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April 25th: Cattle on Feed Report Not So Bearish
CME Group

Friday's USDA cattle on feed numbers came in above the average of analyst estimates, which would normally call for a somewhat bearish reaction. Total on feed numbers as of April 1 were pegged at 10.904 million head, 0.5% higher than a year ago and the largest April inventory since 2012. The challenge for the cattle market, however, is that in the very near term supplies of market ready cattle are tight and packers continue to bid up prices in order to fill orders ahead of the start of the grilling season. The supply of cattle that on April 1 had been on feed for more than 120 days calculates to 3.122 million head, 15.4% less than a year ago. The supply of 150 day cattle is down 40%. This is the largest on feed inventory for the month of April since 2012.  But in April 2012 the inventory of 120 day cattle was 4.270 million head, almost 1.2 million head (+37%) higher than it is today. The bears in the market continue to point out that eventually the higher placements will catch up with the cattle market, maybe in early May... maybe in late May...  maybe in June. Those that hold a more bullish view of the market, on the other hand, continue to point to robust beef demand and the fact that packers are sending cattle to market at a rapid clip in order to fill orders. The rapid pace of marketings combined with light placements in September and October appears to have created a marketing hole that has lifted spot cash prices and created a very wide spread between spot April cattle and June futures. Weather is quickly improving across the country, which is generally good for both retail and foodservice demand.

But let’s look at those March placement numbers a bit more closely since they were indeed quite significant. Cattle placed on feed in March were 2.102 million head, 210,000 head (+11.1%) more than a year ago. Almost half of the increase was due to more placements of cattle in the 700-799 pound category. Placements of such cattle were up 130,000 head (+26.5%) from a year ago. August futures already hold a notable discount to June and the latest placement data suggest that a big discount for late summer cattle may indeed be warranted. Placements of heavy and very heavy feeders (+900 lb.) also were higher but the absolute numbers were relatively small, about 17,000 head more than a year ago. But also consider this: In the first three months of this year feedlots have placed 5.777 million head of cattle on feed, almost 400,000 head more than the same period a year ago. The January 1 feeder cattle supply (i.e. the number of cattle outside feedlots that was available for placement) was 563,000 head larger than the previous year. 

We appear to have already worked through much of that growth in feeder supplies and April 1 feeder numbers are only modestly higher than they were a year ago. It appears unlikely that feedlots will be able to maintain the current rate of placements in the second half of the year. One way we could place more cattle on feed later this year is if producers decide to shift heifers scheduled for herd rebuilding into feedlots. Heifer slaughter is up year over year, but that’s not because producers have decided to stop growing. Rather it is just a function of having a larger calf crop. Heifers placed on feed during Q1 were just 33.7% of all placements, a ratio that is still relatively low (no liquidation yet). Bottom line, placements are up. There could be some supply pressure for summer/early fall. But also more limited supply growth for late 2017/early 2018. 

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April 25th: Commodity Market Comments 
  • “Shootin’ The Bull” -- Christopher B. Swift.
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    Live Cattle: Traders chewed over the placement numbers and decided they are not damning.  The current environment is stronger than the weaker one anticipated.  As best I can tell, the correction remains intact, but fading quickly.  Once, or if,  June trades above $117.47 the wave 4 will be viewed as complete and wave 5 in progress.  There will be several factors to watch for in this. The first will be the new high.  The second will be the oscillator readings as new highs are made.  Lastly, I want you to start thinking now what it is you will want to do upon reaching an upside target around the $121.00 area were it to be met.  Recall, it is not that I anticipate the cash market to plummet, it is more that I anticipate a correction that takes fats off the current highs for the year.  Recall, at this point, a 10% retracement of cash still won’t push the price to the current levels of June.  So, there remains considerable work to be done aggregating the basis.  A new high in the futures, coupled with June turning spot will make for some interesting trading as June will have 4 weeks to trade on its own without significant influence from cash.  Long story short, even if a top in cash is soon, and or futures, the convergence that will take place will create significant volatility.  Be prepared for this upcoming volatility.

    Feeder Cattle: Exceeding Monday’s high after the report is viewed as friendly.  Potentially even a reversal back to the upside.  August traded back and forth enough today to give both sides opportunity to adjust.  With the FCE trading tomorrow and cash not viewed as negative, I would anticipate further upside movement.  Now, with the oscillator having returned to the zero line on the hourly chart, it leads me to anticipate a new high in price, but not a new high of the oscillator.  Upside target is just above $151.00.  As or if it begins to approach this level, have everything you need or want already laid out as to your hedging needs.  Making decisions at leisure is perceived more beneficial than under duress.  For this next go around, I may be more receptive towards using futures with the intent to market inventory through the futures if not privy to cash forward contracts.  This could mean relentless margin calls.  I think what we are looking at is going to be the top of a primary wave 3 rally.  The primary wave 4 is anticipated to have a significant retracement in both time and price.  It is not that I anticipate a collapse in price, but more of a length of time before new highs are realized again.  Potentially through the end of summer.   With so much basis to work out in the fats, once June becomes spot, it may take some of the cream off the top of the feeders.

    Corn: A little inclement weather at planting never hurt price much.  It would be nice if it were beans to, but two out of three is better than no rally at all.  Weather may be what starts this higher move off, but demand from a weaker US dollar is anticipated to help significantly.  Although business has been done with the US dollar elevated, I would anticipate an increase in business with a more favorable exchange rate.  I really liked wheat moving higher today.  Having set a new contract low recently and not have exceeded previous weekly lows suggest some strength.  The higher trade has clearly helped my previous long corn positions.  I continue to like corn, even though it doesn’t appear to like my analysis of it moving higher.

    Crude: Crude has formed a solid base line over the past 8 months.  Were crude to approach it today, it would be around the $48.00 level.  Today’s low June was $48.87, but closed on the high of the day.  I like crude oil due to this base line and reversal today.  If you have a need to book some fuel needs going into planting, I recommend doing so.  If you just need your tanks filled, top them off.

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    Christopher B. Swift is a commodity broker and consultant with Swift Trading Company in Nashville, TN. Mr. Swift authors the daily commentaries "mid day cattle comment" and "Shootin' the Bull" commentary found on his website @ www.shootinthebull.com

    An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits.  You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources and other relevant circumstances. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

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    April 25th: Closing Futures Summary
    AgriCharts/Brugler Marketing, LLC
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    Live cattle futures traded 82.5 cents to $1.125 higher on Tuesday. Feeder Cattle futures were 22.5 to 97.5 cents in the green. The CME feeder cattle index was at $139.31 on 4/24, down 10 cents from the previous day. Wholesale beef prices were higher in the afternoon report. Choice boxes averaged $219.01, up 34 cents, with select gaining $1.98 with an average price of $206.27. Ahead of tomorrow’s Fed Cattle Exchange auction, showlists have 5,448 head of cattle listed with 86.58% from NE. Estimated FI cattle slaughter was 231,000 head through Tuesday, up 7,000 from a week ago and the same Tuesday in 2016.
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  • Apr 17 Cattle settle d at $129.825, up $0.825,
  • Jun 17 Cattle settled at $115.825, up $0.975,
  • Aug 17 Cattle settled at $112.050, up $1.075,
  • Apr 17 Feeder Cattle settled at $138.725, up $0.475
  • May 17 Feeder Cattle settled at $137.675, up $0.225
  • Aug 17 Feeder Cattle settled at $141.350, up $0.650
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    Corn futures closed the day 4 to 6 1/4 cents higher on Tuesday. Moisture is expected in most of the Corn Belt this week, which is likely to be heavy enough to slow planting progress. The weekly EIA report will be released tomorrow morning at 9:30 a.m. CDT. Last week, production was increased 7,000 barrels per day to 993,000 bpd. Illinois planting progress had a 28% jump over the last week to 34% of the state’s crop planted, while Iowa was only 8% complete as of Sunday. Safras Mercado analysts estimate that 83% of the first Brazil corn crop is harvested, vs. 90.5% last year at this time.
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  • May 17 Corn settled at $3.65, up 5 3/4 cents,
  • Jul 17 Corn settled at $3.71 3/4, up 6 1/4 cents,
  • Sep 17 Corn settled at $3.78 3/4, up 6 1/4 cents
  • Dec 17 Corn settled at $3.89, up 5 1/2 cents
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    Wheat futures ended the day higher in most contracts. MPLS was the strongest, mostly 10 to 13 cents higher, with reports of snow in that region and also in Canada. KC was up 8 3/4 to 10 1/2 cents in the nearby contracts. CHI was 6 to 7 3/4 cents in the green. Spring wheat was reported at 22% planted, well behind the average of 34% and last year at 40%. KS, OK, CO, and NE winter wheat conditions were raised 1% for good/excellent from the week previous to 52%, 44%, 42%, and 54% respectively. The CME is planning on implementing a variable storage rate (VSR) mechanism for HRW futures beginning March 18, 2018, subject to CFTC approval. The intent will be to improve convergence at delivery time. 
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  • May 17 CBOT Wheat settled at $4.08 3/4, up 6 1/4 cents,
  • May 17 KCBT Wheat settled at $4.12, up 10 1/4 cents,
  • May 17 MGEX Wheat settled at $5.33 3/4, up 12 1/4 cents
  • ...
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    Lean hog futures finished the day 70 cents to $2.45 higher on Tuesday. The CME Lean Hog Index for 4/21 was down another 61 cents to $60.49.The USDA pork carcass value was down 67 cents in the afternoon FOB Plant report, with an average of $73.82. The loin and picnic cuts were reported lower, with the belly down $4.73. National cash hog base prices averaged 22 cents higher in the afternoon report, with a weighted average of $53.67 and a range reported from $49.00-$55.00. The WCB region was 8 cents higher, with IA/MN down 2 cents. Week to date FI hog slaughter was estimated at 881,000 head for Tuesday, 27,000 head larger than the same week in 2016.
    ...
  • May 17 Hogs settled at $65.225, up $0.825,
  • Jun 17 Hogs settled at $71.825, up $2.300
  • Jul 17 Hogs settled at $72.850, up $2.450
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    April 24th: Feedlots Turn The Big Corner
    John Harrington -- DTN Livestock Analyst

    To paraphrase President Gerald R. Ford as he watched "Tricky Dick" ride into the Watergate sunset, "My fellow beef producers, our long cattle-feeding nightmare is over."

    Pardon the picking of old political scabs, but somehow, only the magnitude of that famous historical pivot adequately describes the financial sea change cattle feeders are set to experience in 2017. In short, the feedlot business has finally emerged from its own constitutional crisis (read multibillion-dollar equity drain). More importantly, it now seems set to generally enjoy a prolonged period of economic recovery.

    When the fed cattle market topped in late 2014, (five-area steer average $171.28 per cwt), feedlot ledgers were absolutely frothy with the most expensive feeder cattle ever to be penned for finish. So when packer bids steadily imploded during the following 23 months (cratering close to $70 per cwt), feedlot red ink naturally swelled like a destructive tsunami.

    But given enough economic hurt and stern looks from bankers, impossible feedlot breakevens eventually corrected themselves, adjusting to new realities of beef supply and demand, and resetting the cattle-feeding table for significant profit potential.

    When the feeding year of 2015 began, lofty breakevens covering the first six months ranged from $160 to $175 per cwt, a disaster in the making if there ever was one. On the other hand, the much-chastened breakevens currently scattered over the first two quarters of 2017 are no more demanding than $97 to $105 per cwt. Talk about a seismic shift in margin potential.

    It's no wonder that closeouts generated in the first quarter of 2017 already read like an inventory at Fort Knox with per-head profits ranging from $200 to $300. While such a feedlot bonanza is unlikely to extend through the entire year, this initial profit surge reliably signals the beginning of a very solid year for the long-suffering feedlot world.

    Based on outlook and conditions at press time, I anticipate the following fed price ranges on a per-cwt basis: January through March, $120 to $125; April through June, $115 to $120; July through September, $100 to $105; October through December, $105 to $110. And should unforeseen events force the foundation of the ballpark to be moved a bit here or a bit there, I think there's still plenty of reasonable room for cattle-feeding optimism.

    Keep in mind that the feeding game is essentially one of middle-margin management. Unlike ranchers and farmers who really have little control over variable costs, feedlot managers can exercise considerable control over breakevens and practical margins, affording them the possibility of scoring profits even in the face of less-than-optimal market conditions.

    The twin realities of plentiful feed supplies (corn prices could be as much as 10% cheaper through 2017) and growing feeder cattle numbers (this year will mark the third consecutively larger calf crop to hit the ground) should lend feeding companies plenty of leverage in managing workable breakevens.

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    April 24th: USDA Cold Storage Report

    As of March 31st:

    Total red meat supplies in freezers were down 5 percent from the previous month and down 7 percent from last year.

    • Total pounds of beef in freezers were down 8 percent from the previous month and down 4 percent from last year. 
    • Frozen pork supplies were down 3 percentfrom the previous month and down 10 percent from last year. 
    • Stocks of pork bellies were up 27 percent from last month but down 68 percent from last year
    Total frozen poultry supplies were up 2 percent from the previous month and up 2 percent from a year ago. 
    • Total stocks of chicken were down 3 percent from the previous month and down 3 percent from last year. 
    • Total pounds of turkey in freezers were up 13 percent from last month and up 16 percent from March 31, 2016.
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    April 24th: Futures Correction Begins
    Cassie Fish -- cassandrafish.com

    With Friday’s larger-than-expected placement figure the catalyst, overbought CME cattle futures have begun a well-earned correction in earnest. Bears are finally getting some relief after a relentless rally as futures give back almost 200 points in some contract months.

    If it weren’t for the enormous discount of futures to cash prices, the bears could be a lot more confident that this break is the beginning of a sustainable downtrend, rather than a correction. But as this market has proven on numerous occasions in 2017, that assumption has not been profitable.

    Was Friday’s USDA Cattle-on-Feed report really that bearish? Thanks to another month of monster marketings, April began with 51k head more cattle on feed than a year ago, about a half-days’ worth of fed kill. Nebraska finally plowed into placements, after being the laggard for months, and brought their state’s COF total to up 1% YOY. Kansas continues to have a boatload of cattle on feed, their numbers up 4% while Texas slipped to 2% less YOY. This well-entrenched pattern of an accelerated turnover rate in feedyards is expected to continue, as are carcass weights expected to stay well-below a year ago.

    After paying up big for cattle last week, packers will leverage three things to attempt to break fed cattle prices this week: last week’s big buy of +140k head, next week’s access to May forward cattle contracts and this week’s sell-off in futures. Packer margins are only modestly black and packers intend to buy cattle cheaper while pushing boxed beef prices higher, taking advantage of the strong seasonal.

    This week’s kill is expected to show a minor increase, 595k-605k compared to last week’s 595k. If over 600k, it will be the first time since January 2017. Slaughter levels will expand going forward with +600k expected throughout the summer.

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    April 21st: National Feeder & Stocker Cattle Weekly Summary

    RECEIPTS:  Auctions   Direct  Video/Internet   Total
    This Week     195,400     65,900         4,100          265,400
    Last Week     194,900     80,800        72,600         348,300
    Last Year       164,700     35,500              900         201,100

    Compared to last week, feeder steers and heifers sold 2.00 to 6.00 higher, with steer and heifer calves being mostly 3.00 to 8.00 higher and instances up to 10.00 to 12.00 higher.  Two weeks ago when there was a lull in the market, order buyers were bargain hunting as feedyards weren't too interested in placements at that time.  However, this week most feedyards upped their bids and those same order buyers can't purchase them fast enough to satisfy their customers.  Rain over the weekend in Oklahoma and the Easter holiday has 
    hampered livestock movement however that recent rainfall followed by warmer temperatures has buyers eager and optimistic towards feeders that fit their grazing pastures. 

    Feeder numbers in the Northern Plains are tightening up very quickly so anyone that wanted to purchase had to pounce quickly on the cattle offered for sale.  Moisture levels in most grazing areas seem to be alright for this time of year and ranchers do not want a repeat of the Southern Plains horrendous wildfires that happened just a short month or so ago.  Demand was good to very good on all classes of feeders this week after fed cattle gained 4.00 and live sales in the Southern Plains reported up to 132.00 on Wednesday.  Packers were insistent on meeting their procurement needs and were willing to pay up sharply to get business done.  Several weeks ago, packers were purchasing cattle 15-30 days out front and now they are giving the appearance that those cattle have been worked through and are chomping at the bit to purchase some more for May delivery.  Once the end of May gets here, those June contracted cattle will start being harvested if buyer and seller agree to terms. 

    Steer dressed weights have decreased dramatically since the first of the year, 53 lbs lower than w/e January 7 and the typical 5 year average decrease is around 23 lbs.  Given the winter weather has been rather mild through Nebraska this year, the more exceptional gaining calf-feds are being marketed at a lighter weight than normal and are probably a little greener as well.  The estimated steer and heifer grading report for the first week of April shows that percent Choice is slightly higher 2016, however the Choice-Select spread is just the exact opposite of traditional thinking.  This year the spread is about 2.50 more than last year, signaling that packers may need some more Select product to get into the pipeline.  Several of thecalf-feds being harvested now were bought last fall and first cost would've been around $800 per head.  If the top end of those calf-feds are coming out of the feedyard now, cattle feeders are basically doubling the value of the animal in six to seven months. 

    Feed costs have been relatively flat throughout their feeding period and that feeder calf feeder will turn a sizeable profit in one turn.  Feeder cattle continue to bring handsome prices at auctions this week.  On Wednesday at Green City Livestock in Green City, MO a load of 780 lb steers sold at 156.75.  Today at Lexington Livestock Market in Lexington, NE two and a half loads of one iron branded steers weighing 809 lbs brought 152.25 and a load of 824 lbs black and red white face steers sold at 152.75.  Corn plantings so far are 6 percent behind a year ago but only 3 percent behind the 5 year average. 

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    April 21st: Cattle on Feed Report
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    United States Cattle on Feed Up Slightly
    • Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 10.9 million head on April 1, 2017. The inventory was slightly above April 1, 2016. The inventory included 7.23 million steers and steer calves, down 2 percent from the previous year. This group accounted for 66 percent of the total inventory. Heifers and heifer calves accounted for 3.67 million head, up 5 percent from 2016.
    • Placements in feedlots during March totaled 2.10 million head, 11 percent above 2016. Placements were the highest for March since the series began in 1996. Net placements were 2.05 million head. During March, placements of cattle and calves weighing less than 600 pounds were 350,000 head, 600-699 pounds were 295,000 head, 700-799 pounds were 620,000 head, 800-899 pounds were 585,000, 900-999 pounds were 185,000, and 1,000 pounds and greater were 67,000 head.
    • Marketings of fed cattle during March totaled 1.91 million head, 10 percent above 2016.
    • Other disappearance totaled 56,000 head during March, 10 percent below 2016.
    Complete April Cattle On Feed Report
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    Cattle on Feed Inventory in 1,000+ Capacity Feedlots as of April 1st
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    Number of Cattle Placed on Feed in 1,000+ Capacity Feedlots in March
    Millions of Head
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    Number of Cattle Marketed from 1,000+ Capacity Feedlots in March
    Millions of Head
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    Cattle on Feed by State as of April 1st
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    April 21st: Shootin' the Bull Weekly Analysis
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    In my opinion, a few things happened this week that should help to determine some longer term movement higher in cattle.  The first was the oscillator technical indicator, on the August and out months, set a new high that reflected a dip, but did not return to the zero line.  The new high in price and oscillator leads me to anticipate further upside potential.  The second was the ability to continue to trade cash higher.  The environment has changed rapidly the past 6 months.  Lighter weights and increased demand, both domestic and export, have helped to absorb the increase of inventory.  While weights may change some this summer, the demand and exports are anticipated to remain elevated.  While many are now growing tired of the abnormally wide basis, and the time it will take to converge, that is really all there is to this market for the time being.  This issue will have to be resolved and the spread difference does not lead one to anticipate cash or futures to be weak enough or strong enough on their own to converge price at either's current level.  Hence, I still anticipate a meeting in the middle as expiration draws near for the respective contract month expiring. 

    I anticipate next week to be softer in tone for the futures as the April contract expires.  It will be after this that we see the huge break lower on the weekly continuation chart via the discounted June contract. This will make the weekly chart look as if it has collapsed.  We know that it hasn't, but what it will actually do is create the major wave 2 correction on the weekly chart without actually ever having to trade cash that low.  I think it will be difficult to change the scheme of things just yet.  The pulling forward of cattle is economically justified and that keeps the weights down and pipeline greased.  Consumers don't appear to have had too many more burdens placed upon them after the last health insurance premium spike.  With energy prices still low, and employment elevated, these factors would have to change before I would anticipate the consumer to begin to reduce beef consumption due to an economic strife of some sort. 

    Night and day difference between fats and feeders.  Fats contending with a sharply positive basis, while feeders are enjoying a mild negative basis.  The feeders gave good indications of its intent to move higher this week.  Both the oscillator and price set new highs.  The oscillators inability to move to or below the zero line before resuming higher suggests this is still the primary wave 3 in progress.  I would anticipate some minor fluctuation in feeders before resuming the up trend.  I made some recommendations this week to market some inventory.  This is not a recommendation to sell futures to be short, it is a marketing recommendation.  That means that however you choose to market, whether futures, cash forward or options, market it and don't look back.  I do not want to be misconstrued as this to be a selling opportunity, it is not.  However, I do view it as a marketing opportunity.  Not much else transpired this week to comment on. 

    Grains remain lack luster and all my analysis and thoughts of a higher market remain wrong.  Swapping horses in mid-stream is not anticipated to necessarily make me right.  So, I'll wait to see what develops from here and make adjustments as needed. 

    Christopher B. Swift is a commodity broker and consultant with Swift Trading Company in Nashville, TN. Mr. Swift authors the daily commentaries "mid day cattle comment" and "Shootin' the Bull" commentary found on his website @ www.shootinthebull.com

    An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits.  You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources and other relevant circumstances. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

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    April 21st: Carcass Weights Trend Lower

    USDA reported that for the week ending April 8 the average dressed carcass, this is both fed and non fed cattle, was 802 pounds. This is 20 pounds lighter (-2.4%) than a year ago and 22 pounds lighter than the five year average. Cattle weights normally decline into the spring but the decline this year has been more significant than usual. The five year average carcass for all cattle at the start of the year was around 810 pounds per carcass and by the end of April the five year average stands at 794 pounds, a 2% decline. 

    This year carcass weights in early January stood at an average 837 pounds and since then have declined 4.2%, more than double the five year average rate. The decline in fed cattle carcass weights has been even more dramatic and has been the primary contributor for the weight reduction. The average fed steer carcass weight for the latest reported week was 852 pounds, 28 pounds (-3.2%) lower than a year ago and now about 6 pounds less than the five year average. The five year average decline for steer weights between early January and the end of April is around 3.4%. So far we are down 5.8% for the year and it is very likely we will see further declines in weights through the end of this month. At this point it looks possible that steer weights may eventually get as low as 840-845 by early May before starting their seasonal upswing. Heifer weights have declined just as sharply this year.

    Keep in mind that heifers are smaller than steers. An increase in the percentage of heifers in the slaughter mix (keep an eye on this in today’s COF report) will also tend to lower overall cattle carcass weights. The average weight of heifers in the latest report was pegged at 792 pounds, 26 pounds (-3.2%) lower than last year. The implication of the lower weights is both direct and indirect. Lower weights will subtract from beef production. While fed cattle slaughter for the week of April 8 was around 6% higher than the previous year, fed beef production for the week likely increased by less than 3% from the previous year. And with robust exports and less imports coming in, the amount of beef available to the domestic user likely was less than a year ago. The indirect implication of the fed cattle weights has to do with the supply conditions in the feedyards. The sharp decline in weights indicates that feedlots are much more current than a year ago and also more current than normal. A current yard does wonders for the testicular fortitude of a feedlot operator. 

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    April 20th: USDA March Livestock Slaughter Report

    Record Total Red Meat and Pork Production for March

    Commercial red meat production for the United States totaled 4.54 billion pounds in March, up 6 percent from the
    4.26 billion pounds produced in March 2016.

    • Beef production, at 2.25 billion pounds, was 7 percent above the previous year. Cattle slaughter totaled 2.77 million head, up 9 percent from March 2016. The average live weight was down 20 pounds from the previous year, at 1,350 pounds.
    • Veal production totaled 6.4 million pounds, 1 percent above March a year ago. Calf slaughter totaled 45,000 head, up 25 percent from March 2016. The average live weight was down 56 pounds from last year, at 246 pounds.
    • Pork production totaled 2.27 billion pounds, up 6 percent from the previous year. Hog slaughter totaled 10.7 million head, up 6 percent from March 2016. The average live weight was unchanged from the previous year, at 284 pounds.
    • Lamb and mutton production, at 13.7 million pounds, was down 4 percent from March 2016. Sheep slaughter totaled 196,900 head, 5 percent below last year. The average live weight was 140 pounds, up 2 pounds from March a year ago.
    January to March 2017 commercial red meat production was 12.8 billion pounds, up 4 percent from 2016.

    Accumulated beef production was up 6 percent from last year, veal was down 4 percent, pork was up 3 percent from last
    year, and lamb and mutton production was down 2 percent. 

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    April 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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    April 19th: 2016 Livestock Slaughter Summary

    Record High Total Red Meat and Pork Production in 2016

    Total red meat production for the United States totaled 50.5 billion pounds in 2016, 4 percent higher than the previous year. Red meat includes beef, veal, pork, and lamb and mutton. Red meat production in commercial plants totaled 50.4 billion pounds. On-farm slaughter totaled 93.2 million pounds.

    • Beef production totaled 25.3 billion pounds, up 6 percent from the previous year. 
    • Veal production totaled 81.0 million pounds, down 8 percent from last year. 
    • Pork production, at 25.0 billion pounds, was 2 percent above the previous year.
    • Lamb and mutton production totaled 155.4 million pounds, down slightly from 2015.
    Commercial cattle slaughter during 2016 totaled 30.6 million head, up 6 percent from 2015, with federal inspection comprising 98.5 percent of the total. The average live weight was 1,363 pounds, up 3 pounds from a year ago. Steerscomprised 54.8 percent of the total federally inspected cattle slaughter, heifers 25.6 percent, dairy cows 9.6 percent, other cows 8.4 percent, and bulls 1.6 percent.

    Commercial calf slaughter totaled 487,700 head, 8 percent higher than a year ago with 98.4 percent under federal inspection. The average live weight was 266 pounds, down 44 pounds from a year earlier.

    Commercial hog slaughter totaled 118.2 million head, 2 percent higher than 2015 with 99.3 percent of the hogs slaughtered under federal inspection. The average live weight was down 1 pound from last year, at 282 pounds. Barrows and gilts comprised 97.3 percent of the total federally inspected hog slaughter.

    Commercial sheep and lamb slaughter, at 2.24 million head, was up 1 percent from the previous year with 89.8 percent by federal inspection. The average live weight was down 2 pounds from 2015 at 134 pounds. Lambs and yearlings comprised 94.6 percent of the total federally inspected sheep slaughter.

    There were 814 plants slaughtering under federal inspection on January 1, 2017 compared with 808 last year. Of these, 650 plants slaughtered at least one head of cattle during 2016 with the 13 largest plants slaughtering 58 percent of the total cattle killed. 

    Hogs were slaughtered at 621 plants, with the 13 largest plants accounting for 60 percent of the total. 

    For calves, 3 of the 200 plants accounted for 46 percent of the total and 3 of the 531 plants that slaughtered sheep or lambs in 2016 comprised 54 percent of the total head.

    Iowa, Kansas, Nebraska and Texas accounted for 49 percent of the United States commercial red meat production in 2016, unchanged from 2015

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    April 18th: Lag in Retail Beef Price Adjustments
    CME Group

    Retail beef prices in March increased compared to the previous month but they were still about 5% lower than the previous year and down 7.9% from the peak in May 2015. The decline in retail beef prices follows the decline wholesale beef prices at the end of 2016 and early 2017. The chart below shows the fairly strong relationship between wholesale beef values, as represented by the choice beef cutout, and the value of beef at retail. We have lagged the choice beef price by two months, in other words, relating the value of choice beef in January 2017 with retail prices in March 2017. 

    What stands out in the last 12 months is that retail beef prices have been higher than one would expect given the long run relationship. Some of this may be due to the retail price data series itself, since it is not a weighted by sales volume. The other reason may be due to the fact that wholesale beef prices last fall and winter declined at a fairly rapid clip and retailers have taken their time to adjust. Wholesale beef prices in February declined compared to the previous month but they rose sharply in March. The average choice beef cutout in March was $216/cwt, 13% higher than the previous month but still about 4% lower than the previous year. 

    So far in April the choice beef cutout has averaged $210/cwt, 4% under last year’s levels. Market participants in the futures markets are now likely pondering what effect the stronger than expected cutout values will have on retail prices and eventually the amount of beef consumers will buy. Because retailers took their time in adjusting prices lower, it appears unlikely to us that we will see a notable increase in retail beef prices this summer. Some of the speculation that higher prices will kill beef demand may be overstating the case a bit. What may be a bit more problematic for beef demand, especially once we move past the key summer holidays (Memorial Day, 4th of July) is the price of competing proteins and beef trade flows. 

    So far this year beef supplies available in the domestic market have increased but not as much as one would expect if you were simply looking at the slaughter numbers. For now retailers and foodservice operators are in full swing preparing for the seasonal improvement in demand that comes from warmer weather. Consumer confidence is at the highest level it has been in almost a decade and consumer disposable income growth has returned to pre-recession levels. The unemployment rate is at 4.5%. In other words, these should be good times for beef demand and retailers could opt to keep prices in check (after all their margins are still good) and capitalize on consumer willingness to indulge as the grilling season gets underway.

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    April 18th: Top 5 Global Beef Importers
    Daily Livestock Report

    China has emerged in recent years as the top beef market in the world. Beef consumption in China has been increasing rapidly, albeit from a very small base. Higher incomes, a more urban population and increasing popularity of western diets has led to increased demand for beef in this market with +1.3 billion people. As recently as 2011, imports of beef in China and Hong Kong were 180,000 MT (cwe), with Mainland China accounting for just 28,000 MT. In 2017, USDA estimates combined beef imports for China/Hong Kong at 1.425 million MT (cwe), a 7 fold increase from just six years ago. 

    Given the increased importance of China in the global beef market, there has been a lot of interest in efforts to open this market to US beef products and it appears that Chinese officials have agreed in principle to do that. However, there are a number of obstacles that will limit the amount of US beef that will go into Chinese markets in the short to medium term. China insists that all beef going into the country conform to its traceability requirements. Australia, Brazil, Uruguay, New Zealand and Argentina have mandatory traceability systems for their cattle but at this point this is not the case for the US. Also, China has a very strict policy with regard to hormones. A Chinese notice to trade said that “any detection of a synthetic hormone, or a detection of a naturally occurring hormone at levels higher that the normal physiological levels, will result in rejection of the consignment and possible delistment of the plant .” 

    Product is tested at the port of entry and exporters run significant financial risk, which will likely limit the amount of beef that US can ship into China even as US beef is allowed into the country. But other markets hold more promise for US beef. Exports to Japan and S. Korea likely will benefit from increased competiveness of US beef product relative to Australia, our key competitor in these markets. Exports to Mexico and Canada also are expected to be quite robust. The challenge for US beef going forward will be to gain increased access to regions and parts of the world where beef consumption is expected to increase as incomes grow and consumers look to upgrade their diets. 

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    April 17th: Brazil Indicts 63 People in Meat Probe
    MeatingPlace.com

    Brazil's Federal Police has charged 63 people investigated for participating in a corruption scheme involving meat processing plants in the country on Saturday, according to reports by Agência Brasil news agency and the news website O Estado de S.Paulo.

    The defendants were already held in preventive detention and include agricultural inspectors and staff of processing plants, according to a report sent by the Police to a Federal Court and published by O Estado de S.Paulo. They will respond for crimes such as corruption, falsification, adulteration in food products, among others.

    Flavio Evers Cassou, an employee at Seara Alimentos (JBS), is among the indicted. JBS said in a statement sent to Meatingplace that it wouldn't comment about the indictment because it didn't have access to the final police report. The company said it “does not comply with any misconduct,” and that the employee mentioned in the report is not in an executive position at JBS.

    André Baldissera and Roney Nogueira dos Santos, director and manager at BRF, respectively, have also been indicted. BRF did not respond to a request for comment by Monday afternoon.

    Brazil's Federal Police had already disclosed that those three employees were among the investigated when the Operation Weak Flesh was announced on March 17. The probe is focused on 21 meat processing plants and 33 federal sanitary inspectors, allegedly involved in the bribery scheme.

    After the investigation was announced, dozens of countries suspended Brazilian meat imports temporarily. Since then, Brazil's Ministry of Agriculture (MAPA) has conducted a special investigation on the plants and found sanitary problems in eight out of 302 meat samples collected.

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    April 17th: The Black Swan - Waiting & Hoping
    Ag Center Cattle Report

    The Black Swan story is familiar to all traders. Swans come over the hill one at a time. Only 1 in a thousand is black. After 100 come over with traders betting with each new appearing swan, and each being white, the overconfident traders become more sure of the bet the swan will be white. Then the black swan appears. This causes the opposite effect. The traders become more cautious estimating the possibility of a black swan at 1 in a 100 instead of 1 in a 1000.

    This pattern is repeated by all people operating in volatile markets. Assessing the odds and making decisions is not all done by a computer without emotion but by humans impacted by the more recent events to occur in their lives. It is just human nature to suffer the residual pain caused by a recent harm rather than view the future from a disinterested and impassionate analysis of the past. The rancher hit by a large death loss in the herd from a freak blizzard will rush to the insurance agent the next year regardless of the price of insurance.

    Not all livestock hedgers are meticulously disciplined in their protection.  Many will accumulate inventories and then select the time and price to fix a margin. Most of the operators today remember the inventories of the past couple of years and the damage done. Those inventories bought over the past couple years never were provided an exit point with a profit on the board or in the cash markets. They were left with inventories dropping in value with each day and only awaiting the damage from the final sale.

    Today lenders are wary of allowing operators to accumulate large unprotected positions with skinny equity in the credit facility. For many stocker and feeding operators the past few months have provided little margin for ownership programs. High priced calves were matched up against even lower futures prices for feeders or feeders matched against lower live cattle futures prices. Nothing seemed to make sense. Like the black swan story, many were wary of accumulating an inventory betting the futures prices would rise. They all remember the more recent times when they never did.

    History reminds us that in more normalized times, if there is such a thing, inventories are generally bought and price fluctuations in futures prices usually provide a price point for a profit. Recalibrating the human mind to that fact is sometimes hard. The best plan is generally to let the grazing or feeding program run the show. If conditions are such that grazing forage is good, a good caretaker is available, and a willing lender on hand, then all is a go.

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    April 14th: Beef Checkoff Under Scrutiny
    The Fence Post - Amanda Radke

    Beef Checkoff under scrutiny as industry leaders demand repeal and reform

    Since 1988 when it was approved by 79 percent of beef producers in a national referendum vote, the Beef Checkoff Program has collected a $1-per-head of beef cattle assessment to be used for promotion, education and research for the beef cattle industry.

    Of the program and its effectiveness, John Robinson, National Cattlemen's Beef Association executive director of organizational communications, said, "From my perspective, without the checkoff, American beef would be at a disadvantage on the global stage where we compete against nations whose producers are looking for any edge they can find to push our product out of the market. In the U.S., consumers continue to choose beef because they know that they're buying a safe, wholesome, high-quality product that they can rely on, thanks to the work done by the checkoff. Whether that consumer is choosing a flat iron steak that's only in the meat case because of checkoff research investments, or a filet that's labeled lean because of nutrition work conducted by the checkoff, it's all demand that supports beef prices."

    Despite the checkoff's list of achievements, it's long been contested by some industry leaders that beef producers' dollar investments are being misused by contractors of the checkoff.

    "Our members have voted and decided that the checkoff program is unsalvageable," said Bill Bullard, R-CALF USA CEO. "We fully support a repeal and reform of the checkoff because we feel NCBA has abused the program, and we have evidence that shows NCBA is working against cattle producers' interest."

    Bullard said of the $80 million checkoff assessment, NCBA receives half of the dollars beef producers have invested, and he believes evidence within the 12,000-plus pages of financial records from a 2011 audit might prove just that.

    LAWSUIT

    March 31, 2017, marked the U.S. Department of Agriculture's court-ordered deadline to release documents from the 2011 audit of the federal Beef Checkoff Program. The information is being sought in a lawsuit by the Organization of Competitive Markets through the Freedom of Information Act. Of the total 12,341 pages of financial records, USDA released less than 175 pages, most of which were already public tax forms, using confidentiality as the reason behind the lack of transparency.

    "In 2010, an independent accounting firm did an audit of NCBA's beef checkoff expenditures, and within just nine days of spending by the NCBA, the audit found nearly $200,000 in wrongdoing by the organization," said Angela Huffman, OCM director of communications and research. "That's when we got involved and requested USDA do a full audit. That audit started in 2011 and wrapped up in 2013 with USDA concluding that there was no wrong-doing committed by the NCBA."

    Following that announcement, OCM, along with several farm groups such as R-CALF USA, protested USDA's conclusion, arguing that the agency white-washed the facts. In January 2014, the USDA issued a corrected report that removed the claim that there was no wrong-doing by NCBA. In November 2014, OCM filed its FOIA Complaint, demanding the information of the audit conducted by the Office of the Inspector General to be released by the USDA. Upon receiving word about this information request, NCBA got involved to attempt to protect its private business records.

    "As the court records show, the original FOIA request involved in this litigation was made by OCM in 2013, and litigation was filed by OCM against the USDA Inspector General a year later," Robinson said. "NCBA did not become aware until August 2016, that our documents were among those requested by OCM's FOIA request, and NCBA only became aware the following month that there had been litigation about the FOIA request for two years. NCBA moved to intervene in the litigation because, like most businesses, NCBA normally does not disclose its confidential business information to the public and, as the court determined, NCBA has a substantial interest in not disclosing such information to its competitors."

    "When USDA was finally court-ordered to release the documents, 98.5 percent of them were completely blacked out," Huffman said. "We will go back to court to challenge that decision and continue to demand to see the actual documents. We have very strong concerns about NCBA receiving 80 percent of its funding from the checkoff program. They have been able to build their brand and organization and are now seen as a group that represents cattle producers even though their membership only represents 4 percent of cattle producers. They lobby against laws that would help family farmers such as COOL and the new GIPSA rules, and we believe it's a conflict of interest that they are receiving these funds in the first place."

    "There seems to be a general misunderstanding about how NCBA is structured and how we conduct our work," Robinson said. "We're composed of two divisions, with one being the Federation division which serves as a contractor to the beef checkoff. NCBA's Federation division work is reviewed daily by an in-house compliance officer and an accounting department which ensures that regulations and guidelines are being followed by staff throughout each individual project. The compliance officer and accounting departments review all expenditures, time coding, contracts and any other aspects of the projects to ensure NCBA is in full compliance with the Act and Order."

    Robinson added, "The other division is the policy division which is our member-driven side which conducts the work of our members. The work conducted by the policy division, which includes the representation of our member interests and policies in Washington, D.C., is directed by volunteer cattlemen and women who spend a significant amount of time and their own personal resources to represent their operations and those of their fellow producers. The points of view we promote are those of our members and they are agreed upon by a majority vote."

    UNCONSTITUTIONAL?

    In addition to the ongoing OCM lawsuit, R-CALF is battling the checkoff in the legal system in Montana, arguing that the use of checkoff dollars on the state level is unconstitutional.

    "We have a pending lawsuit in the district court in Montana," Bullard said. "In May 2016, we alleged that it is unconstitutional for the checkoff to allow the state beef councils to siphon off half the money to spend. These state beef councils are not an arm of the USDA; they are a private entity, so we argue it's illegal to force beef producers to fund private speech with federal tax dollars."

    Bullard said a decision from the judge will be forthcoming soon, and that part of the lawsuit stems from the Montana Beef Council promoting an advertisement by Wendy's which promotes North American Beef.

    "Producers have been told that the checkoff is not allowed to market any country's particular beef product, so we believe that this was an exception to that rule without authority. We think the entire checkoff program is being mishandled and producers are not receiving the benefit they should from their investment."

    If Bullard could construct his ideal beef checkoff program, it would be voluntary and would promote only U.S. beef.

    "If producers realize a benefit, they will support a voluntary program," Bullard said. "The argument that some producers will benefit from it but won't pay, well, that's part of our capitalistic free enterprise system. It makes us work harder. That's why we need an accountable and responsive checkoff program, and the best way to do it is to make it a voluntary program. Producers can then vote in real-time with their pocket books, and money that is collected from domestic producers should be used to promote domestic beef producers. It's counterproductive for producers to be forced to promote competitors' products."

    In Washington, checkoff reform is in the works with Sens. Cory Booker, D-N.J., and Mike Lee R-Utah introducing legislation in late March that calls for further transparency and accountability to all checkoff programs. The Opportunities for Fairness and Farming Act of 2017 (OFF ACT) and the Voluntary Checkoff Act would do two things — make the checkoff voluntary and prohibit lobbying groups like NCBA from contracting checkoff dollars.

    "We are in full support of these bills," Bullard said. "We need to repeal and start new. The 100-plus member CBB should decide where the funds should go and contract directly with advertisers or universities to conduct their projects. This would stop NCBA from siphoning off administration costs with checkoff dollars."

    CHECKOFF REFORM

    OCM favors the two pieces of legislation (HR1752 and S741), which they say would promote transparency and accountability, and R-CALF USA fully supports the checkoff reform, as well. NCBA, however, has its concerns.

    "We're concerned to see this legislation for several reasons, for starters because HSUS (Humane Society of the United States) seems to be so excited about this. We know that HSUS ultimately wants to see meat off the table, and they know if they can make it harder for folks on the production side then meat gets too expensive for consumers to afford. If they can hurt the checkoff, we would have to scale back on research and promotion," said Colin Woodall, NCBA vice president of government affairs.

    "Second, we are supportive of the checkoff process, so we don't believe there needs to be reform. These aren't tax dollars; the checkoff is made up of producer dollars, so they need to be the ones who need to make decisions regarding the checkoff. The voluntary bill counters the original intent of the checkoff, and the second would prevent any organization that has a lobbying arm from being a contractor of the checkoff.

    "Additionally, the work that I do in D.C., is paid for by our members, and we don't use checkoff dollars. The firewall that exists is one that has been there from the get-go and is audited by ourselves internally, USDA AMS (Agricultural Marketing Service) and the Inspector General. On the plus side, this has been a great opportunity for NCBA to explain the checkoffs to the new administration. Some have the impression that this is an unfair tax, but the checkoff was voted on by beef producers."

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    April 13th: Canadian Fall Feeder Cattle Outlook
    Canadian Cattleman - Market Talk with Jerry Klassen

    Feeder cattle prices have been percolating higher since November 2016 and I’ve received many inquiries regarding the price outlook for the fall of 2017. The U.S. cattle herd is moving through an aggressive expansionary phase while the Canadian cattle inventory has remained relatively stagnant. The year-over-year increase in feeder cattle numbers south of the border has tempered Canadian exports. At the same time, finishing feedlots have experienced favourable margins over the past couple of months. The Canadian dollar has weakened and it appears that the market fundamentals suggest further deterioration. Feed grain prices remain under pressure and supplies will remain burdensome into the new crop year. I’ve changed my outlook on the feeder cattle market since last fall and thought I’d update readers on the changing perspective.

    To start off, looking at the numbers can be intimidating but keep in mind there are many factors influencing the feeder market besides overall supplies. The 2016 U.S. calf crop was estimated at 39.4 million head, up nearly one million head from 2015; U.S. beef cows that have calved as of January 1 were also up one million head over year-ago levels, coming in at 31.2 million. The U.S. cow herd is relatively young and there is no signal that producers are pulling in the reins on expansion.

    The 2016 Canadian calf crop came in at 4.350 million head, up a meager 23,000 head from the 2015 crop of 4.327 million head. Beef cows that have calved numbers were relatively the same as last year and heifers for beef cow replacement numbers were actually down two per cent from year-ago levels as of January 1. We’re not seeing the expansionary activity in Canada. During 2016, we saw a sharp year-over-year decline in feeder cattle exports to the U.S. and this trend will likely continue in 2017.

    In Alberta and Saskatchewan, we’ve seen a massive consolidation in the finishing feedlot sector. A number of small, medium and larger operations are no longer in business while some feedlots have been taken over by larger operators. When an industry moves through a massive consolidation due to low margins, there is a serious effect on the market for feeder cattle. One can only look at the grain industry as an example to understand the consequences. For years, finishing feedlots experienced a very tight or even negative margin structure. While 2014 and first half of 2015 were more profitable, the latter half of 2015 and all of 2016 were quite devastating to say the least. We’ve now seen a quick turnaround in margins since December, but feedlots are extremely cautious to bid up the price of feeders. The price outlook for fed cattle is rather negative with the building U.S. supplies in the third and fourth quarters. Basis levels are rather strong for fed cattle and some producers are questioning whether the futures market is even relevant. At the time of writing this article, the cash and futures are too far out of line with delivery close at hand.

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    April 13th: More Beef Exports & Less Imports Supports Beef Markets
    Derrell S. Peel, Oklahoma State University

    U.S. beef exports continue the 2016 trend with additional improvement so far in 2017.  February total beef exports were up 19.3 percent and combine with the January total for a year to date increase of 20.1 percent year over year for the first two months of the year.  This extends the annual 12.6 percent year over year increase in 2016. 

    Japan remains the top destination for U.S. beef exports, up 44.4 percent year over year for January and February.  Beef exports to Japan represented 29.9 percent of beef exports so far this year.  Japan accounted for 25.7 percent of total beef exports in 2016.  South Korea is the second largest beef export market for the U.S., up 26.5 percent in the first two months of the year compared to the same period in 2016.  South Korea has had a rising share of U.S. beef exports in the last four years and represented 17.8 of total beef exports in 2016. 

    Mexico is third largest beef export market, up 25.8 percent year over year for the year to date.  Beef exports to Mexico have generally decreased in recent years but did show a year over year increase of 8.6 percent in 2016.  Mexico’s share of U.S. beef exports has dropped sharply in the last few years to a 2016 level of 15.4 percent of total beef exports. Canada is the number four beef export market and is up 17.0 percent so far this year compared to the first two months of 2016.  Canada’s share of beef exports has also declined some in the last five years with a 2016 share of 12.1 percent of total exports.  Hong Kong has had a larger share of U.S. beef exports in the last four years but dropped from the previous year to 11.5 percent of total exports in 2016.  Beef exports to Hong Kong so far in 2017 are down 23.6 percent year over year. 

    The top five beef export markets (Japan, South Korea, Mexico, Canada and Hong Kong) represented 83.7 percent of total beef exports in the first two months of 2017, similar to the 82.6 percent share in 2016.  2017 beef exports are up year over year to all of these markets except Hong Kong.

    Beef imports are down 17.4 percent year over year in the first two months of 2017. This follows a 10.5 percent year over year decrease in 2016. Australia, historically the largest source of U.S. beef imports, is down 45.5 percent so far this year following a 39.0 percent year over year decrease in 2016.  In fact, Australia is currently the fourth largest beef import source so far in 2017.  Australia is in roughly the same relative position as the U.S. beef industry was in 2014/2015, with drought-reduced animal inventories restricting production and herd rebuilding further restricting beef production at the current time. 

    New Zealand is the largest beef import source so far in 2017 but is down 21.1 percent year over year, following a 7.3 percent year over year decrease in 2016.   Mexico is the second largest beef import source thus far in 2017 and is up 37.2 percent year over year in the first two months of the year.   Imports of Mexican beef have grown sharply in recent years, jumping 25.9 percent in 2016 and accounting for 16.4 percent of total beef imports.  Canada is the third largest beef imports source, with year to date imports down 12.7 percent.  After an annual year over year increase of 14.3 percent, Canada represented 23.8 percent of total beef imports in 2016.  The top four import markets represented 85.9 percent of 2016 beef imports.  Significantly smaller import shares include Brazil, which accounted for 5.1 percent of total imports along with 4.1 percent from Uruguay in 2016. Beef imports are largely driven by the demand for lean trimmings used in the ground beef market.  On average, an estimated 72 percent of U.S. beef imports are lean trimmings. 

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    April 12th: Brazil's Beef Export Volume Up 20 Percent Despite Meat Scandal
    Reuters

    Brazil's total beef exports rose in March despite a food safety scandal that caused many countries to question the quality of its meat products and impose temporary import bans.

    Total beef exports, including fresh and processed varieties, reached 125,000 tons in March, up 20 percent from February, beef exporters association Abiec said in a statement on Tuesday.

    Revenues reached $501 million, up 22 percent from the prior month but down 3 percent from the same month a year ago, according to the statement.

    The results suggest the initial success of the Brazilian government's campaign to reassure buyers of the quality of the country's meat in the wake of a police bribery probe that accused sanitation inspectors and companies of conspiring to sell rancid products, falsifying export documents or failing to inspect meat-packing plants.

    "The results in March show the resilience of the Brazilian beef industry," said Antônio Camardelli, Abiec president. The investigation "did not reduce average export volumes as many destination countries quickly suspended their bans," he said.

    The government said exports should return to normal levels between April and May as the country's efforts to reverse import bans from key clients quickly bear fruit.

    To be sure, total beef export volumes were down 11 percent at 140,000 tons in March from the same month a year ago, Abiec said, citing trade ministry data.

    As the scandal fades, Abiec said it will focus on expanding the presence of Brazilian beef products "on strategic markets and negotiate to open up new ones," Camardelli said.

    Currently Brazil's main meat buyers are Hong Kong, China, Russia and the European Union, which imported about half of all the country's beef products last month, Abiec data show.

    Brazilian fresh beef exports totaled $403.5 million in March, down 2 percent on an annual basis, while volumes slumped 11.3 percent to 98,200 tons, according to the Brazil's trade ministry.

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    April 11th: USDA World Agricultural Supply & Demand Estimates

    LIVESTOCK & POULTRY: The 2017 forecast of total red meat and poultry production is raised from last month as higher beef and turkey production more than offset modest reductions in pork production. 

    • Beef production is forecast higher on the current pace of slaughter and heavier-than-expected cattle weights in the first half of the year. 
    • The pork production forecast is lowered slightly with second and third-quarter production reduced but almost offset by higher fourth-quarter production. The March Quarterly Hogs and Pigs report indicated that industry expansion is still underway although producers intend to slow farrowings this summer.
    • Turkey production is forecast higher on recent hatchery data.
    • The broiler production forecast is unchanged.
    The beef import forecast for 2017 is raised as higher expected beef supplies from Oceania in the latter half of the year outweigh declines in the first half. No changes are made to beef exports.  The first quarter turkey export forecast is reduced slightly from last month. The egg export forecast is reduced slightly on the pace of firstquarter trade. Pork and broiler trade forecasts for 2017 are unchanged.

    The cattle and hog price estimates for the first quarter reflect March price data, but the forecasts for the outlying quarters are unchanged. Broiler price forecasts are raised as current prices remain strong. Turkey prices is adjusted to reflect March data; forecasts for the outlying quarters are unchanged. 

    WHEAT: U.S. wheat ending stocks for 2016/17 are raised 30 million bushels on lower feed and residual use which more than offsets a slight import reduction. At 1,159 million bushels, ending stocks are projected to reach a near 30-year high. Feed and residual use is lowered 35 million bushels to 190 million which reflects lower-thanexpected disappearance for the December-February and September-November quarters, as indicated by March 1 and revised December 1 stocks from the March 31 Grain Stocks report. The import change is based on the pace to date with reductions for soft red winter and durum.

    Global 2016/17 wheat supplies are raised 1.7 million tons due to higher projected beginning stocks and a 0.3-million-ton increase in production. The change to beginning stocks stems from a 1.4-million-ton reduction in 2015/16 domestic consumption, primarily in the EU. World exports are lowered 0.3 million tons led by 0.5-million-ton decreases each for Australia, Canada, Kazakhstan, and Russia. Partly offsetting are higher projected exports for the EU and Ukraine. Total global consumption for 2016/17 is lowered 0.6 million tons to 740.8 million with a 1.0-millionton decrease in the United States, more than offsetting a small net increase for foreign countries. With supplies rising and use declining, global ending stocks are raised 2.3 million tons to 252.3 million. 

    COARSE GRAINS: This month’s 2016/17 U.S. corn outlook is for increased corn used to produce ethanol, reduced feed and residual use and unchanged ending stocks. Corn used to produce ethanol is raised 50 million bushels to 5,450 million based on the most recent data from the Grain Crushings and Co-Products Production report which estimated the amount of corn used to produce ethanol to be record high during December-February. The pace of weekly ethanol production during March as indicated by Energy Information Administration data has also been above expectations. Offsetting is a 50 million bushel reduction in projected feed and residual use to 5,500 million bushels based on disappearance indicated during the first half of the marketing year in the March 31 Grain Stocks. With offsetting usage changes, ending stocks are unchanged from last month. The season-average corn price received by producers is unchanged at the midpoint with the range narrowed to $3.25 to $3.55 per bushel.

    Global coarse grain production for 2016/17 is forecast 4.4 million tons higher from last month to 1,346.1 million. This month’s foreign coarse grain outlook is for increased production, consumption, trade, and stocks relative to last month. Brazil corn production is raised primarily on larger projected second crop area. The latest government data indicate a higher-than-expected expansion of area in both the Center-West and North. Argentina corn production is increased on the latest harvest results indicating better-than-expected yields. Other major corn production changes include increases for Mexico, Indonesia, Pakistan and South Africa, with reductions for Paraguay, Ecuador and Russia. Major global trade changes for 2016/17 this month include higher projected corn exports for Brazil and Argentina, with increased competition from these countries expected to impact the 2017/18 marketing year in the United States. Corn imports are raised for Mexico, with mostly offsetting reductions for Indonesia, Venezuela, Philippines, and Colombia. Foreign corn ending stocks are raised from last month, with the biggest increases for Mexico, Brazil, Indonesia, and Argentina. 

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    March 22nd: Post-Wildfire Reality Sinks in for High Plains Ranchers
    Sherry Bunting -- Progressive Cattleman

    “The overwhelming reality of it all is sinking in,” said Greg Gardiner of Ashland, Kansas, in a phone interview 10 days after the Starbuck fire – which had consumed over 300,000 acres in Oklahoma and nearly 500,000 acres in southwest Kansas – claimed 43,000 of the 48,000 acres at Gardiner Angus Ranch.

    Officials are calling the Starbuck fire the largest single fire in Kansas state history. Additional wildfires on the same day brought the state total to 650,000 acres burned.

    All told, multiple windswept wildfires on March 6 burned close to 2 million acres of grasslands and left a deadly trail of crippling losses in four states.

    Preliminary livestock loss estimates for Kansas, Oklahoma, Texas and Colorado are approaching 7,000 to 9,000 adult cows and untold numbers of calves, horses and wildlife. These numbers are expected to increase in the weeks ahead as more cattle are located and those with less severe injuries are monitored and may not recover.

    Tragically, some of the affected ranching families suffered the ultimate loss of loved ones. Seven people lost their lives, at least five while trying to herd cattle to safety before becoming trapped in the rapidly moving fire when the high winds changed direction.

    It was the perfect storm when the red flag day dawned in the High Plains. The 60 to 70 mph winds drove multiple fast-moving fires that found abundant fuel in the grasslands that had previously benefited from two years of good moisture before turning tinder-dry over the past 60 days.

    In fact, the Starbuck fire was so fast and intense that even where fence appears to be standing, the wood at ground level is disintegrated. In Kansas, alone, an estimated 12,000 miles of fence will eventually need to be replaced. The priority is perimeter fencing, so materials and fencing crews are needed.

    With severe losses of grazing land and stockpiled hay, another immediate concern is feeding the estimated 25,000 to 30,000 surviving cattle in the affected areas of the four states for the next 30 to 60 days while ranchers deal with the recovery while finishing out the calving season before they can take stock of their positions and make decisions about their futures.

    The toll of survival

    While Gardiner Angus Ranch lost 500 adult cows – mainly donor cows for fall breeding and spring calving females on grass – the 1,500 cattle on wheat pasture and those gathered for their April 1 production sale were not affected. Gardiner estimates they have lost 300 calves. All of their stored hay is gone – 5,000 round bales and 3,000 bales of horse hay – despite scattered locations. Of the cattle in the line of the fire, 150 survivors are being monitored in corrals, and 30 of them have calved within days of the fire.

    “Those cows didn’t deserve this,” said Gardiner of the devastation. “We found many with their calves flat beside them – having just calved as the fire raced through. The fire happened so fast, but everything that day seemed to be happening in slow motion.”

    “Everywhere you looked, it was like the world was on fire with fire lines on every horizon,” Gardiner said, explaining how fast the fires were upon them and the complications of changes in wind direction, making it impossible to move cattle ahead of the fire.

    Even people evacuating their homes were back and forth on where to go as the shifting high winds fueled fires that jumped roads and turned in unpredictable ways throughout the day and night. Greg’s brother Garth had a few close calls, as the fire came first from the north and Garth’s family evacuated their home. Then it switched and the roads were blocked.

    Greg Gardiner described his own close encounter while following his brother Mark with a horse trailer. Mark and Eva were attempting to save three horses and two dogs with the fire closing in on their home. When a tree belt erupted in flames, the blackness descended and the heat of the fire reached Greg’s vehicle. He was forced to retreat with zero visibility, and was left wondering for what seemed like an eternity whether Mark and Eva had escaped before their home was engulfed.

    A firefighter emerged 30 minutes later to tell him they had made it out.

    “This thing is of biblical proportions. Everywhere you look, it is like an apocalyptic wasteland, but that seems like small potatoes right now: My family is alive,” said Gardiner.

    Waves of relief

    As the heart-wrenching stories and statistics emerge from the region, the focus is transitioning from cattle triage to organizing the significant short- and long-term needs of the ranchers. The agriculture community across the country is wasting no time organizing shipments of donated hay, milk replacer, fencing materials and other needs, while foundations are setting up methods to accept donated funds, and auctions are being organized to raise additional funds for these ranchers.

    “When the hay trucks rolled in, it was like the cavalry arrived,” said Gardiner, whose ranchlands were largely burned by the Starbuck fire, deemed the largest single fire in Kansas state history. All told, 22 counties in Kansas were affected by multiple wildfires.

    Truckers dispatched from drop points to ranches describe the evident relief in the faces of the ranchers they have met. While the early convoys of semis and flatbeds traveled under lifted highway restrictions, strangers along the way offered cash for fuel or for the ranchers. But the cost of fuel and the availability of trucking remain a bottleneck in getting some of the hay donations to their destinations.

    Hay has been delivered from mainly a 300-mile radius of the affected areas. Dr. Randall Spare of Ashland Veterinary Clinic said 800 bales are waiting in Waco, Texas, if they can find trucking. Convoys are also being assembled in South Dakota, Kentucky, Tennessee and Minnesota, with calls coming into the various state coordinators from as far away as Arizona, Wisconsin, Vermont and Canada.

    “By Friday we were just amazed at the amount of hay and calls we were getting, and it continues,” said Danny Nusser, Texas A&M Agrilife Extension regional director. “We put the message out Saturday morning that we will take all that we can handle.”

    By Monday, however, the 4,200-bale goal set for the three Panhandle supply points had been met, and Nusser reported they are taking names and numbers until they further assess the region’s needs. The goal was to gather a 30-day supply for the estimated 15,000 surviving cattle in the Panhandle.

    In Oklahoma, hundreds of large round bales were received over the weekend; one convoy was organized by ranchers in the southern part of the state.

    In Kansas, 3,000 large bales were received within a week of the wildfires, and according to Spare, they can use more. “We don’t want to turn down hay because some of our ranchers are just coming to grips with what their losses are and what their needs will be. Since Gardiner Ranch has the capacity to unload and accumulate hay where neighbors can come and get what they need, we are utilizing that.”

    Southwest Kansas has an estimated 15,000 surviving livestock on ranches that have lost most of their grazing and hay.

    Donations that lift spirits

    The challenge with the hay, said Spare, is that “some producers are saying they don’t need the hay or they feel embarrassed to take it, but the grass is all gone and we are 60 days from good grass [in unburned areas], and that’s if it rains, so we are still in the process of contacting ranchers, trying to help people understand as they make their plans that they will need to have something to feed.”

    As the immediate hustle to triage cattle and secure feed and care for survivors shifts to a longer-term coordination of ongoing recovery, those close to the situation are urging more distant donors to consider monetary donations to help with trucking of closer hay and materials and other needs instead of trying to send hay from 1,000 miles away.

    Spare has spent his time trying to connect the dots. And those dots include the growing number of orphaned calves.

    With fences to build and repair, feed to secure, cows still calving and long-term plans and decisions to make, there’s no time to bottle and bucket feed calves two and three times a day, particularly for those ranchers who have also lost their homes.

    Kansas county 4-H clubs put the word out early that youth members are taking in bucket calves to help the ranchers who have so many other things to do in the recovery. To follow their progress and donate milk replacer and other supplies, visit the Orphaned Calf Relief of SW Kansas on Facebook.

    Veterinarians are reaching out to colleagues in the hard-hit areas. Spare received a call late last week from Dr. Tera Barnhardt. She and Deerfield Feeders’ general manager, Cary Wimmer, came up with the idea of offering temporary homes and care in the calf ranch hutches for orphaned calves from Ashland.

    Many ag companies have donated milk replacer, feed, pharmaceuticals and other animal care products – and along with hay donations from other ranches, have come personal items for the families who have lost their homes and belongings.

    “Our hearts go out to the ranchers,” said Barnhardt. “I’m just glad we could help connect some dots and take something off their plate.”

    Moving forward

    With the fires mostly contained in the affected regions, conditions are still tricky in some spots, according to Nusser. He said it will be June or July, with sufficient rain, before the greenup slows the fire threat in the Panhandle.

    County FSA offices are asking ranchers to contact them with loss numbers so this information can be tied to emergency declarations from each state’s respective governors for grazing lands exceptions and assistance.

    The problem is that individual ranch losses will far exceed the individual $125,000 caps for USDA programs like the Livestock Indemnity Program and fencing cost shares.

    “Every individual rancher will weather these losses differently, depending on their financial position at the time of the fire,” said Dr. Steve Amosson, AgriLife Extension economist in Amarillo, Texas. His early estimate for the Panhandle, alone, is $21 million in losses, which he expects to see increase as more information is gathered. He said that for many ranchers, little insurance money will come into play.

    In Texas, the Perryton/Lipscomb fire is deemed the third largest in Texas state history.

    For the short term, the tangibles are necessary because it takes time for the various foundations to pool monetary donations and get resources to the ranchers. Over the next 30 to 60 days, the recovery will transition to a rebuilding effort.

    This will be a long recovery for ranchers who have lost 50 to 90 percent of their herds and multiple years of income and stockpiled forage, according to Spare.

    “We’re praying for rain,” he said, describing dirty skies as the wind lifts the gray dusty sand over charred soils.

    “I told CNN that we as ranchers are stewards of the grasslands, and that the only way we have something to sell for an income is to sell grass through the cows that are eating it. We are working to take care of that and start all over again,” said Spare, who had significant losses among his own cow herd and was relieved when his son showed up in the driveway Tuesday morning, taking time away from vet school before spring exams to take care of the home front while he worked with other ranchers and their cattle.

    As for the immediate fencing need, a short- and long-term approach is being pursued. While fencing certainly has its government specs to qualify for USDA cost-sharing, several ranchers interviewed for this report indicate that the amount of fencing they have to replace so greatly exceeds the cap on funds they will begin with what is donated to establish perimeters and do their cross fencing as they can over the next few years.

    While prayers are most coveted, those who want to help are urged to contact organizers in the affected states to see what the needs are as community leaders develop an ongoing relief plan.

    “There are no guarantees in agriculture. We know the risks and we appreciate this is life we have chosen to live,” said Gardiner. “This is an emotional deal, hitting us all every day. We’ll take it one step at a time. We’ll survive by keeping ourselves moving.”

    “There is so much appreciation in this community for the outpouring of love and compassion from the people who have come alongside us with prayers and help,” said Spare. “Many don’t know how they’ll get through this, but we know we will get through it.”  end mark

    The Starbuck fire consumed 43,000 of the 48,000 acres at Gardiner Angus Ranch. Over 12,000 miles of fencing in Kansas, alone, is estimated in need of replacement as the rapidly moving and intense fire disintegrated posts at the ground level. 


    Photo by Julie Tucker

    How you can help

    Wildfire relief organizers are indicating that the best way for distant donors to help is to provide monetary donations for transporting nearby hay and resources to the areas affected by the wildfires.

    In addition, auctions are being organized to benefit wildfire funds. For example, a heifer donated by Oklahoma West Livestock Market was auctioned 105 times on March 8 to garner $115,449 with proceeds going to the Oklahoma Cattlemen’s Foundation Fire Relief Fund. Similar ideas are creating a ripple response throughout the agriculture community and can be replicated anywhere.

    Trent Loos at Rural Route Radio is helping to organize this idea to fund the recovery and rebuilding efforts in the fire-ravaged areas of the High Plains through means of raising cash. For information about how to participate in this and to find a list of upcoming auctions, as well as how to set one up, contact Trent Loos at (515) 418-8185.

    To give supplies and trucking or to donate funds to foundations for direct wildfire relief, contact the state-by-state resources below.

    Kansas

    Monetary donations: Ashland Community Foundation/Wildfire Relief Fund at www.ashlandcf.comor P.O. Box 276, Ashland, KS 67831. The Kansas Livestock Association/Wildfire Relief Fund at 6031 SW 37th St., Topeka, KS 66614.

    Hay, trucking and fencing donations: Call Ashland Feed and Seed at (620) 635-2856. (Ashland Feed and Seed is also taking credit card orders over the phone for feed and milk replacer or other supplies for ranchers in the area.)

    Texas

    • Monetary donations: Texas Department of Agriculture STAR Fund.
    • Hay, trucking and fencing donations: Ample hay has been received for two to three weeks, so call to see if and when more is needed. Fencing supplies are needed, which can go to the Agrilife supply points. Contacts are J.R. Sprague at (806) 202-5288 for Lipscomb, Mike Jeffcoat at (580) 467-0753 for Pampa, and Andy Holloway at (806) 823-9114 for Canadian.
    • For questions about donations or relief efforts, contact Texas A&M Extension at (806) 677-5628.
    Colorado
    • Hay, trucking and fencing: Contact Kent Kokes (970) 580-8108, John Michal (970) 522-2330, or Justin Price (970) 580-6315.
    Oklahoma
    • Monetary donations: Oklahoma Cattlemen’s Foundation Fire Relief at P.O. Box 82395, Oklahoma City, OK 73148 or www.okcattlemen.org.
    • Hay, trucking and fencing donations: Contact Harper County Extension at (580) 735-2252 or Buffalo Feeders at (580) 727-5530.
    • Other states organizing deliveries
    Preliminary statistics
    • Texas: Four deaths and more than 480,000 acres burned and early livestock loss estimates of 2,500 adult cattle. Texas A&M Agrilife Extension estimates preliminary damage at over $21 million, not counting equipment losses. Gov. Greg Abbott declared a state of disaster in six counties in the Texas Panhandle.
    • Kansas: One death, 11 injuries, more than 40 homes destroyed and 702,000 total acres burned, 462,000 of which stem from the Starbuck fire deemed the largest single fire in Kansas state history. Kansas Gov. Sam Brownback signed a disaster declaration covering 20 counties. Early estimates of livestock losses are 3,000 to 6,000 adult cows and additional calves.
    • Oklahoma: One death, eight homes and 381,000 acres burned from the Starbuck fire. Three additional fires in the state have burned 120,000 additional acres. Gov. Mary Fallin declared a state of emergency for 22 counties. Early estimates of livestock losses are 3,000 cows and additional calves.
    • Colorado: Five homes were destroyed and more than 30,000 acres burned; early livestock loss estimates are 185 cow-calf pairs.
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    February 15th: Comprehending the Immensity of the National Debt

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

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

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

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

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

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    All Cattle & Calves Inventory: January 1, 2017 vs. 2016
    Compiled from USDA National Agricultural Statistical Service Data
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    Beef Cows Inventory: January 1, 2017 vs. 2016
    Compiled from USDA National Agricultural Statistical Service Data
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    Replacement Heifers Inventory: January 1, 2017 vs. 2016
    Compiled from USDA National Agricultural Statistical Service Data
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    January 31st: January 1 Cattle Inventory Up 3 Percent
    USDA - National Agricultural Statistics Service (NASS)
     
    • All cattle and calves in the United States, as of January 1, 2017, totaled 93.6 million head. This is 2 percent above the 91.9 million head on January 1, 2016. 
    • All cows and heifers that have calved, at 40.6 million head, are 3 percent above the 39.5 million head on January 1, 2016. 
      • Beef cows, at 31.2 million head, are up 3 percent from a year ago. 
      • Milk cows, at 9.35 million head, are up slightly from the previous year. 
    • All heifers 500 pounds and over, as of January 1, 2017, totaled 20.1 million head. This is 1 percent above the 19.9 million head on January 1, 2016. 
      • Beef replacement heifers, at 6.42 million head, are up 1 percent from a year ago. 
      • Milk replacement heifers, at 4.75 million head, are down 1 percent from the previous year. 
      • Other heifers, at 8.88 million head, are 1 percent above a year earlier. 
    • Calves under 500 pounds in the United States, as of January 1, 2017, totaled 14.4 million head. This is 2 percent above the 14.1 million head on January 1, 2016. 
      • Steers weighing 500 pounds and over totaled 16.4 million head, up slightly from one year ago. 
      • Bulls weighing 500 pounds and over totaled 2.23 million head, up 4 percent from the previous year. 
    • The 2016 calf crop in the United States was estimated at 35.1 million head, up 3 percent from last year's calf crop. 
      • Calves born during the first half of 2016 were estimated at 25.6 million head. This is up 4 percent from the first half of 2015. 
      • Calves born during the second half of 2016 were estimated at 9.53 million head, 27 percent of the total 2016 calf crop. 
    • Cattle and calves on feed for the slaughter market in the United States for all feedlots totaled 13.1 million head on January 1, 2017. The inventory is down 1 percentfrom the January 1, 2016 total of 13.2 million head. 
      • Cattle on feed, in feedlotswith capacity of 1,000 or more head, accounted for 81.2 percent of the total cattle on feed on January 1, 2017. This is up 1 percent from the previous year. 
      • The combined total of calves under 500 pounds and other heifers and steers over 500 pounds (outside of feedlots) is 26.6 million head. This is 2 percent above one year ago. 
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    November 16th: What Did it Cost to Produce a Calf This Year?
    Aaron Berger -- University of Nebraska Extension 

    Weaning of spring-born calves has occurred for many cow calf producers. Right after weaning is a good time to analyze the business and see what it cost to produce a pound of weaned calf.

    Cow costs and thus the cost to produce a weaned calf have shot up over the last 15 years. From 1987 to 2001, the Livestock Market Information Center reports that annual cow costs increased from $300 to $400 per cow. From 2002 to 2015, cow costs more than doubled from $400 to $875 per cow.

    These annual cow costs figures are from National Ag Statistics Surveys. Cow costs in much of Nebraska would be equal to or higher than the national average due to the cost of pasture. Obviously not every cow weans a calf, so the actual cost per calf produced is much higher than $875!

    This information prompts the question: What did it cost you to produce a pound of weaned calf this year? What do you project it will cost in 2017?

    Unit cost of production (UCOP) is a value based on a relationship in production between costs and units of product made or produced.

    Unit Cost of Production = Costs / Units Produced

    The relationship between the numerator (Costs) and the denominator (Units Produced) is what drives the UCOP value. The power of the UCOP ratio for cow-calf producers is that everything involved in the production of a pound of calf is represented in the numerator or denominator of the equation. For example, if a producer wants to buy a pickup that will be used in the production of calves, he can estimate how the purchase of that pickup will affect his UCOP in terms of cost per pound of calf produced. The same thing goes for the purchase of a bull. Evaluating the purchase of a bull in light of how many estimated pounds of calf that bull will produce in relation to his cost can give insight into what a producer might be willing to spend.

    What did it cost to produce a pound of weaned calf this year? What is it projected to cost next year? The old adage "you can't effectively manage what you don't measure" is true in relation to managing the cow-calf enterprise. The first step in calculating UCOP is to have accurate production and financial records. These records do not have to be complicated, but they need to be accurate and thorough. If current management and information systems don't provide the data to run this type of analysis, consider making changes that will provide the records needed.

    Unit Cost of Production takes into account both product produced and input costs. Knowing UCOP allows a manager to look forward utilizing both present and projected input costs with production numbers to make informed decisions. You can’t change last year’s cost of production numbers, but with good information, you can make management changes that will impact the upcoming year. Cow-calf producers who know UCOP numbers and understand the interaction between costs and production can implement strategies to effectively manage resources to meet business and personal goals. 

    As with most things in life, the first few times you do something, you make mistakes and through the process learn how to get better. The first time someone learns to drive, there is going to be gears grinding, lurching and jerking, and some killed engines. There also is likely going to be some parent or adult with more gray hair (or perhaps less hair) in the process! Passing the driver’s test and being able to drive is well worth the hassle and effort!

    Learning how to calculate UCOP is a similar process for cow-calf producers who have never done it before. The first few times through the mental gears will be grinding and there will be frustration along the way. However once someone does it and gets comfortable, the value of knowing this information and being able to confidently make decisions that improve profitability is extremely satisfying! 

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