. The chart pattern looks
bullish to me, but it looks bullish for a long term move. This is
where I am having difficulty. I don’t know of a long term bullish
factor or factors in the beans. If you do, I would greatly appreciate
sharing that information.
has pushed back to the high end of the stagnant price range. I do
not know if there is enough strength left to push through just yet.
Regardless of whether it does or not, I would not anticipate much until
a correction of some form materializes.
remains weak. I remain wrong on my previous analysis and will not
attempt much more on this market for the time being.
blew to new contract lows last week. In my opinion, this was the
“get me out” phase. Therefore, even if the Fed does raise rates on
the 14th of this month, I would not anticipate bonds to do much.
With the significance in the drop, one may want to let it idle for a few
weeks to see if traders don’t push the yield down just slightly before
they move higher. This suggests bond prices may move higher before
they resume the down trend.
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
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
5th: Closing Futures Summary
U.S. cattle futures
ended the session mixed on Monday, pressured by a recent surge in beef
production. December live-cattle futures declined 0.4 cent, or 0.4%,
to $1.07825 a pound on the Chicago Mercantile Exchange, after a 2.3% drop
over the past week. February live-cattle futures rose 0.1 cent to $1.08975
Producers have fetched
higher prices for their livestock in the cash markets for three straight
weeks, amid strong demand for steaks, short ribs, and other beef items
typically featured prominently by grocery stores and restaurants for the
end-of-year holidays. However, traders have kept a close watch on the number
of cattle being sent to market, as beef supplies soar over year-ago periods,
and pork and poultry productions are record-large.
Through the week
ending Saturday, meatpackers produced 517.5 million pounds of beef, from
616,000 head of cattle, which was 10.8% more than the same time in 2015.
For the year, total beef output is up 5.7% from this point last year, raising
concerns about how the market will fare after the holiday buying slows.
5th: Meat Supplies & the Holidays
behind us and Christmas just a few weeks from now, retailers and food service
operators have a bevy of proteins to pick from and feature into the holidays.
Robust export demand, a much improved employment picture and the end of
a contentious election season so far appear to have positively contributed
to demand for most proteins.
If we make some conservative
estimates about production numbers for poultry last week, combined protein
supplies last week were over 1.9 billion pounds, 93 million pounds
(+5.1%) higher than a year ago. And last week was not an aberration.
For the last six weeks, weekly red meat and poultry production has averaged
1.865 billion pounds, +5.3% higher than last year. All proteins have
contributed to the surge in supplies but beef has by far provided the largest
growth in total pounds.
Beef production in
the last six weeks has averaged 508 million pounds/week, 49 million pounds
(+11%) more than a year ago. Beef production has been constrained
for so many years and retailers have been forced to raise prices in order
to ration out demand. The increase in supply has provided opportunities
to once again feature beef but the challenge is that demand is not distributed
Going into the holiday
demand for beef ribs has been excellent and some other cuts also
have performed quite well, allowing packers to run slaughter quite aggressively,
matching the levels we saw in 2013 (see steer/heifer slaughter chart).
But some of the round cuts have not fared quite as well, in part because
they have to compete not just with regular holiday items but also very
inexpensive pork and chicken. Fat beef trimmings received a bit of
a boost from pre-holiday party manufacturer buys and some food service
promos but have slumped in recent days given the sheer amount of product
not just in the fresh market but also sitting in freezers.
For now, holidays
have offered much needed support to clean up the beef market
but we think some product continue to flow into refrigerated
storage. And this could limit demand going into Q1, especially as
consumers tend to become a bit more frugal in their spending after
the holiday splurge. Fed cattle futures reflected some
of this uneasiness on Friday, selling off quite aggressively and breaking
through some key support levels.
Chicken and pork
production also have bolstered the total supply of protein, but the growth
rate has been a bit more modest than beef. Pork production in the
last six reported weeks has averaged 514 million pounds/wk, 19 million
pounds (+4%) more than a year ago. Last week pork production was
an all time record 537 million pounds, 3.5% more than
a year ago. As with beef, some items have performed better than others.
Hams have benefited from both holiday demand and exports, with prices up
20% despite the surge in supply.
What happens with
the ham market two weeks from now is certainly a source of worry for packers
and producers. Seasonally hog slaughter drifts lower into the spring
but traditionally hog numbers remain large through January and it appears
there will be a lot of competition for inexpensive protein in the retail
meat counter. Total chicken production in the last six weeks has
averaged 733 million pounds, 21 million pounds (+3%). Leg quarters
are up 40% from last year on robust exports and wings are the perennial
favorite at this time of year. Breast meat is languishing.
5th: How Current Are The Feedyards?
Center Cattle Report
Cattle feeders have
enjoyed several consecutive weeks of improving prices and some are expecting
the rally to continue but late week futures trading cast doubts on the
price direction in year end trading. Futures prices are guesses and they
can be wrong just as individual traders can err in their forecast. There
are many complex forces at work on the market and little science to be
applied to price forecasting.
Carcass weights is
important in evaluating both currentness of fed offerings and supplies
of beef on the market. The last report from November 19th showed average
weights for steers 5# under prior year but that is expected to change and
weights will likely exceed last year in the next couple weeks. This is
not so much related to the current nature of offerings as to excellent
feeding weather. There remains and will continue to be more heifers in
the slaughter mix tending to reduce total average carcass weights.
The quality grade
on cattle this year is 1-2% higher grade than last year. This continues
a long string of years in which the quality grade has improved each year.
This is in part genetics, part heavier cattle placed on feed, and part
cattle fed longer. With larger supplies of cattle on hand, and corn prices
low, the inclination of feeders is to lower the breakeven by feeding cattle
Show list numbers
continue to run well above prior year but those numbers are driven by larger
monthly placements, year on year, except for the most recent October number.
Show lists tend to be noise when taken in isolation. There is little question
that the cash trade has been larger for the past few weeks but that does
not necessarily mean we are digging into future supplies leaving a gap
in the upcoming weeks.
Regardless of the
current nature of fed offerings, the demand side of the business will determine
the future of prices for cattle. Beef features by retailers between now
and Christmas will set the stage for beef movement and consumer demand
at the stores. There is support for the notion that retailers with generous
margins on beef will sponsor specials in the coming weeks and those specials
will find good reception among consumers. Winter may not be prime time
for beef but a respite from turkey is always welcome.
Not to be excluded
from the mix is the important but often overlooked factor of the dollar
index. Subsequent to Trump's election, the dollar has been in major rally
mode as interest rates have posted the largest short term advance in years.
An advance in the value of the dollar makes our exports more expensive
and our imports cheaper -- not good for beef. It is too early to assess
the new administration's trade policy but an isolationist policy would
not be good for beef exports.
In the final analysis
the current nature of fed cattle is assisted and encouraged by a heavily
discounted futures board. The need to market cattle now for fear of lower
prices in the future is the number one adversary of overfed cattle. Stubbornness
and fighting the market also is illogical when the option is to replace
with another set of cattle with a still lower breakeven.
2nd: National Feeder & Stocker Cattle Summary
Auctions Direct Video/Internet
Compared to last
week, steers and heifers traded 2.00 to 6.00 higher with most steer calves
under 600 lbs up to 10.00 higher. Several mid and late week auctions
were called sharply higher and while they were in fact much higher, many
were looking back two weeks due to last week’s Thanksgiving holiday.
Those sale barns had some catching up to do with last week’s early auctions,
many of which had held specials before the holiday break. Demand
was very good for all classes of cattle this week, but still exceptionally
good for light cattle suitable for wheat. Winter weather curtailed
receipts in parts of the Dakotas but elsewhere across the country the supply
was heavy. The volume that was lagging in the early fall is being
caught up now.
The cash feeder market
has re-energized, with several weeks of steady gains being convincing enough
for owners to finally bring their stock to town. In some parts of
the country, the supply was so heavy that by mid-week competition for available
trucks was just as intense as the rivalry ringside. Weaned calves
continue to make up a larger percentage of the offering each week and in
most places, the competition to own anything that could be placed in an
extended winter grazing program is fierce. Buyers seem to have a
renewed confidence in the market, evident by their willingness to chase
some cattle to prices that haven’t been seen in months.
Colder weather moved
into the Midwest mid-week which will help harden and “green up” fleshier
cattle. Fed cattle traded as much as 3.00 higher Wednesday, 114.00-115.50
live and northern dressed sales at 175.00. Futures prices are now
lagging cash by quite a few dollars, as the market moves in a more fundamental
direction with cash cattle leading the board and not the other way around.
Cash trade has tacked on 10.00 in just three weeks and fats are as close
to break evens as they’ve been in quite some time. Big kills over
an extended period has cleaned up the front end, giving cattle feeders
a little leverage they’d needed.
It is rumored though
that some pockets of heavy cattle are still standing around in parts of
Nebraska and Iowa, areas where packer needs aren’t as urgent and show lists
aren’t always cleaned up. Packers will push to keep kills large and
are clearly willing to pay up a bit, giving up a bit of margin even, as
they have fewer formula cattle available in the short term. Optimism
is bountiful as the entire cattle complex has recovered remarkably from
early November lows. Cattlemen are fully aware of the fickle nature
of their market and while there’s no assurance this six week rally will
hold it has brought a little relief to an industry that badly needed it.
2nd: Record-Large Meat & Poultry Production in 2017
and poultry production combined with recent feedlot currentness issues
are adding to the pressure on today’s cattle market, said CattleFax Chief
Executive Officer Randy Blach. His comments came during yesterday’s Beef
Industry University session at the Kansas Livestock Association Convention
in Wichita, sponsored by the Farm Credit Associations of Kansas.
Blach estimates supplies
will continue to be large as an additional 800,000 to 900,000 fed cattle
are expected to be harvested in 2017. He encouraged producers to begin
reducing beef tonnage on the market.
“One of the best
to combat these increasing numbers is to get weights under control, and
that’s something you can do as producers,” he told KLA members and guests.
U.S. beef exports
are expected to increase 5% in 2017, which Blach said will be another important
factor in helping to offset larger supplies.
Blach thinks the
industry has made it through the worst of the equity drain. He believes
positive margins at the feedyard level would benefit others in the supply
“For those cow-calf
and stocker operators, you need to see the cattle feeder get profitable,”
he said. “He gets profitable, and you’ll start to see some stability come
back into your business.”
2nd: Proposed Tax Regulation Threatens Multigenerational Cattle Operations
The Internal Revenue
Service hosted a public hearing on Thursday on a Department of Treasury
proposed rule that would eliminate or greatly reduce available valuation
discounts for family-related entities. Kevin Kester, National Cattlemen’s
Beef Association vice president, said the regulation would effectively
discourage families from continuing to operate or grow their businesses
and passing them on to future generations.
Many cattle operations
are family-owned small businesses, facing the same concerns as other small-businesses
– making payroll, complying with numerous federal and state regulations,
and paying bills, loans, and taxes. However, cattle producers face a number
of unique challenges specific to agriculture.
“Ranching is a debt-intensive
business, making the U.S. livestock industry especially vulnerable to the
estate tax,” said Kester. “Beef producers largely operate an asset-rich,
cash-poor business model: a cattleman’s biggest asset is his land. In the
event of the death of a principal family member, illiquid assets are often
sold in order to meet the costs associated with the estate tax. As a result,
many families are unable to keep their estates intact.”
For more than two
decades, livestock producers have utilized legitimate valuation discounts
as a means of maintaining family ownership. These discounts, which accurately
reflect the actual market value of minority ownerships in closely-held
businesses, reduce the tax burden at death allowing agricultural operations
to maintain family ownership from one generation of producers to the next.
“Should the discounts
be eliminated, a significant number of farmers and ranchers will face an
even greater tax burden during the difficult task of transferring minority
interests to the next generation,” said Kester. “Having dealt with the
death tax on multiple occasions, I can assure you that it’s not easy to
settle the estate of a loved one while coping with the loss of that loved
one. To add insult to injury, the proposed rule will upend succession plans,
halt planned expansion and growth, and require a majority of livestock
operations to liquidate assets in order to simply survive from one generation
to the next.”
The proposed regulations
under Section 2704 will have a profoundly negative impact on the business
climate for farmers and ranchers, ultimately dis-incentivizing a new generation
of cattle producers from carrying on the family business. For that reason,
NCBA calls for the IRS to formally withdraw the proposed rule.
1st: Positive Outlook for Beef & Pork Exports
today its weekly update on US beef and pork exports and the data continues
to paint a very positive picture for both proteins. Keep in mind
that the weekly report only covers sales of beef and pork muscle cuts while
the monthly statistics include all fresh/frozen meat exports plus they
will also included exports of cooked and processed items. The
weekly export numbers will always be quite a bit lower than the monthly
trade but the benefit is that they are much more current than the
monthly statistics that often have a 5 week lag.
The challenge often
is that weekly numbers can be volatile and add to the overall noise in
the marketplace. Also, many of the forecasts that USDA and private
analysts put together are on a quarterly basis and so it is hard to put
the weekly numbers in the proper context. With that in mind, let’s
look at some of the details from today’s numbers and what the implications
are for the month of November.
Exports of beef muscle cuts in the past two weeks have averaged 16,808
MT, the highest two week average at any point this year or last year for
that matter. Beef exports in the last four reported weeks have averaged
15,750 MT, 28% higher than the same four week period a year ago.
Extremely strong demand from a number of Asian markets continues to drive
exports of US beef this fall. And it is quite impressive that the
robust export pace so far has not been impacted much by the strong US dollar
(remember a strong US dollar raises the effective price world buyers have
to pay for US products). Exports to South Korea in the last four
reported weeks averaged 4,279 MT, 80% higher than a year ago.
Exports to Japan averaged 3,894 MT, +34% while exports to Taiwan
averaged 1,999 MT/wk, +75%. There is one Asian market where US beef
exports have been struggling and that is Hong Kong, with sales there in
the last four weeks down 17% from last year. It is not a coincidence
that the markets where we have gained ground are also markets that normally
buy from Australia but do not allow Brazilian beef. With Australian
slaughter down in double digits from a year ago, Korean and Japanese buyers
have had to bid more aggressively on US product. Lower prices
for US beef in October also helped considerably to increase the pace of
shipments to these markets. Exports to Mexico and Canada were up +6% and
+23%, respectively, accounting for about 20% of overall shipments.
Asia is by far the major destination for US beef, however. At this
point we are projecting US fresh/frozen monthly exports in November at
+21% compared to a year ago and a significant improvement over October
US pork exports also have recovered nicely in the last few weeks.
Low prices for a number of pork items in October likely set the stage for
a major rebound in November. Mexico has become the top market
for US pork recently and exports to that market in the last four weeks
averaged 9,705 MT, 8% higher than a year ago. There
is speculation that Mexican buyers have accelerated their purchases
due to the expected change in the US administration in January.
However, any changes to NAFTA will likely take time so it is curious
that this could be the motivation for the jump in exports.
The rise in exports to Mexico helps explain the firm market for hams so
far this fall despite very large slaughter. Exports to China have
been quite low so far but if they are buying carcasses those
numbers would not show up in the weekly update and we will have to wait
for the monthly statistics. At this point we are projecting November
fresh/frozen pork exports at +16% Y/Y.
1st: EPA Increases Biofuel Mandate for 2017
Protection Agency gave a lift to the renewable fuels industry by finalizing
biofuel usage mandates for 2017 higher than originally proposed.
The agency is requiring19.28
billion gallons of total renewable fuel to be blended with conventional
fuel under the renewable volume obligation (RVO). That includes 15 billion
gallons of conventional corn ethanol, a 200-million gallon increase from
EPA's May proposal and the same level set as the annual target in the 2007
energy law. The May proposal called for total usage of 18.8 billion gallons
with the potential for 14.8 billion gallons of corn ethanol.
EPA's final rule,
released November 23rd, also requires usage of 2 billion gallons of biodiesel,
up from 1.9 billion this year, and 311 million gallons of cellulosic biofuels.
There is a total requirement for 4.28 billion gallons in advanced biofuels,
which includes biodiesel, cellulosic biofuels and other biofuels that have
50-percent lower carbon emissions than conventional fuels, including sugarcane
ethanol produced in Brazil.
The final RVO for
advanced biofuel is 280 million gallons higher than what the agency proposed
in May. In addition, the EPA also set an RVO for biodiesel in 2018
of 2.1 billion gallons. The other mandates for 2018 will be determined
is the final RVO determination under the Obama administration, but it could
spark a new debate about the RFS as Donald Trump moves into the White House
signaled support for the RFS during the presidential campaign, but the
adviser leading the transition at EPA, Myron Ebell, has been critical of
The chairman of the
House Science, Space and Technology Committee, Lamar Smith of Texas, today
called on Trump to work with Congress to reform the RFS, which is under
the jurisdiction of the Energy and Commerce Committee. “More unrealistic
mandates won't benefit the environment or lead to innovation in biofuels
technology,” Smith said.
The American Petroleum
Institute criticized EPA's final rule as a “step backward.”
“We are disappointed
that EPA has taken a step backwards with this final rule,” said Frank Macchiarola,
API's downstream group director. “The RFS mandate is a bad deal for the
American consumer. Today's announcement only serves to reinforce the need
for Congress to repeal or significantly reform the RFS. Democrats and Republicans
agree this program is a failure.”
23rd: USDA Livestock Slaughter Report
meat production for the United States totaled 4.43 billion pounds in
October, up 3 percent from the 4.31 billion pounds produced in October
at 2.21 billion pounds, was 4 percent above the previous year. Cattle slaughter
totaled 2.64 millionhead, up 5 percent from October 2015. The average live
weight was down 9 pounds from the previous year, at 1,381 pounds.
totaled 6.6 million pounds, 8 percent below October a year ago. Calf slaughter
totaled 48,300 head, up 20 percent from October 2015. The average live
weight was down 67 pounds from last year, at 237 pounds.
totaled 2.20 billion pounds, up 1 percent from the previous year. Hog slaughter
totaled 10.4 million head, up 2 percent from October 2015. The average
live weight was down 1 pound from the previous year, at 282 pounds.
production was up 5 percent from last year, veal was down 8 percent,
pork was up 1 percent from last
Lamb and mutton production,
at 11.7 million pounds, was down 2 percent from October 2015. Sheep slaughter
totaled 181,600 head, 2 percent below last year. The average live weight
was 128 pounds, unchanged from October a year ago.January to October 2016
commercial red meat production was 41.5 billion pounds, up 3 percent from
year, and lamb and
mutton production was down 1 percent.
22nd: USDA Cold Storage Report
U.S. beef supplies
in October rose to the highest on records dating back to 1915
Total red meat supplies
in freezers were down 3 percent from the previous month but up 1 percent
from last year.
Total pounds of beef
in freezers were up 3 percent from the previous month and up 5 percent
from last year.
Frozen pork supplies
were down 7 percent from the previous month and down 1 percent from last
Stocks of pork bellies
were down 17 percent from last month but up 16 percent from last year
Total frozen poultry
supplies on October 31, 2016 were down 9 percent from the previous month
and down 3 percent from a year ago.
Total stocks of chicken
were up 1 percent from the previous month but down 10 percent from last
Total pounds of turkey
in freezers were down 22 percent from last month but up 13 percent from
October 31, 2015.
18th: Cattle on Feed Report
Cattle on Feed Down 1 Percent
Cattle and calves
on feed for the slaughter market in the
United States for feedlots with capacity of 1,000 or more head totaled
10.7 million head on November 1, 2016. The inventory was 1.33
percent below November 1, 2015.
Placements in feedlots
during October totaled 2.17 million head, 5.02
percent below 2015. Net placements were
2.11 million head. During October, placements of cattle and calves weighing
less than 600 pounds were 610,000 head, 600-699 pounds were 525,000 head,
700-799 pounds were 471,000 head, and 800 pounds and greater were 565,000
Marketings of fed
cattle during October totaled 1.71 million head, 4.60 percent above
totaled 57,000 head during October, 24
percent below 2015.
Feed Inventory in 1,000+ Capacity Feedlots as of November 1st
Millions of Head
Cattle Placed on Feed in 1,000+ Capacity Feedlots in October
Millions of Head
Cattle Marketed from 1,000+ Capacity Feedlots in October
Millions of Head
Feed by State as of November 1st
16th: What Did it Cost to Produce a Calf This Year?
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
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
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!
9th: USDA World Agricultural Supply & Demand Estimates
The 2016 forecast
of total red meat and poultry production is increased from last month as
higher fourth quarter beef and pork production forecasts more than offset
reductions in broiler and turkey production. Beef production is increased
on the pace of slaughter and heavier carcass weights.
Pork production for
2016 is raised based on the current rate of slaughter. Broiler production
is lowered based on September slaughter data. Turkey production is reduced
based on the pace of slaughter. For 2017, higher forecast beef production
more than offsets lower pork and broiler production. Turkey production
The increase in beef
production reflects slaughter of cattle placed in late-2016 and early-2017
as well as slightly higher carcass weights. Pork production is lowered
on slower expected gains in carcass weights. Broiler production for 2017
is lowered from last month on slower second-half growth.
The beef import forecast
in 2016 is lowered due to expected tightness in supplies from Oceania.
Beef exports are expected to decline modestly in 2016 based on recent trade
data. Beef imports and exports are unchanged for 2017. U.S. pork imports
for 2016 and 2017 were lowered as increases in domestic pork production
and lower prices are expected to limit demand for imports. Pork exports
in 2016 are lowered from last month on recent trade data. Exports are raised
in 2017 on lower hog prices which are expected to make U.S. product more
competitive. Broiler exports are raised for 2016 and 2017 on strong demand
in a number of countries.
Cattle prices are
forecast lower for the remainder of 2016 and for 2017. Large supplies of
fed cattle are currently weighing on prices and are expected to carry into
next year. Hog prices are lowered for 2016 and early 2017 on supply pressure.
However late-2017 prices are expected to reflect demand from new slaughter
facilities. Broiler prices are lowered for 2016 and 2017 as supplies of
broilers and competing meats pressure the markets.
Cow-Calf Returns Lowest Since 2009
The LMIC has consistently
ratcheted-down estimated cow-calf returns this year as forecast calf prices
for the fourth quarter were lowered. As of early in the third quarter,
fourth calf prices were estimated to be 15% below a year ago. That
fourth quarter forecast has been lowered to 25% below year ago prices.
Most U.S. operations sell their calves in the fall and prices at that time
of the year heavily influence profitability. Note that these calculated
returns do not include all economic costs of production; they are used
in market analysis and estimated cash costs plus pasture rent. Of
course, every operation has different resources and costs. Year-over-year
changes in calculated returns are more insightful than the specific numeric
As of late September’s
revisions, the LMIC’s 2016 estimate was a return over cash costs plus pasture
rent of about $15.00 per cow, which is the lowest since 2009. That is a
huge one-year decline of about $285.00 per cow (2015 was about $300.00
per cow) and was even more disappointing when compared to 2014’s record
high level (about $550.00 per cow). Returns this year will not cover
the total economic costs for most cow-calf operations. While estimated
costs of production have decreased slightly in 2016, based on cheaper fuel,
feed, and slight drops in pasture cost, it has not been enough to offset
declining calf prices.
Huge returns in recent
years provided the economic foundation to aggressively grow the U.S. beef
cowherd. The economic stage has quickly changed, but the adjustment
in cattle numbers is just starting.
Chart does not
reflect the September downward revision to $15 per cow
Cattle & Calves Inventory: January 1, 2016 vs. 2015
Compiled from USDA
National Agricultural Statistical Service Data
Cows Inventory: January 1, 2016 vs. 2015
Compiled from USDA
National Agricultural Statistical Service Data
Heifers Inventory: January 1, 2016 vs. 2015
Compiled from USDA
National Agricultural Statistical Service Data
29th: January 1 Cattle Inventory Up 3 Percent
USDA - National
Agricultural Statistics Service (NASS)
All cattle and
calves in the United States as of January 1, 2016 totaled 92.0 million
head. This is 3 percent above the 89.1 million head on January 1, 2015.
Calf Crop Up 2 Percent
All cows and heifers
that have calved, at 39.6 million head, are 3 percent above the 38.6 million
head on January 1, 2015.
Beef cows, at 30.3 million
head, are up 4 percent from a year ago. Milk cows, at 9.32 million head,
are up slightly from the previous year.
All heifers 500 pounds
and over as of January 1, 2016 totaled 19.8 million head. This is 3 percent
above the 19.3 million head on January 1, 2015.
Beef replacement heifers,
at 6.29 million head, are up 3 percent from a year ago.
Milk replacement heifers,
at 4.82 million head, are up 2 percent from the previous year.
Other heifers, at 8.71
million head, are 3 percent above a year earlier.
All Calves under 500
pounds in the United States as of January 1, 2016 totaled 14.1 million
head. This is 4 percent above the 13.5 million head on January 1, 2015.
Steers weighing 500
pounds and over totaled 16.3 million head, up 4 percent from one year ago.
Bulls weighing 500 pounds
and over totaled 2.14 million head, up 2 percent from the previous year.
The 2015 calf crop in
the United States was estimated at 34.3 million head, up 2 percent from
last year's calf crop.
Calves born during the
first half of 2015 were estimated at 24.8 million head. This is up 2% from
the first half of 2014.
The calves born during
the second half of 2015 were estimated at 9.50 million head, 28% of the
total 2015 calf crop.