18th: National Feeder & Stocker Cattle Weekly Summary
Direct Video/Internet Total
Compared to last
week, feeder steers and heifers began the week with trends mostly 5.00
to 10.00 lower. Early-week markets had to play catch-up with the
lower markets observed late last week. However, as the week progressed,
sales became mixed from 3.00 lower to 5.00 higher. In the Southeast
region, feeder markets were 1.00 to 5.00 lower. Trade and demand
was moderate, with instances of good demand reported in a few auction barns
on yearling cattle as feed yards are in need of cattle to fill pen space.
There has been a larger volume of un-weaned and short weaned calves reported,
with many seeing heavy discounts. Tuesday’s CME live and feeder cattle
futures put optimism into the market, encouraging feeder buyers to purchase
cattle at higher prices. However, the confidence faded as the board
saw declines thereafter and cash trade for slaughter cattle saw lower prices.
Compared to last Friday, August live cattle futures ended the week 3.37
lower at 106.38 and October 1.50 lower at 105.90. Feeder cattle futures
for August were 1.27 lower at 140.50 and 2.19 lower at 140.03 for September.
There were still
noteworthy sales in the field, with the Sheridan Livestock Auction Co.
in Rushville, Nebraska seeing several good strings of yearling steers,
with several loads of steers weighing 890 pounds selling at an average
price of 150.85. There were also several loads of 918 pound yearling
steers coming off of grass that sold at an average price of 145.30.
On Monday, Iowa traded live slaughter cattle at 110.00, setting the tone
for the week. On Wednesday, direct slaughter cattle trade broke out
in Nebraska. Dressed purchases were 8.00 to 10.00 lower from 175.00-177.00.
On Thursday, more trade occurred with dressed purchases steady with Wednesday
at 175.00. Live sales were 6.00 to 7.00 lower compared to last week
from 109.00-110.00, with a few up to 110.50. In Kansas and the Texas
Panhandle, trade has been inactive on light demand. In the Southern
Plains, live purchases were 5.00 lower at 110.00.
Weather has played
a factor throughout many regions this week, with the Northern and Southern
Plains seeing heavy rainfall and unseasonable cooler temperatures.
This curtailed receipts throughout both regions. In central Nebraska,
adverse weather was reported as well, with some areas receiving extensive
damage from hail. The Corn Belt may find the rain showers beneficial
for their soybeans, as they are in a critical development stage.
The soybean crop rating declined 1 point, with 59 percent in the good or
excellent category and 79 percent of the crop has pods set. The corn
crop rating improved 2 points, now with 62 percent rated in the good or
excellent category and only 16 percent dented. Compared to last Friday,
Choice boxed-beef closed 5.31 lower at 194.29 and Select boxed-beef closed
at 192.50, down 3.62. Today’s Choice-Select spread is at 1.79.
Auction volume this week included 55 percent weighing over 600 lbs and
40 percent heifers.
18th: Ranchers in Parched U.S. Northern Plains Welcome Hay Lottery
Hundreds of livestock
ranchers in the drought-stricken U.S. Northern Plains are embracing what
organizers say is the first lottery designed to provide some much-needed
relief to their operations.
The prize? Tons and
tons of hay.
Ranchers in North
Dakota, South Dakota and Montana have been suffering through the region's
worst drought in 30 years, which has withered grazing fields, causing a
severe spike in the cost of hay to feed their animals.
While the ranchers
search for affordable hay, some have been selling off cattle they cannot
afford to feed. If the drought persists, cattle and beef prices will rise,
livestock economists said.
"Thousands of producers
who have invested their lives in their operations are being financially
affected by the drought. It will change how they're going to operate for
the next several years in order to get through it," Greg Lardy, head of
North Dakota State University's (NDSU) animal sciences department, said
The Dakotas and Montana
represent 13 percent of the U.S. beef cow herd and 26 percent of hay acres,
according to the U.S. Department of Agriculture.
In response to the
drought, the North Dakota Department of Agriculture (NDDA) and NDSU helped
organize a "hay lottery." Farmers can register
online for a chance to win a semi-truck load of hay - roughly 30
The lottery is the
first of its kind in North Dakota, state officials said.
register by Aug. 31 and the drawing is tentatively scheduled for early
September. Entry is free. Additional lotteries are possible if donations
continue to pour in, officials said.
HAY PRICES GO
The United States
is the largest producer and exporter of grass hay, the foundation of the
diet for grazing animals such as cattle, according to the National Hay
Association (NHA). Even so, only 4 percent of U.S. grass hay is exported,
with the rest used domestically, NHA said.
The lack of adequate
moisture in the Northern Plains this summer sent prices skyward.
Weston Dvorak, a
rancher in Manning, North Dakota, said hay that cost him $60 per ton earlier
this year is now going for $120 to $200, adding hundreds of thousands of
dollars to his costs.
Dvorak has culled
his 400-head beef cow herd by 10 percent after running short of the hay
needed to see him through the winter. He cut some of his shriveled corn
stalks and wheat for silage to help make up some of the shortfall.
Faced with the prospect
of losing more of his livestock, Dvorak recently drove 300 miles (483 km)
to bale hay on once federally protected conservation land, now freed up
to assist struggling ranchers.
“If I didn’t come
out here to make this hay, I would have to sell at least 40 percent of
my cows," he said. "So it’s either sell 40 percent of my cows and do nothing
all winter or come out here and fight for another day.”
Doug Goehring estimated there are more than 800 lottery entries from the
three states so far, with NDSU research farms in Fargo, North Dakota, collecting
"I hope there's 15
to 20 semi loads of hay, and if it were 100 that would even be even better,"
BEEF PRICE BOUNCE?
Though dry pastures
have bedeviled Upper Plains ranchers, exports of U.S. hay are not expected
to suffer because most of the crop is harvested closer to the U.S. East
and West Coasts.
in the Northern Plains will lead to increased culling of breeding stock
that could eventually result in higher cattle and beef prices, analysts
NDSU's Lardy recalled
how the 2012 drought, the worst in half a century, sank the U.S. cattle
herd to a 63-year low two years later - driving up cattle and beef prices
"We're not there
yet in terms of this drought, but continued dried conditions will lead
to that eventually," he said.
Meanwhile, each passing
day claims more grazing land that is scattering animals to other states
to be fed, watered and in some cases ultimately processed.
North Dakota Governor
Doug Burgum has declared a drought disaster, citing the state's climatologist
who expects drought conditions to continue at least through late October.
18th: "Shootin' the Bull" Weekly Analysis
|In my opinion, this
weeks lower trading is perceived to be brining the major wave 2 closer
to fruition than beginning a new move to the down side. It is rare
to have such a definable situation. The hard pull on feeder cattle
the first half of the year has produced numbers of fats to be marketed.
This is anticipated to make for fewer placements over the next 3 months.
Next weeks on feed report is anticipated to start reflecting this.
When this begins to materialize, it is anticipated to be exceptionally
friendly towards first half of next year.
The chart pattern
on the fats is starkly different than that of feeders. The fats appear
to have made a simple zig-zag, A,B,C pattern. Most contract months
have now printed 5 waves down of the C wave as of Thursday's close from
their respective July 20th high. A close above $111.47 December will
suggest the decline is complete and to anticipate a higher trade.
My analysis suggests the boat is significantly overloaded to one side.
That is perceived both in price and consensus.
The feeder market
remains the better market. It lagged the most in the spring rally,
but has held together better during this correction. The pattern
on the feeders appears to be sideways and marking time rather than a price
decline. This is perceived due to the heavy pull the first half of
the year. Were the second half of the year to begin to experience
renewed demand, I would anticipate a harder pull on feeders to meet the
demand. Having some confirmation that the sale of JBS is in the works
leads me to anticipate the new owners having an affiliation with China
in some form. Were this to be true, the sideways pattern would have
greater importance towards it being a marking of time.
A marking of time
suggests that price superseded conditions and needed to stall while the
conditions strengthen. Conditions are anticipated to strengthen going
forward. So, with feeders having set a new low in this three week
decline, or for some a new low from the contract high, they still remain
elevated from contract low. This is friendly. Like the fats,
the boat appears a little one sided. A trade above this weeks high
of $146.50 January will lead me to anticipate the major wave 2 correction
complete. I urge feed yard managers to look into owning the discount
of the futures with options now. Were the January contract to exceed
$146.50, I will recommend being a buyer.
I was so wrong on
corn it wasn't even funny. The sideways price range of corn is so
entrenched that it will be more than interesting to see what traders do
at $3.58 December. A break of and it will be the first time December
corn has traded out the range since being established between September
of '15 to today. Of the only positive aspect I can find with me having
been so wrong was that livestock producer's won't have to worry with high
feed costs for a while longer at least.
Swift is a commodity broker and consultant with Swift Trading Company
in Nashville, TN. Mr. Swift authors the daily commentaries "mid day cattle
comment" and "Shootin' the Bull" commentary found on his website @ www.shootinthebull.com
investment in futures contracts is speculative, involves a high degree
of risk and is suitable only for persons who can assume the risk of loss
in excess of their margin deposits. You should carefully consider
whether futures trading is appropriate for you in light of your investment
experience, trading objectives, financial resources and other relevant
circumstances. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE
18th: Closing Futures Summary
& Management LLC
|Live cattle futures settled mixed Friday
as nearby contracts were lower and back months higher. Aug lost 3.05% on
the week, as cash trade was weaker. Feeder cattle futures were mixed as
well with Aug up 2.5 cents and other front months lower. The CME feeder
cattle index was 36 cents higher than the previous day at $144.80 for August
17. Wholesale beef prices were lower again in the Friday afternoon report,
with choice down $1.34 at $194.29 and select boxes $1.70 lower at $192.50.
The CH/SE spread is now at $1.70. Cash sales of $110-$110.50 were reported
across most regions yesterday, down $5 from last week. Weekly FI cattle
slaughter is estimated at 634,000 head, 7,000 fewer than last week but
32,000 larger than the same week last year. Thursday’s export sales report
showed Japan, again the lead buyer at 3,000 MT, as their tariff on frozen
beef was increased to 50% on Aug 1. We are assuming that these latest purchases
are either fresh beef (not affected by the tariff increase) or to price
|Lean hog futures ended the week with most
front months a quarter to 80 cents lower and back months higher. Nearby
Oct was down 3.64% since last Friday. The CME Lean Hog Index for 8/16 was
33 cents lower than the previous day at $83.70. The USDA pork carcass cutout
value was $1.83 lower in the Friday afternoon report, with a weighted average
of $90.14. The loin and picnic were slightly lower, with the rib down $8.90
and belly $10.98 lower. The national base hog carcass was down $2.06 at
$73.34 in the PM report. FI hog slaughter is estimated at 2,332,000 through
Saturday, 60,000 head larger than the previous week and up 37,000 from
the same week in 2016.Argentina agreed to open their boarders to US pork
for the first time in 25 years, with initial estimates a cautious $10 million
per year. Spec traders added another 5,663 contracts to their net long
position in lean hog futures and options as of Tuesday, to +81,149 contracts.
|Corn futures closed Friday with most contracts
1 1/4 to 1 3/4 higher. Nearby Sep lost 2.43% on the week. Friday’s Commitment
of Traders report indicated managed money backing off their net long position
by another 27,271 contracts in corn futures and options trading. They had
net position of +39,802 contracts as of Tuesday August 15. On Friday, China
sold 494,714 MT of corn from 2013 and 2014, which was 40.25% of the more
that 1.229 MMT offered. The Buenos Aires Grain exchange estimates the Argentine
corn harvest at 85.4% complete.
Wheat futures saw fractional gains in most
KC and CBT contracts on Friday, as their respective Sep contracts were
down 6.06% and 5.29% since last Friday. MPLS was 1 1/2 to 2 3/4 cents lower
on the day, with Sep down only 0.78% on the week. As of Tuesday, spec funds
were reporting a net position of -34,236 contracts in Chicago wheat futures
and options, 20,135 more bearish than the previous week. In KC wheat futures
and options, they were shown to lower their net long position by 14,326
contracts to +34,609 contracts. BAGE lowered their Argentine wheat planting
estimate to 13.22 million acres. Australia’s production is estimated at
22 MMT according to a private analyst, vs. the USDA’s 23.5 MMT. Saudi Arabia’s
tender for 480,000 MT of wheat will close today.
17th: Multitude of Factors Impact U.S.- Australia Competition in Japan
-- Farm Bureau Economist
In the wake of the
Japanese safeguard tariff on U.S. frozen beef, discussions have focused
on the relative change in tariff values that impact frozen beef. For those
of you who may have missed it, Japan, beginning on August 1 temporarily
increased the U.S. tariff on frozen beef imports from 38.5 percent to 50
percent until the end of the Japan’s fiscal year (March 31). Safeguard
tariffs are implemented when the import volume exceeds a predetermined
This safeguard measure
only affects countries without free trade agreements with Japan, which
includes the U.S., Canada and New Zealand. Countries that have free trade
agreements with Japan, such as Australia, will not experience a change
in their negotiated frozen beef tariff levels. This is important because
Japan is a major destination for U.S. beef, representing 20 percent of
frozen exports and over 30 percent of fresh beef exports. USMEF estimates
the tariff rate change will increase the price of U.S.-produced short plates
by 17 cents per pound, an 8 percent increase.
The U.S. is the second
largest supplier to Japan, accounting for approximately 23 percent of beef
consumption while Australia is closer to 35 percent according Meat and
Livestock Australia Market Snapshot. The tariff change does throw salt
in the wound of the U.S. backing out of TPP and highlights the need for
further work to be done to maintain market access to critical U.S. markets.
Free trade agreements
offer some consistency in market access, but before we assume how much
market share we will lose to Australia, we should consider all the moving
parts at play. The exchange rate is a big one, but also something, that
on balance hasn’t changed much in recent years. Australia has enjoyed a
significant currency advantage over the last four years relative to the
U.S. Figure 1 shows the Australian and U.S. dollar converted to Japanese
yen. The U.S. dollar has been about 30 percent more expensive relative
to Australia in 2017. Currency exchange rates go beyond affecting
a specific product. They also fluctuate considerably, cannot be negotiated,
and affect not only the relative value of currencies with trading partners
but also competitors. Since Australia has enjoyed a significant currency
advantage in the last four year, the launch of this safeguard further disadvantages
U.S. frozen beef to Australian beef from a pricing standpoint. The Australian
dollar was trading at $1.26 per U.S. dollar during the first week of August.
The primary loss
of market share is predicted to come from U.S. short plates, a product
preferred in gyuden beef bowl restaurants and heavily used by Japanese
consumers. As stated above, short plate prices are predicted to rise
8 percent from the tariff increase. However, that’s not to say the value
of U.S. short plates will fall to zero. Other markets could open up in
the wake of Australia devoting more product to the Japanese market – creating
an opportunity for the U.S. to backfill residual demand globally.
From a value perspective,
short plate prices are also unlikely to fall below the price of 50 percent
lean ground beef price, because there is still value in grinding the product
and finding a home on the domestic market.
Japanese buyers also
have the choice between chilled and frozen, as well as grass-fed beef and
grain-fed. Japan is a much larger chilled market for Australia then frozen.
Chilled product represents about 61 percent of the exports by value, compared
to 39 percent frozen product according to Meat and Livestock Australia.
On a volume basis, the division of grain to grass varies between chilled
and frozen as well. About 32 percent of the chilled beef exported to Japan
is grain-fed compared to only 17 percent of frozen beef over the 2016 calendar
year. This means the U.S. shipped an additional 46 thousand metric tons
of frozen grain-fed beef into Japan than Australia did in 2016. Figure
2 shows the 2016 comparison of grain-fed and grass-fed trade volumes.
Trade matters are
often complicated and involve far more than supply and demand of the underlying
commodity. Without question, the safeguard tariff makes U.S.-produced
beef less competitive and more expensive in Japan. However, it signifies
a good thing: so far during 2017, the U.S. and other countries have shipped
more beef to Japan than in 2016 thereby triggering the safeguard. Year
to date, U.S. exports to Japan are up 13 percent for frozen beef and 40
percent for fresh/chilled compared to last year. Variety meats are also
not under safeguard measures and have also seen gains in the Japanese market.
Fresh, chilled offal is up 13 percent year to date in 2017, tongues are
up 22 percent, and livers are up 9 percent.
The safeguard measure
is neither a positive precedent nor is it a dire setback. This safeguard
is due to lift at the end of March 2018 and although fresh/chilled beef
could trigger an additional safeguard measure, for now, U.S. chilled beef
is enjoying a vast expansion into the Japanese market to the tune of 40
percent year to date.
Summer weather takes
a toll on pastures during this time of the year and this year is not different.
USDA currently estimates that 47% of pastures and ranges are in excellent
or good condition, 4 points less than the same time last year. Current
conditions still are above that 10 year average but, as with corn, one
needs to recognize that the long run average includes that disastrous 2012
year when good/excellent rating dropped to under 20%. Current pasture rating
is the worst since 2013. Deteriorating pasture conditions and deteriorating
profit outlook could continue to put pressure on cow-calf operators, pushing
calves to market earlier than expected and, in some cases, forcing producers
to change their plans about expanding the beef cow herd. Low feed costs
and ample hay supplies have bolstered calf supplies in the last three years.
But much as we would like that to be the case, weather patterns turn and
invariably this directly impacts cattle production (pastures/corn) and
hog / chicken production (corn).
16th: U.S. Trade Envoy Says NAFTA Has Failed Americans
U.S. President Donald
Trump’s top trade official laid down a hard negotiating line for revamping
the North American Free Trade Agreement on Wednesday, saying that major
changes were needed to slash U.S. trade deficits and boost U.S. content
U.S. Trade Representative
Robert Lighthizer said NAFTA had “failed many, many Americans” and Trump
was not interested in merely tweaking the 23-year-old pact, and would seek
major changes that would increase North American and U.S. content for autos
and strong labor standards.
“We need to ensure
that the huge trade deficits do not continue and we have balance and reciprocity.
This should be periodically reviewed,” Lighthizer said in opening remarks
at NAFTA negotiations in Washington. “The rules of origin, particularly
on autos and auto parts, must require higher NAFTA content and substantial
16th: US Beef Prices Rise in Japan as Tariff Kicks-in
JAPAN - Wholesale
prices for US beef are climbing even higher in Japan, fed by the country's
new additional tariff on American frozen beef as well as continued robust
demand from restaurants.
tariff took effect on 1 August, as the nation's quarterly import volume
of US frozen beef increased in the April-June period by more than the 17
per cent threshold that triggers this safeguard mechanism.
According to Nikkei
Asian Review, wholesale prices of American frozen short plate beef came
to around 800 yen ($7.24) per kilogram in mid-August, rising 3 per cent
from July. Prices also were up 40 per cent on the year, riding strong demand
from the restaurant industry in Japan and abroad.
US beef accounts
for around 40 per cent of Japan's import market. Even cheaper varieties
of Japanese beef cost almost double that of US imports, and they are not
used in eateries serving low-cost meals such as beef bowls.
The higher tariffs
have been largely ineffective in protecting Japan's livestock farmers,
failing to push retailers and restaurateurs to buy more domestic beef.
Edoichi, operator of restaurant chain Stamina-Taro, may source some of
its barbecued beef from Australia and Mexico, while adding more pork and
chicken. Supermarkets, meanwhile, are thinking about offering fewer discounts.
16th: Can & Should Packers Pay More for Cattle?
Can beef packers
pay a bit more for cattle and still be stay in the black? I think most
would agree that the answer to that is yes (see chart). But that does not
mean that they should do that, the same way that feedlots should not sell
feds at a so called “reasonable” price, or cow-calf operators should not
part with their calves at what a buyer likes to think is a “fair” price.
What we should want is a market that is as frictionless as possible, free
of market distorting influences. What would it take for beef packers to
pay more for cattle than they are today? Better beef demand surely is a
good answer. After all, excellent demand going into the spring caused packers
to up their bids for cattle in order to fill large orders from retailers,
foodservice operators, and foreign buyers. In the process packer margins
were squeezed, albeit only for a few short weeks.
In the short term
the challenge for the market is that retail feature activity slows down
after the 4th of July and it does not get a whole lot better in August
either. The retail activity index for the week ending August 11 was down
8% from a year ago but in line with the five year average. Retail activity
normally improves in October as retailers tend to promote more beef items
before they start to fill the meat case with turkeys, hams and other seasonal
is also an important factor. It is no big secret that any negotiation,
be this for a house, a tract of land or a lot of cattle, hinges on real
and perceived leverage. Large slaughter runs in March and April caused
feedlots to get extremely current with their marketings. If packers wanted
to buy more cattle, they had to open their wallets and pay up enough to
encourage feedlots to dig deeper into their on feed supply. Packer margins
have declined from the all time record levels established in June but they
are still above year ago levels.
But before we go
more into this, one point of clarification. The calculations in the chart
above are simply an approximation. Every packer faces a different cost
structure. In addition, not all cattle that come through the door in a
given week have the same price tag. When calculating the gross margin number
above, we make some generalizing assumptions and it is good to know what
those assumptions are.
For one, we need
to assign a price to the average price the packer paid for cattle. The
average feedlot price we used was based on negotiated trade, both live
and dressed, calculated at $182/cwt dressed carcass or around $115.5 live.
On the revenue side, we use the comprehensive cutout value, which last
week was $203.68 plus the by-product credit, last week estimated at $11/cwt
live or around $151 per head. October fed cattle futures are currently
trading around $109/cwt. All things being equal and assuming packers get
a similar margin they are getting today, this would imply market is pricing
the October comprehensive cutout at around $195.
Last year the comprehensive
cutout traded at about the same level as choice in October. The question
at this point is whether cutout values will continue to come under additional
pressure in September, which is a function of domestic/export sales after
Labor Day. And whether feedlots manage to gain ground in terms of currentness
so as to be in a better negotiating position in Q4 when holiday demand
for middle meats kicks in.
15th: Bad News Priced into the Market?
Cassie Fish --
Perhaps CME live
cattle futures have priced the bad news for now. In early trade, most active
Oct LC traded down to $105.75, not far from key long-term support of $105
only to rally a fast 165 points. Not only is $105 big support, it has been
the downside technical objective of many since the market topped in June.
Now, the market is trading back above $107 but has yet to fully penetrate
the key overhead resistance of $107.97 to $108.60.
Futures are ignoring
weaker auction barn sales in the Midwest today, yesterday’s Iowa trade
of $110 with time and today’s Texas bids of $110, a harsh $5 lower than
last week’s average negotiated fed cattle price of $115.17.
Futures are significantly
oversold, a ton of open interest has come out of the market for a month
and the selling appears to have exhausted itself for now. If the board
holds, closes well and builds on today’s action, then another short-term
low is likely in.
This week’s kill
may top last week’s 641k, which was the largest of 2017, as the market
absorbs its large supply into the pipeline. Last week’s USDA Comprehensive
Boxed Beef report showed the third largest volume of 2017 and a pick-up
in long-term forward sales as value attracts end users, seemingly a little
early this year.
It is not new news
to this market that fed cattle supplies are their largest of the year or
that packer has the upper hand, which is why Aug LC traded $7 under last
week’s cash average. But the gate rush fueled by fear inspiring cattle
feeders to avoid a fall wreck by aggressively selling cattle, will go a
long way in shortening the “wall” of cattle. August weakness may turn out
to be a worthy sacrifice and go a long way to cementing a Q3 low this year.
15th: Congress... Stop Horsing Around
Dr. William James
Dr. William James
capped a 28-year career at USDA’s Food Safety & Inspection Service
(FSIS) as the agency’s chief veterinarian. During his career in FSIS he
worked in the offices of Field Operations, Policy, Science, and International
Affairs. James supervised district offices, coordinated animal welfare
enforcement throughout the country, directed ante-mortem and post-mortem
inspection of livestock and poultry, implemented pathogen and residue sampling
and had executive oversight of import and export issues for FSIS.
Kids of my generation
grew up on a steady diet of westerns. That’s a figure of speech.
Trigger and Silver were not for dinner. Westerns aren’t nearly as popular
today, but horses still are.
Under public pressure,
Congress passed an appropriations act in 2005 that forbid FSIS from spending
any of its budget to inspect horses at slaughter. Since horses are
required by the Federal Meat Inspection Act to be inspected and passed
before entering commerce, slaughter of horses for meat was effectively
ended in the U.S.
USDA tried an end-run
around the intent of the act by issuing a regulation permitting horse slaughter
plants to pay for inspection. But Congress wasn’t happy with that,
and USDA backed off.
Since then, the story
of horse slaughter has taken some twists and turns. Right now, the
House (yea) and Senate (nay) are squabbling over resuming horse inspection.
Since the prohibition
on slaughter in the U.S., it’s estimated that over 100,000 horses are exported
to Mexico and Canada each year to become meat. That’s a long haul
to meet the same end they’d have met here.
Also, thousands of
horses have been abandoned since 2005 that would have been sold for slaughter.
They’ve been found emaciated, sick, and injured. Slaughter would
have been more humane.
Before the ban, virtually
all of our horse meat was exported to Europe. The Euros manufactured
a scare about hormone use in cattle because they didn’t want U.S. beef.
But, real residue problems in horses were ignored because the French in
particular coveted our “viande chevaline.” And, news of criminal
convictions in Europe over the past few years reveals horse meat is a cheap
substitute for beef.
If Congress permits
the resumption of horse slaughter in the United States, it will be a difficult
start-up. For one thing, companies will need to make investments
in an industry that could be defunded again in a few years.
For another, horses
aren’t raised for meat. FSIS recognized that horses had the highest
level of residue violations of all the slaughter classes. As we were
looking at regulatory options, Congress made further considerations unnecessary
with the ban. If horse slaughter resumes, expect FSIS to take a stronger
regulatory posture than before the ban.
So, the abandonment
and misery of horses will continue in this country. Economic uncertainty
due to the whims of Congress, and tight regulatory enforcement by FSIS
cloud the future of horse slaughter in the United States if the “yeas”
have it. Shipment of live horses over long distances to other countries
for slaughter will continue if the “nays” have it.
It doesn’t matter
whether the House or Senate wins, because the “neighs” will continue to
15th: Weekly Corn Crop Condition Report
15th: BQA Reports Improvement in Cattle Branding
In 2016, nearly three
quarters of all harvested steer and heifer beef animals did not contain
any hot-iron branding marks.
According to the
report, in 2016, most of the cattle branding was located on the butt of
the animal; the hide and leather industry’s preferred location for branding.
“The positive findings in the recent Beef Quality Assurance (BQA) report
are a testament to the U.S. cattle industry’s concerted efforts to improve
producer value and returns to all sectors of the beef industry,” said Stephen
Sothmann, President, USHSLA. “The data reveals a major shift in the U.S.
beef herd as U.S. cattle producers have become increasingly aware that
their branding decisions can have a major impact on the overall economic
value of the animal”, he added.
According to the
BQA report, 74.3% of cattle had no brand, meaning a marked improvement
from the 55.2% in 2011 and compared with the 55% of non-branded cattle
back in 1991, when the first report was issued. Also, the number of cattle
with multiple brands is reported to have fallen from 9.9% in 2011 to 1.6%
in 2016. The number of hides with “side brands” (located on the side, shoulder
or rib cage area of the animal) decreased from nearly 14% in 1991 to 6%
in 2016. Side brands often pose challenges to tanners, as their location
reduces the available portion of the hide that can be used to produce leather.
The difference in
brand locations affects the overall economic value of the animal. No brands
on the hide will garner the highest price per head while, on average, butt
brands are US$1-2 per piece lower, and side branded hides can be range
from US$10-12 lower. The BQA report, which captures the lost value of branding
practices by the U.S. cattle industry, estimates that producers lost nearly
US$1 dollar per head in 2016 as a result of branding practices, however,
due to increased awareness by cattle producers, the value lost is reported
to have shrunk from US$2.43 per head since the first BQA report in 1991.
The U.S. hide and
leather industry exports approximately 95% of all hides that are produced
in any given year. In 2016, this represented a total market value of over
US$2 billion, with China being the largest buyer; importing nearly 60%
of all hides produced.
14th: Searching for the Seasonal Lows
Ag Center Cattle
A lot of time has
been spent by a lot of people analyzing the seasonal patterns for cattle
prices. Studies of the spring highs and the summer lows keep market participants
guessing and the forecasters predicting, but observers note, with little
success from either party. This week's decline in fed prices was a reminder
of how vulnerable the market can be to weakness in price. Those who believed
the market would hang in the high teens/low 120s for the balance of the
year are now looking at a price level that could find prices $5 under last
year by next week and closeouts deep in the red soon after.
The industry as a
whole is much more protected this year with many, fearing a decline from
increasing numbers of cattle on feed, are short the board. It is likely
over half of the live segment of the industry is fully hedged, leaving
the balance divided between partially hedged and some who are open. Breakevens
are working higher from this point forward and many of the cattle to close
for the balance of the year have breakevens from $115-125 - a far cry from
the $107 posted on the October live cattle contract.
The question on all
minds is how low can it go? The answer will rest with two primary
factors -- carcass weights and beef demand. Carcass weights are currently
8# under last year but rising faster than last year and are expected to
match last year's record number soon. Total beef tonnage is key to maintaining
the important supply/demand balance. Cow slaughter is up +10% and expected
to remain above last year. Continued declines in cattle prices will certainly
encourage more cow culling this fall.
Beef demand has been
good all year. Exports have exceeded prior year's numbers throughout the
year but warning signs are on the horizon. The U.S. producers refuse to
support National ID and this costs us foreign sales every day. Japan, our
largest trading partner, has increased tariffs. Imports are likely to increase
as Australia rebuilds its herd following a drought. Domestically, unemployment
is down and people are active buying beef and protein is increasingly popular
in the diet.
Beef packers are
positioned to get more than their fair share of the margins available to
beef production because slaughter capacity is currently quite low when
compared to the increasing size of the herd. The industry needs to see
a new beef plant or the reopening of an old beef plant. Competition will
help keep margins across all sectors in line.
Finally, the CME
will play a role in price and production. Premium deferred cattle contracts
will cause more holding at the feedyard level hoping for a better basis
and taking cattle to heavier weights. Discounted futures serve the opposite
effect. It will encourage earlier marketings. October will soon become
the spot month and is trading $8 under this week's cash -- a good reason
to pull sales forward.
10th: USDA Crop Production Report Sends Grain Lower
Down 7 Percent from 2016
Up 2 Percent from 2016
Up 20 Percent from 2016
Production Up 1 Percent from July Forecast
is forecast at 14.2 billion bushels, down 7 percent from last year. Based
on conditions as of August 1, yields are expected to average 169.5 bushels
per acre, down 5.1 bushels from 2016. If realized, this will be the thirdhighest
yield and production on record for the United States. Area harvested for
grain is forecast at 83.5 million acres, unchanged from the June forecast
but down 4 percent from 2016.
is forecast at 4.38 billion bushels, up 2 percent from last year. Based
on August 1 conditions, yields are expected to average 49.4 bushels per
acre, down 2.7 bushels from last year. Area for harvest in the United States
is forecast at a record high 88.7 million acres, unchanged from the June
forecast but up 7 percent from 2016. Planted area for the Nation is estimated
at a record high 89.5 million acres, also unchanged from June.
All cotton production
is forecast at 20.5 million 480-pound bales, up 20 percent from last year.
Yield is expected to average 892 pounds per harvested acre, up 25 pounds
from last year. Upland cotton production is forecast at 19.8 million 480-pound
bales, up 19 percent from 2016. Pima cotton production is forecast at 770,000
bales, up 35 percent from last year.
Buoyant US crop supply
hopes send corn, soy, wheat prices lower
All wheat production,
at 1.74 billion bushels, is down 1 percent from the July forecast and down
25 percent from 2016. Based on August 1 conditions, the United States yield
is forecast at 45.6 bushels per acre, down 0.6 bushel from last month and
down 7 bushels from last year.
Corn, soybean and
wheat futures tumbled after US officials, in a much-anticipated briefing,
pegged domestic supplies of all three crops above market expectations –
with world wheat supplies supported too by a huge upgrade to Russia's harvest.
Corn futures for
December tumbled 2.6% to $3.76 ¼ a bushel in Chicago, where soybean
futures for November stood down 2.3% at $9.51 a bushel.
Wheat futures for
September dropped 2.0% to $4.50 ¼ a bushel in Chicago, and by 2.6%
to $7.15 ¼ a bushel in the Minneapolis exchange, which trades the
spring wheat which has been particularly closely watched by investors thanks
to dryness in major growing regions in the US and Canada.
The declines followed
crop estimates in the US Department of Agriculture's monthly Wasde report
on world crop supplies and demand which reversed ideas of a drop in world
soybean supplies in 2017-18, and lifted expectations for the rise in wheat
In corn, the estimate
for US stocks at the close of 2017-18 was reduced, but by far less than
investors had expected.
Indeed, rather than
cutting its estimate for the US corn yield by 2.5 bushels per acre, as
investors had expected after a dry July for much of the Midwest, the USDA
downgraded the forecast by a modest 1.2m bushels per acre, to 169.5 bushels
While South Dakota,
Iowa, Minnesota, and Illinois "are forecast to have yields below a year
ago… the projected yield for Indiana is unchanged relative to last year,
while Nebraska and Ohio are forecast higher", the USDA said.
While the yield reduction
translated into a harvest downgrade of some 100m bushels, the cut was offset
in part by a drop in expectations for corn exports and for domestic feed
use of the grain.
Although the US corn
inventory forecast for the close of 2017-18 was downgraded by 50m bushels
to 2.27bn bushels, that was well above the 2.00bn-bushel figure the market
For soybeans, the
USDA actually increased its domestic yield estimate, by 1.4 bushels per
acre to 49.4 bushels per acre, rather than cutting it to 47.5 bushels per
acre as traders had forecast.
While some of the
extra soybeans were seen being used up by increased export prospects, thanks
to "lower prices", the upgrade translated into a 15m-bushel increase to
475m bushels in the estimate for US soybean inventories at the close of
That was 50m bushels
more than investors had expected.
The upgrade fuelled
a 4.3m-tonne hike to 97.8m tonnes in the estimate for world soybean inventories
at the close of 2017-18, well ahead of market forecasts.
For wheat, meanwhile,
although the estimate for US output in 2017-18 was cut by 21m bushels,
that was less than 50m-bushel downgrade that the market had expected.
Figures for both
winter and spring wheat came in ahead of investors' forecasts.
And global supply
prospects received a mammoth boost from an 8.6m-tonne hike to a record
77.5m tonnes in the forecast for Russian wheat output this year.
The USDA flagged
official Russian reports of "high winter wheat yields in the Southern,
North Caucasus, and Central Districts of Russia.
"In addition, satellite
imagery indicates outstanding conditions and high potential yields in the
country's spring wheat zone, including the Siberian, Ural, and Volga Districts."
10th: USDA World Agricultural Supply & Demand Estimates
AND DAIRY: The forecast for total meat production in 2017 is raised
from last month, as increases in commercial beef and broiler production
more than offset declines in pork and turkey production. The increase in
beef production reflects relatively large cattle placements in the second
quarter which will likely impact fourth quarter cattle slaughter. Second
quarter broiler production is raised slightly based on June production
data, but no change is made to the outlying quarters. Pork production is
reduced on lower expected slaughter in the third quarter. Forecast turkey
production is reduced on a slower-than-expected recovery in demand and
relatively poor returns to producers. Egg production is increased modestly
on recent hatchery data. For 2018, the beef production forecast is raised
from the previous month, as expected higher placements in late 2017 and
early 2018 result in higher steer and heifer slaughter. Pork, poultry,
and egg production forecasts for 2018 are unchanged from the previous month.
For 2017, beef imports
are raised, as higher-than-expected shipments of lean processing beef from
Oceania in June are expected to carry into the third quarter. The beef
export forecast is lowered from last month on recent trade data and an
expected slowdown in global demand for the remainder of 2017. Pork imports
are raised slightly on recent trade data. The second quarter pork export
forecast is adjusted for June data, but the forecast for the remainder
of the year is unchanged. The broiler export forecast is reduced on weak
foreign demand. Turkey exports are adjusted to reflect June data. For 2018,
the beef import forecast is unchanged from the previous month while exports
are lowered slightly. Pork, poultry, and egg trade forecasts are unchanged
from the previous month.
Fed cattle prices
are reduced in 2017 and 2018 as current prices have weakened and larger
expected supplies of fed cattle are expected to pressure prices. Hog price
forecasts are raised for 2017 and 2018 on continued strength in demand.
The annual broiler price forecast for 2017 is raised, but the price forecast
for 2018 is unchanged. The turkey price forecasts for 2017 and 2018 are
lowered on slow recovery in demand. The egg price forecast for 2017 is
raised, but no changes are made to the 2018 price forecast.
The milk production
forecasts for 2017 and 2018 are reduced from the previous month as slow
growth in milk per cow more than offsets increases in dairy cow numbers.
For 2017, fat basis exports are raised from the previous month on higher
butter and anhydrous milk fat shipments. Fat basis imports are unchanged.
The skim-solid basis export forecast for 2017 is lowered on weaker than
expected whey sales. The import forecast is unchanged. For 2018, fat basis
exports are raised on stronger shipments of a number of dairy products.
Fat basis imports are lowered slightly. Skim-solid basis exports are raised
on expected stronger WASDE-568-5 sales of nonfat dry milk (NDM) and
other dairy products while imports are unchanged from last month.
Butter and cheese
price forecasts are raised for 2017 and 2018 as demand strength is expected
to carry into 2018. The 2017 and 2018 NDM and whey price forecasts are
reduced from the previous month on weak demand. The 2017 Class III price
forecast is unchanged at the midpoint, but the 2018 price is lowered as
lower whey prices more than offset higher cheese prices. Class IV price
forecasts for 2017 and 2018 are raised as stronger forecast butter prices
more than offset lower NDM prices. The all milk price is raised to $17.80
to $18.00 per cwt for 2017, but is unchanged at $18.00 to $19.00 per cwt
2017/18 U.S. wheat supplies are decreased this month on lower production,
down 21 million bushels to 1,739 million. The August NASS production forecasts
for durum and other spring wheat indicated a significant decline compared
to last year, primarily due to continued severe drought conditions affecting
the Northern Plains. Partially offsetting this decrease is higher winter
wheat production, on increased yields, with most of the production increase
for white wheat. Food use estimates for both 2016/17 and 2017/18 are reduced,
based primarily on the August 1, NASS Flour Milling Products report. The
other wheat usage categories for 2017/18 are unchanged this month. Projected
2017/18 ending stocks are decreased 5 million bushels to 933 million. The
2017/18 season-average farm price is unchanged at the midpoint of $4.80
per bushel and the projected range remains at $4.40 to $5.20.
Global 2017/18 wheat
supplies increased significantly, primarily on an 8.6-million-ton production
increase in the Former Soviet Union (FSU). Russian production is a record
77.5 million tons, surpassing last year’s record by 5.0 million. Winter
wheat yields are forecast higher for both Russia and Ukraine, based mainly
on harvest results to date. Additionally, spring wheat conditions have
remained very favorable for both Russia and Kazakhstan, resulting in higher
production forecasts. Canadian wheat production is reduced 1.9 million
tons to 26.5 million on the increasing intensification of drought conditions
in major production areas of the Prairie Provinces. The increased FSU production
more than offsets reduced production forecasts in Canada, EU, and U.S.,
raising 2017/18 global production by more than 5.0 million tons to 743.2
Foreign 2017/18 trade
is increased on higher exports for Russia, Ukraine, and Kazakhstan more
than offsetting reductions in Canada and EU. Projected imports are raised
for several countries, led by Indonesia and Nigeria. Total world consumption
is projected higher, primarily on greater usage by Russia, Indonesia, and
Nigeria. Projected global ending stocks are 4.1 million tons higher this
month at 264.7 million, which is a new record.
This month’s 2017/18 U.S. corn outlook is for lower supplies, reduced feed
and residual use and exports, and a decline in ending stocks. Corn production
is forecast at 14.2 billion bushels, down 102 million from the July projection.
The season’s first survey-based corn yield forecast, at 169.5 bushels per
acre, is 1.2 bushels lower than last month’s trend-based projection. This
month’s Crop Production report indicates that South Dakota, Iowa, Minnesota,
and Illinois are forecast to have yields below a year ago. The projected
yield for Indiana is unchanged relative to last year, while Nebraska and
Ohio are forecast higher. Sorghum production is forecast 13 million bushels
higher with the forecast yield 2.6 bushels per acre above last month’s
Projected feed and
residual use for 2017/18 is lowered 25 million bushels on a smaller crop.
Exports are forecast down 25 million bushels, reflecting the increased
competitiveness of supplies in Argentina and Brazil and the low level of
new-crop outstanding sales. With supplies falling faster than use, ending
stocks are reduced 52 million bushels. The projected range for the season-average
corn price received by producers is unchanged at $2.90 to $3.70 per bushel.
This month’s 2017/18
foreign coarse grain outlook is for virtually unchanged production, lower
trade, and greater stocks relative to last month. EU corn and barley production
are reduced. Canada corn production is down on lower projected harvested
area. Corn and barley production forecasts are raised for Russia based
on higher corn area and favorable growing conditions for barley. Ukraine
corn production is unchanged as a reduction in projected yield is offset
by increased area. For 2016/17, corn production is increased for Brazil
based on second crop corn harvest results to date.
Major global corn
grain trade changes for 2017/18 include corn export reductions for the
EU, Serbia, and Canada. More than offsetting are increases for Ukraine
and Russia. Brazil’s corn exports are raised for 2016/17 based on record-high
shipments observed for the local marketing year beginning in March 2017.
Corn imports for 2017/18 are raised, mostly reflecting increases for the
EU and Iran. Foreign corn ending stocks are raised from last month. Historical
revisions are made to corn stock estimates for Ukraine to better reflect
statistics published by the government.
2nd: Calf & Yearling Prices: Mid-year Review and Outlook
At mid-year, U.S.
calf and yearling prices were similar to a year ago, but had rebounded
strongly from the dismal market of October and November 2016. Underpinning
higher prices was stronger than expected fed cattle prices and profits
posted by cattle feeders. In the Southern Plains, yearling prices (700-
to 800-pound steers) averaged below a year earlier during the first three
months of 2017 and essentially equal to 2016’s for the second quarter.
Calf prices (500-to 600-pound steers) were more than $30.00 per cwt. below
2016’s in the first quarter of this year, but in the second quarter posted
a year-over-year decline of only $3.40 per cwt.
If fed cattle prices
remain above a year ago for the balance of 2017, look for that to support
calf and yearling prices compared to a year ago, too. Of course, prices
last year were very depressed. Nationally, LMIC is currently forecasting
that yearling prices will be at or above a year ago for the balance of
2017. Current quarter (July-September) calf prices are likely to be unchanged
to higher, compared to 2016’s. In 2017’s the fourth quarter, Southern Plains
calf prices (500- to-600 pound steers) are currently forecast to be $8.00
to $12.00 per cwt. above 2016’s.
Three usual drivers
of calf and yearling prices in 2018 will likely be at play: 1) fed cattle
prices; 2) size of the calf crop; and 3) feedstuff costs. Larger domestic
supplies will likely pressure fed cattle prices lower compared to this
year’s. How much prices slip depends mostly on beef demand, both domestic
and foreign. Currently, LMIC is forecasting the annual average fed steer
price in 2018 will be 2% to 6% below 2017’s. The 2017, U.S. calf crop was
bigger than 2016’s, and 2018’s will increase, again. Feedlots and backgrounders
could face higher feedstuff costs in 2018 which may provide some additional
headwind to prices. For planning purposes, look for some erosion in calf
and yearling prices in 2018 compared to 2017’s.
24th: USDA Cold Storage Report
As of June 30th,
Total red meat
supplies in freezers were down 3 percent from the previous month and down
7 percent from last year.
Total pounds of beef
in freezers were up 1 percent from the previous month but down 10 percent
from last year.
Frozen pork supplies
were down 5 percent from the previous month and down 4 percent from last
Stocks of pork bellies
were down 29 percent from last month and down 65 percent from last year.
Total frozen poultrysupplies
were up 4 percent from the previous month and up 4 percent from a year
Total stocks of chicken
were up 3 percent from the previous month but down 1 percent from last
Total pounds of turkey
in freezers were up 7 percent from last month and up 12 percent from June
21st: USDA Mid-Year Cattle Inventory Report
July 1 Cattle
Inventory Up 4 Percent from 2015
All cattle and calves
in the United States, as of July 1, 2017, totaled 103 million head. This
is 4 percent above the 98.2 million head on July 1, 2015.
All cows and heifers
that have calved, at 41.9 million head, are 5 percent above the 39.8 million
head on July 1, 2015.
Beef cows, at 32.5 million
head, are up 7 percent from two years ago.
Milk cows, at 9.40 million
head, are up 1 percent from 2015.
All heifers 500 pounds
and over, as of July 1, 2017, totaled 16.2 million head. This is 3 percent
above the 15.7 million head on July 1, 2015.
Beef replacement heifers,
at 4.70 million head, are down 2 percent from two years ago.
Milk replacement heifers,
at 4.20 million head, are unchanged from 2015.
Other heifers, at 7.30
million head, are 9 percent above two years earlier.
Calves under 500 pounds
in the United States, as of July 1, 2017, totaled 28.0 million head. This
is 5 percent above the 26.7 million head on July 1, 2015.
Steers weighing 500
pounds and over totaled 14.5 million head, up 3 percent from two years
Bulls weighing 500 pounds
and over totaled 2.00 million head, up 5 percent from 2015.
Calf Crop Up 3 Percent
Calves under 500 pounds
in the United States, as of July 1, 2017, totaled 28.0 million head. This
is 5 percent above the 26.7 million head on July 1, 2015. Steers weighing
500 pounds and over totaled 14.5 million head, up 3 percent from two years
ago. Bulls weighing 500 pounds and over totaled 2.00 million head, up 5
percent from 2015.
The 2017 calf crop in
the United States is expected to be 36.3 million head, up 3 percent from
last year's calf crop and up 6 percent from 2015. Calves born during the
first half of 2017 are estimated at 26.5 million head. This is up 4 percent
from the first half of 2016 and 8 percent above 2015. An additional 9.80
million calves are expected to be born during the second half of 2017.
Cattle and calves on
feed for the slaughter market in the United States for all feedlots totaled
12.8 million head on July 1, 2017. The inventory is up 6 percent from the
July 1, 2015 total of 12.1 million head. Cattle on feed, in feedlots with
capacity of 1,000 or more head, accounted for 84.5 percent of the total
cattle on feed on July 1, 2017. This is down 0.1 percent from 2015. The
combined total of calves under 500 pounds and other heifers and steers
over 500 pounds (outside of feedlots) is 37.0 million head. This is 5 percent
above the 35.4 million head on July 1, 2015.
21st: Cattle on Feed Report
Cattle on Feed Up 4 Percent
Cattle and calves
on feed for the slaughter market in the United States for feedlots
with capacity of 1,000 or more head totaled 10.8 million head on July 1,
2017. The inventory was 4 percent above July 1, 2016. The inventory
included 6.96 million steers and steer calves, up 1 percent from the previous
year. This group accounted for 64 percent of the total inventory. Heifers
and heifer calves accounted for 3.86 million head, up 11 percent from 2016.
Placements in feedlots
during June totaled 1.77 million head, 16 percent above 2016. Net
placements were 1.71 million head. During June, placements of cattle and
calves weighing less than 600 pounds were 375,000 head, 600-699 pounds
were 315,000 head, 700-799 pounds were 430,000 head, 800-899 pounds were
385,000 head, 900-999 pounds were170,000 head, and 1,000 pounds and greater
were 95,000 head.
Marketings of fed
cattle during June totaled 1.99 million head, 4 percent above
totaled 56,000 head during June, 8 percent
United States All
Cattle on Feed Up 6 Percent from 2015 Cattle and calves on feed for
the slaughter market in the United States for all feedlots totaled 12.8
million head on July 1, 2017. The inventory was up 6 percent from the July
1, 2015 total of 12.1 million head. Cattle on feed in feedlots with capacity
of 1,000 or more head, accounted for 84.5 percent of the total cattle on
feed on July 1, 2017. This is down 0.1 percent from 2015.
Feed Inventory in 1,000+ Capacity Feedlots as of July 1st
Millions of Head
Cattle Placed on Feed in 1,000+ Capacity Feedlots in June
Millions of Head
Cattle Marketed from 1,000+ Capacity Feedlots in June
Millions of Head
Feed by State as of July 1st
20th: Fed Cattle Market - Mid-Year Review
In the first quarter
of this year, the 5-market slaughter steer price was 8.8% below 2016’s.
Slaughter steers averaged above a year ago (up 4.0%) in the second quarter.
Those were stronger prices than forecast in late 2016. It appeared that
the cash market price was topping out in mid-March when the weekly 5-market
average hit $130.91 per cwt. (live basis) and prices did erode for a few
weeks. Then they surged higher. The weekly peak was $144.60, which was
posted the first week of May. By the last week of June the price
had fallen to $118.64 per cwt.
Steer and heifer
slaughter levels have been larger than expected so far this year, while
carcass (dressed) weights have been much lower than anticipated. Very strong
beef packer profits made packers aggressive buyers of slaughter ready animals
cattle feeders were willing sellers.
U.S. commercial cattle
slaughter in the first quarter was 7.3% above 2016’s. Average cattle dressed
weight declined 1.1% year-over-year, so beef production was 6.1% above
a year ago. The trend of higher slaughter levels compared to a year earlier
and lower dressed weights continued in the second quarter (slaughter up
5.8% and dressed weight dropped 2.2% year-over-year). In the second quarter,
U.S. beef production was up 3.4% from 2016’s. For the first half of 2016,
commercial beef output was just over 12.7 billion pounds, which was the
largest for the first six months of a calendar year since 2012.
Due to strong beef
exports and declining imported beef tonnage, U.S. per capita beef disappearance
in the first two quarters of this year in percentage terms grew much less
than production. Year-over-year, per person disappearance was up 3.3% in
the first quarter and the LMIC projects the second quarter will be up only
The LMIC is forecasting
U.S. commercial beef production will increase 2% to 3% in the second half
of 2017. In 2018, year-over-year quarterly production increases in the
3% to 5% range are currently forecast. If strong beef exports continue
to absorb most or all of the increase in per capita domestic supply, look
for fed cattle prices to remain above a year ago for the balance of 2017.
In 2018, larger domestic supplies will likely pressure prices lower compared
to this year.
U.S. Exports of
Beef & Pork Remain Strong
U.S. red meat export
tonnage continued to post year-over-year increases in the latest data compiled
by USDA, which is for the month of May. In their World Agriculture Supply
and Demand Estimates, USDA is forecasting that both beef and pork exports
(carcass weight) this calendar year will set new record highs.
Beef export tonnage
during May was 3.2% above a year ago. For the first five months of 2017,
U.S. beef export tonnage surged 19.5% year-over-year to nearly 1.1 billion
pounds (carcass weight equivalent).That slightly eclipsed the prior high
for January-May set in 2011.
Pork export tonnage
in May was 12.3% above 2016’s and year-to-date increased 12.1%. At over
2.4 billion pounds (carcass weight), U.S. pork exports so far this year
were the largest ever for the January-May timeframe (increased 3.0% from
the prior high set in 2012).
20th: USDA Livestock Slaughter Report
Record Total Red
Meat and Pork Production for June
meat production for the United States totaled 4.35 billion pounds in
June, up 3 percent from the
4.23 billion pounds
produced in June 2016.
at 2.28 billion pounds, was 4 percent above the previous year. Cattle
slaughter totaled 2.86 million
head, up 6 percent
from June 2016. The average live weight was down 13 pounds
from the previous year, at
Veal production totaled
6.3 million pounds, 1 percent below June a year ago. Calf slaughter totaled
40,400 head, up
7 percent from June
2016. The average live weight was down 23 pounds from last year, at 268
Pork production totaled
2.05 billion pounds, up 2 percent from the previous year. Hog slaughter
totaled 9.87 million
head, up 3 percent
from June 2016. The average live weight was down 1 pound from the previous
year, at 279 pounds.
Lamb and mutton production,
at 12.4 million pounds, was down 7 percent from June 2016. Sheep slaughter
188,000 head, 4
percent below last year. The average live weight was 132 pounds, down 4
pounds from June a year ago.
January to June
2017 commercial red meat production was 25.4 billion pounds, up 4
percent from 2016.
production was up 5 percent from last year, veal was down 2 percent,
pork was up 3 percent from last year, and lamb and mutton production was
down 5 percent.
13th: Drought Likely to Worsen in the Northern Plains
The Midwest is dividing
into three regions as the growing season continues this summer, and it
appears these divisions will grow more prominent throughout the summer.
The areas are:
The northern Plains,
including the Dakotas and Montana, where hot, dry weather has caused a
drought that ranges from moderate to extreme. Shown at right, the soybeans
in Wilmot, South Dakota, are thirsty for a rain.
The west, south-central
Midwest – eastern Nebraska, southern Iowa, and southern Illinois – where
dry conditions are being picked up on the drought monitor and some areas
are beginning to move into a moderate drought.
The northeastern Midwest,
spanning from Minnesota, down through Iowa, and across Illinois into Indiana,
where growing conditions are much more favorable.
“The rains this week
have gone a long way in improving soil moisture in a lot of places,” says
Dan Hicks, meteorologist at Freese-Notis Weather.
While most of the
Midwest is going to get some precipitation, there are a few places that
will be left out or only get minimal amounts, including southwest Minnesota,
northwest Iowa, northeast Nebraska, and southeast South Dakota.
Rain chances during
the next 48 hours are greatest for Indiana, Ohio, and southern Michigan,
where .5 to 1.5 inches are forecast. “As you move farther west, the amounts
tend to be lighter and more spotty,” says Hicks. “There is still the possibility
for some beneficial amounts in drier pockets of Iowa, eastern Nebraska,
and the southern half of Illinois.”
As the drought monitor
has been updated each week this summer, the yellow patch indicating dry
conditions has continued to creep across Montana, North Dakota, and South
Dakota as the center has turned darker and darker. Unfortunately for farmers
in these states, it doesn’t look like this will improve anytime soon.
“It’s hard to imagine
this getting better based on what the weather looks like,” says Hicks.
“I think the drought index will show worsening conditions through late
For the rest of this
month, the forecast is continuing to indicate below-normal rainfall combined
with above-normal temperatures, says Hicks. “There will be periods when
hot weather flairs up for three to four days and then cools back down,”
he says. “I don’t see much opportunity for the spring wheat crop to improve
The condition of
spring wheat in this area is already significantly behind other states.
For the northern Plains, North Dakota brings up the lead with 36% in good-to-excellent
condition, Montana 11%, and South Dakota with only 10%, according to the
USDA’s weekly crop progress report. By comparison, 85% of Minnesota’s spring
wheat is in good-to-excellent condition.
The North Dakota/Minnesota
border has picked up some rain in the past 24 hours. In addition, this
region will have a slightly cooler temperature pattern with slightly better
chances for rain moving forward.
in the Northern Plains do look to be a littler cooler and wetter in August
than they will be for June/July, Hicks cautions against being too optimistic.
“There will be a slight improvement, but that isn’t saying much. I’d be
really hesitant to say growing conditions would improve much,” he says.
THE REST OF THE
The areas with the
greatest danger of stressful conditions for corn and soybean conditions
– based on insufficient rainfall and the number of days where temps pass
90°F. – appear to be southwestern Minnesota, eastern Nebraska, parts
of western and southern Iowa, eastern Kansas, Missouri, and the southern
half of Illinois. “Given the soil moisture situation currently, these areas
may not get enough rain to keep up with crop needs,” says Hicks, adding
that the areas may receive some, just not enough, rainfall.
Moving farther north
and east, Mother Nature will please farmers with more favorable growing
conditions. “These areas had better rains this week, soil moisture is better,
and they will have fewer days of high temperatures,” explains Hicks.
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.
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.
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 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.
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
Hogs were slaughtered
at 621 plants, with the 13 largest plants accounting for 60 percent of
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
Iowa, Kansas, Nebraska
and Texas accounted for 49 percent of the United States commercial red
meat production in 2016, unchanged from 2015
22nd: Post-Wildfire Reality Sinks in for High Plains Ranchers
-- Progressive Cattleman
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.
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
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
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
“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.
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
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
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.”
has an estimated 15,000 surviving livestock on ranches that have lost most
of their grazing and hay.
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
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.
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.”
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.
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
“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
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.
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 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.
Hay, trucking and fencing:
Contact Kent Kokes (970) 580-8108, John Michal (970) 522-2330, or Justin
Price (970) 580-6315.
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
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.
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
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
"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.
Cattle & Calves Inventory: January 1, 2017 vs. 2016
Compiled from USDA
National Agricultural Statistical Service Data
Cows Inventory: January 1, 2017 vs. 2016
Compiled from USDA
National Agricultural Statistical Service Data
Heifers Inventory: January 1, 2017 vs. 2016
Compiled from USDA
National Agricultural Statistical Service Data
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 is1
percent above the 19.9 million head on January 1, 2016.
heifers, at 6.42 million head, are up 1 percent from a year
heifers, at 4.75 million head, are down
1 percent from the previous year.
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,
500 pounds and over totaled 16.4 million head, up slightly from
one year ago.
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 percentfrom
last year's calf crop.
Calves born during
the first half of 2016 were estimated at 25.6 million head. This is
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.
Did it Cost to Produce a Calf This Year?
Berger -- University of Nebraska Extension
Weaning of spring-born calves has occurred
for many cow calf producers. Right after weaning is a good time to analyze
the business and see what it cost to produce a pound of weaned calf.
Cow costs and thus the cost to produce
a weaned calf have shot up over the last 15 years. From 1987 to 2001, the
Livestock Market Information Center reports that annual cow costs increased
from $300 to $400 per cow. From 2002 to 2015, cow costs more than doubled
from $400 to $875 per cow.
These annual cow costs figures are from
National Ag Statistics Surveys. Cow costs in much of Nebraska would be
equal to or higher than the national average due to the cost of pasture.
Obviously not every cow weans a calf, so the actual cost per calf produced
is much higher than $875!
This information prompts the question:
What did it cost you to produce a pound of weaned calf this year? What
do you project it will cost in 2017?
Unit cost of production (UCOP) is a value
based on a relationship in production between costs and units of product
made or produced.
Unit Cost of Production = Costs / Units
The relationship between the numerator
(Costs) and the denominator (Units Produced) is what drives the UCOP value.
The power of the UCOP ratio for cow-calf producers is that everything involved
in the production of a pound of calf is represented in the numerator or
denominator of the equation. For example, if a producer wants to buy a
pickup that will be used in the production of calves, he can estimate how
the purchase of that pickup will affect his UCOP in terms of cost per pound
of calf produced. The same thing goes for the purchase of a bull. Evaluating
the purchase of a bull in light of how many estimated pounds of calf that
bull will produce in relation to his cost can give insight into what a
producer might be willing to spend.
What did it cost to produce a pound of
weaned calf this year? What is it projected to cost next year? The old
adage "you can't effectively manage what you don't measure" is true in
relation to managing the cow-calf enterprise. The first step in calculating
UCOP is to have accurate production and financial records. These records
do not have to be complicated, but they need to be accurate and thorough.
If current management and information systems don't provide the data to
run this type of analysis, consider making changes that will provide the
Unit Cost of Production takes into account
both product produced and input costs. Knowing UCOP allows a manager to
look forward utilizing both present and projected input costs with production
numbers to make informed decisions. You can’t change last year’s cost of
production numbers, but with good information, you can make management
changes that will impact the upcoming year. Cow-calf producers who know
UCOP numbers and understand the interaction between costs and production
can implement strategies to effectively manage resources to meet business
and personal goals.
As with most things in life, the first
few times you do something, you make mistakes and through the process learn
how to get better. The first time someone learns to drive, there is going
to be gears grinding, lurching and jerking, and some killed engines. There
also is likely going to be some parent or adult with more gray hair (or
perhaps less hair) in the process! Passing the driver’s test and being
able to drive is well worth the hassle and effort!
Learning how to calculate UCOP is a similar
process for cow-calf producers who have never done it before. The first
few times through the mental gears will be grinding and there will be frustration
along the way. However once someone does it and gets comfortable, the value
of knowing this information and being able to confidently make decisions
that improve profitability is extremely satisfying!