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May 23rd: Closing Futures Summary
AgriCharts/Brugler Marketing, LLC
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Live cattle futures ended the day mostly lower, with June down 85 cents. Feeder cattle futures were steady to $1.275 lower, as May expires on Thursday. The CME feeder cattle index was at up 39 cents on May 22, at $143.27. Wholesale beef prices were lowerin the afternoon report, with choice boxes $2.14 lower, averaging $245.74, and select down $1.66, averaging $221.17. Estimated FI slaughter through Monday was 231,000 head, up 1,000 head from the previous week and 10,000 head larger than the same week last year. Showlists on the FCE show 2,684 head of cattle up for sale in tomorrow’s auction. Last week’s prices averaged $135.16 for 1-9 day delivery.
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  • Jun 17 Cattle closed at $123.075, down $0.850,
  • Aug 17 Cattle closed at $121.325, down $0.700,
  • Oct 17 Cattle closed at $118.050, down $0.350,
  • May 17 Feeder Cattle closed at $144.250, unch,
  • Aug 17 Feeder Cattle closed at $151.500, down $1.275
  • Sep 17 Feeder Cattle closed at $151.675, down $0.975
  • ...
    ...
    Corn futures closed 2 1/2 to 5 cents lower on Turnaround Tuesday. The dollar was stronger, and some crop condition ratings were better than expected in individual states. Dr. Michael Cordonnier increased his 2016/17 Brazil corn production to 93 MMT, which is shy of the USDA number of 96MMT. Safrinha crop estimates continue to rise as no major yield threat has developed and the Mato Grosso crop is reaching ear fill. Chinese imports of DDGS during April were down 80.4% since last year at 51,523 MT. Chinese ethanol exports increased, while imports were almost entirely cut off. Corn planting progress in IL, IN, and NE was slightly below their respective averages, with IA currently ahead of their 5-year average pace. The Weekly EIA report will be released Wednesday morning at 9:30 a.m. CST.
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  • Jul 17 Corn closed at $3.69 1/2, down 5 1/2 cents,
  • Sep 17 Corn closed at $3.77, down 5 1/2 cents,
  • Dec 17 Corn closed at $3.87 3/4, down 5 cents
  • Mar 18 Corn closed at $3.97 1/2, down 5 cents
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    Wheat futures settled the day 4 3/4 to 5 1/2 cents lower in the nearby contracts on Tuesday. MPLS was mostly down 4 3/4 to 6 cents, with KC fractionally to 5 1/2 cents lower. KS winter wheat ratings got a little better over the week, but CO got worse. Most states are well ahead of their respective averages in the amount of wheat that is headed, with the northern states slightly behind. Japan is seeking for 79,930 MT of US wheat in their weekly tender, with the other 37,870 MT being Australian wheat. This tender closes on Thursday.
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  • Jul 17 CBOT Wheat closed at $4.29 1/2, down 4 3/4 cents,
  • Jul 17 KCBT Wheat closed at $4.30 1/2, down 5 1/2 cents,
  • Jul 17 MGEX Wheat closed at $5.54 1/4, down 5 cents
  • ...
    ...
    Lean hog futures were mixed on Tuesday, with June 80 cents higher and July down 2.5 cents. The CME Lean Hog Index for 5/19 was up another 44 cents to $75.89. The USDA pork carcass cutout value was $1.59 higher in the afternoon report, with an average of $90.30. The loin was $1.70 lower, with the rib increasing $7.48 and the butt, picnic, and belly all higher by $3+. The national base hog carcass price was 56 cents higher at $71.06. The WCB was 66 cents higher with IA/MN up 74 cents. WTD estimated FI hog slaughter through Tuesday was 881,000 head, 5,000 larger wk/wk, and is 18,000 head above the same time a year ago.
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    Jun 17 Hogs closed at $80.150, up $0.800,
    Jul 17 Hogs closed at $80.025, down $0.025
    Aug 17 Hogs closed at $79.900, up $0.225
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    May 23rd: Lower Beef Prices Weigh on Cattle Futures
    Benjamin Parkin - Dow Jones Newswire

    CHICAGO –  Cattle futures sank Tuesday as lower beef prices spurred bets that the market was unwinding from its seasonal peak.

    Wholesale beef prices fell sharply Tuesday morning to $2.46 per pound from a little under $2.48 a pound on Monday. That added pressure to live cattle futures, with June contracts closing 0.7% lower at $1.23075 a pound at the Chicago Mercantile Exchange. August feeder cattle futures also fell.

    Cattle futures have flip-flopped after hitting a high in early May, while prices on the cash market have also struggled. The soaring value of wholesale beef, however, has cushioned packers to continue paying more for their inventory, preventing a sharp correction. Beef prices will likely start trending lower too, said Steve Wagner of brokerage CHS Hedging in Minnesota.

    "Packers are making very good money, and I think they're going to stay in the game until that changes," Mr. Wagner said.

    The HedgersEdge beefpacker margin index rose to $153.90 per head on Tuesday, despite being in the red less than two weeks ago.

    A government cold storage report released Monday also pressured beef prices after showing a lower-than-expected drawdown in beef stocks in commercial freezers by 1% from the previous month.

    While slightly negative, the report "can be a little deceiving as a lot of product in storage is staged there awaiting export," said Troy Vetterkind, of Vetterkind Cattle Brokerage in Wisconsin.

    An unexpectedly large addition in frozen pork stocks, which rose 9% from March to April, had a limited impact on the futures trade. After opening lower, CME June lean hog futures proceeded to close up 1% at 80.15 cents a pound.

    Part of the strength could be because of funds switching course to bet hog futures would rise while cattle fall, said Mr. Wagner, with pork prices heading toward their late spring boost.

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    May 23rd: Commodity Market Comments 
  • “Shootin’ The Bull” -- Christopher B. Swift.
  • ..
    Live Cattle: After 17 years overlooking the happening’s on 2nd Avenue, the growth of Nashville has finally begun to uproot me.  Never has there been this much growth to Nashville.  The loss of charm, scenery, and ability to drive somewhere is being replaced with new arrivals of little charm, sky scraper buildings blocking the scenery, and traffic like Atlanta, or worse.  The move is not all bad as Swift Trading Company will relocate on historic 16th Avenue S., or better known as Music Row.  Recording studios line the avenue and some of the most iconic hits were recorded in some of these.  On Tuesday, May 31st, Swift Trading Company will be located at 1222 16th Ave. S., suite 26.  The phone numbers will remain the same as all other factors of Swift Trading.  As with the policy here, our doors are always open to clients and friends, and we urge you to stop by our office anytime you can.
    I can’t imagine one of the record exec’s coming by to sign me up for one of those big fat recording contracts, however at least I’ll be closer if they decide to.  Studying supply and demand for years keeps me grounded as to the demand prospects for a banjo picker in Nashville.
    Market action today doesn’t warrant much comment.  Although the excitement from the rally remains, there hasn’t been much more to go on recently.  I look out as far as I can and see little change in supply.  With no incentive to push weights higher, yard managers know that if they can keep the weight off, they will be able to thwart tactics used by the packer to manipulate price.  Today’s action is deemed a correction of Monday’s rally.  I anticipate cash to be steady to higher tomorrow.  Were that to materialize, the futures would be anticipated to jump rather sharply.  A week from today and the aggregation of the basis will be in full swing against the June contract.  The answer is, cash and futures will meet at expiration.  The question is, will cash come to futures, futures to cash, or they meet in the middle?

    Feeder Cattle: Feeders were sparked with a little volatility, but other than that, not much else transpired.  I perceived today’s price action to be a correction of the move higher the past couple of days.

    Corn: Nothing new in corn today.  Back to the antic’s of volatility in a very narrow range.

    Farming the World: China’s Epic
    Race to Avoid a Food Crisis

    Crude: Crude held its gains.  There is going to be some news to decipher this week with the OPEC meeting.

    US Dollar Index: The dollar has made a correction today.  I don’t anticipate this to last long.

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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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    May 23rd: Analysis of USDA Cold Storage Report
    CME Group

    The latest USDA ‘Cold Storage’ report contained some positive implications for red meat demand in April. Output during the month increased significantly and yet supplies in cold storage at the end of the largely increased in line with the normal seasonal rather than showing a significant buildup. For poultry, the picture is a bit mixed, with some products indicating very robust demand and others still struggling with burdensome supplies. Below are some of the highlights from the latest report:

    Total supplies the main proteins in cold storage at the end of April (beef, pork, chicken and turkey) were 2.333 billion pounds, 1% higher than a year ago and 4.4% higher than a year ago. Overall inventories increased by 5.7% vs. the previous month compared to a five year average build of 4.7%. Beef, pork and chicken production increased sharply in April but this did not have a significant impact on cold storage stocks, implying robust demand has kept the flow of product moving. Boneless beef inventories at the end of April were 415.6 million pounds, 4% less than a year ago and 3% lower than the five year average. Normally inventories of boneless beef are steady in April (5-yr avg.) but very high prices for fat trim and limited imports from Australia/New Zealand caused inventories to decline for the month. Inventories of some beef cuts were counter seasonally higher but we think this is mostly due to freezer hedges than packers struggling to move product.

    Pork inventories in cold storage at the end of April were 599.1 million pounds, 6% less than a year ago and 8.8% lower than the five year average. Pork inventories increased 9% compared to the previous month in April. In the last five years the inventory build in April is about 5%. The pork cutout declined significantly in April and it appears some of that pork ended up in the freezer. Still, the overall inventory position does not appear particularly burdensome and April stocks under 600 million pounds compare to 2013 when pork inventories exceeded 700 million pounds. Ham inventories at the end of April were 114.0 million pounds, 12.5% less than last year and 2.9% under the five year average. The ham inventory build in April was 26% compared to a 5-yr average of 28%. Pork belly stocks increased in April as the decline in wholesale markets likely encouraged packers/processors to put more product away. Belly stocks at 34.0 million pounds were 66% higher than the previous month but still some 53% under year ago levels. Inventories of picnics and trim continued to be relatively low, which should remain supportive of prices going into May and June when seasonally supplies decline while grilling demand improves. Picnic inventories at 8.5 million pounds were 26% lower than last year and 42.5% lower than the five year average while pork trim inventories at 40.8 million pounds were about the same as a year ago but 26% less than the five year average.

    The cold storage situation for poultry is a mixed bag. Breast meat supplies remain burdensome, up some 36.8% compared to the five year average. Breast meat stocks increased 5% from the previous month while in the last five years breast meat inventories on average declined 1% in April. Leg quarter inventories increased 4% compared to the previous month compared to a five year average build of 6%. Demand for wings remains stellar. Wing inventories declined 4% in April while in the last five years stocks on average increased 7% for the month. Turkey breast supplies are heavy, which is reflected in the low price in product markets. Turkey breast stocks in cold storage were 106.7 million pounds, 52.3% higher than last year and 66% higher than the five year average. Whole turkey inventories at 221.3 million pounds were 21.5% higher than last year and 7.4% higher than the five year average.

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    May 23rd: U.S.- China Beef Deal Possible by Early June
    Reuters

    Talks on restarting U.S. beef exports to China are moving fast and final details should be in place by early June, the U.S. Department of Agriculture said on Friday, allowing American farmers to vie for business that has been lost by rival Brazil.

    As part of a trade deal, U.S. ranchers are set to face tests over the use of growth-promoting drugs to raise cattle destined for export to China and to log the animals' movements, according to the USDA.

    The two sides are negotiating to meet a deadline, set under a broader trade deal last week, for shipments to begin by mid-July.

    Finalizing technical details in early June should mean beef companies such as Tyson Foods Inc and Cargill Inc can sign contracts with Chinese buyers to meet the deadline, the USDA said.

    China banned U.S. beef in 2003 after a U.S. scare over mad cow disease. Previous attempts by Washington to reopen the world's fastest-growing beef market have fizzled out. But now, the quick progress of the latest talks is raising hopes of U.S. farmers.

    "Both sides feel the urgency to get it done by the deadline," said Joe Schuele, spokesman for the U.S. Meat Export Federation, which represents Tyson, Cargill and other meat companies.

    China's embassy in Washington could not immediately be reached for comment.

    Brazil Woes

    The timing of the new deal allows U.S. producers to benefit as Brazil, the world's top beef exporter, is struggling with scandals and rival shipper Australia is suffering from a drought that is hurting production, analysts said.

    China accounted for nearly one-third of the Brazilian meat packing industry's $13.9 billion in exports last year.

    But in March, Beijing briefly banned Brazilian imports after Brazilian police accused inspectors of taking bribes to allow sales of rotten and salmonella-tainted meat.

    JBS SA, the world's largest meatpacker, was involved in the probe and in separate allegations this week that Brazil's president conspired to obstruct justice with the company's chairman.

    The food-safety probe hit Brazil's beef exports, which fell by 24.6 percent to $378 million in April from March, according to Abiec, an industry group that represents meat processors accounting for about 90 percent of Brazil's exports.

    "This is a very opportune time for the U.S. to step up," said Derrell Peel, an agricultural economist at Oklahoma State University.

    Chinese appetite for beef has climbed due to its expanding middle class. In 2003, its imports totaled just $15 million, or 12,000 tons, including $10 million from the United States, according to the USDA.

    Tracking Cattle

    Brazilian exporters hope China's trade deal with Washington will not inflict more pain on meat companies in the country because U.S. exporters will be targeting different, higher-end customers, said Abrafrigo, an association representing Brazil's small meatpackers.

    To reopen U.S. trade, Beijing has accepted a U.S. proposal in principle that would require producers to document the locations where cattle raised for beef exported to China are born and slaughtered, the USDA said. The system would be less onerous than tracking cattle throughout their entire lives, during which they can be kept at up to four different locations.

    Peel, a livestock expert, estimated that U.S. producers trace the movements of less than 20 percent of the nation's cattle.

    Under another proposed rule, U.S. beef exported to China must pass tests showing it is free from detectable residue of a class of growth-enhancing drugs known as beta-agonists that includes Elanco's Optaflexx, according to the USDA. Elanco, owned by Eli Lilly and Co, declined to comment.

    A trade group for veterinary drug companies, the Animal Health Institute, said China should accept beef from cattle raised with beta-agonists because they are safe.

    U.S. beef shipments to China also will have to come from cattle under the age of 30 months, according to the USDA. Most U.S. cattle will meet that requirement, the U.S. Meat Export Federation said.

    The terms of the deal are a win for the United States over Canada, which is approved to ship only frozen beef to China.

    China already bans meat from Canadian cattle fed with Optaflexx, according to the Canadian Meat Council. It also requires that Canadian beef be produced from cattle that are less than 30 months old and can be tracked to the farm where they were born.

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    May 23rd: Weekly Corn Crop Report
    USDA

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    May 22nd: USDA Cold Storage Report

    As of April 30th:

    Total red meat supplies in freezers were up 4 percent from the previous month but down 4 percent from last year.

    • Total pounds of beef in freezers were down 1 percent from the previous month and down 2 percent from last year. 
    • Frozen pork supplies were up 9 percent from the previous month but down 6 percent from last year. 
    • Stocks of pork bellies were up 66 percent from last month but down 53 percent from last year.
    Total frozen poultry supplies were up 7 percent from the previous month and up 5 percent from a year ago. 
    • Total stocks of chicken were up 4 percent from the previous month but down 1 percent from last year. 
    • Total pounds of turkey in freezers were up 11 percent from last month and up 20 percent from April 30, 2016.
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    May 19th: National Feeder & Stocker Cattle Weekly Summary

    RECEIPTS: Auctions   Direct  Video/Internet   Total
    This Week     182,100     25,400        29,500         237,000
    Last Week     225,900     48,400        54,600         328,900
    Last Year       188,700     44,800          1,200         234,700

    Compared to last week, steer and heifer calves traded unevenly from mostly 5.00 lower to 6.00 higher.  There were instances where calves sold up to 10.00 lower early in the week.  Sales of feeder steers and heifers early in the week traded steady to 5.00 lower, with the tide turning at the later part of the week as sales sold 2.00-4.00 higher.  Trade active on moderate to good demand.  Early week auctions saw declines as the markets were trying to catch up with losses from the CME late last week.  The cattle futures were down sharply on Monday lending no support to the market.  All confidence was lost forcing buyers to purchase feeders at lower prices with calves taking the hardest hit.  However, the futures saw a comeback on Thursday and Friday triggering major gains on the board. 

    Northern buyers, especially in Nebraska, continue to drive the market and tip their hand as to how far they will go when local cattle come up for sale.  In Valentine, NE on Thursday 141 head of steers averaging 621 lbs sold for 205.50 and 180 head of yearling steers averaging 879 lbs sold with a weighted average price of 147.53.  With the board posting gains, cattle traders put money back on the table.  In Unionville, MO a load of steers weighing 714 lbs sold for 171.50, 10.00 higher than the average price for 7 weight steers sold in other parts of the state. 

    Slaughter weights saw a huge drop in the report released this week with an average dressed carcass weight of 832 lbs.  Perhaps feedlot operators might still have the upper hand despite lower fed cash trade this week as packers still need inventory.  Boxed-beef has a Choice and Select spread over 25.00 due to a significant amount of green cattle slaughtered.  On Friday, choice boxed-beef closed 55 cents lower at 247.14 with Select 4.09 lower at 221.42 when compared to the prior week’s close.  In the fed cattle exchange, Wednesday morning, slaughter cattle sold lower than the previous online sale with a weighted average price of 135.16 with a 1-9 day delivery, and 134.28 at a 1-17 day delivery.  This set the tone for Thursday’s cash cattle trade which also resulted in lower money.  Compared to last week, in the Texas Panhandle live sales brought 4.00 lower at 134.00.  Kansas live sales sold 4.00-5.00 lower from 133.00-134.00 and Nebraska live sales were reported from 133.00-135.50, with live sales at 135.00 in Colorado.  The Western Corn-belt had a few live sales sold at 134.00 and dressed at 212.00. 

    Warm temperatures swept across most of the trade area turning cooler late through the week as severe storms moved in dumping heavy rain and hail in some areas.  Planting continues to advance across the U.S. with 71 percent of the corn crop on the ground and soybeans at 32 percent complete which is on pace with the five year average.  Auction volume this week included 50 percent weighing over 600 lbs and 46 percent heifers. 

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    May 19th: Shootin' the Bull Weekly Analysis
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    In my opinion, not much has changed in the environment of cattle production.  The more I think about it, the more I come to the conclusion that the packer no more anticipated this current environment than anyone else.  Therefore, it leads me to perceive the current environment will continue for sometime to come.  There is no incentive to grow cattle bigger.  The only way to produce incentive would be to buy enough physical inventory out front to keep from coming to the weekly showlist, but yards are privy to the environment as well and many do not want to sell cattle cheaper in the future and give the weight gain away to the packer.  The other way would be to push back month futures sharply higher to produce incentive to hold cattle back.  With the basis spreads having been run wide all year, that doesn't appear to be likely.  So, I continue to anticipate the basis spread to be aggregated to even as front month futures go into expiration.  Futures appear to be completing the final minor waves of the intermediate wave 4 correction. 

    Two reversal signals were produced this week with one being a "Morning Star" on the candlestick chart and the other an outside reversal made on Thursday.  All that is needed to begin suggesting wave 4 complete would be a turn of the oscillator higher.  With the oscillator still not having returned to the zero line, it suggests the current wave structure to still be intact.  So, were a resumption of the uptrend to resume, it will be the intermediate wave 5 rally to do so.  Upside projection for the intermediate 5th wave on the October contract is $126.12.  I continue to see no reason to hedge fat cattle at such a grave discount.  When the yard manager wants to sell fats for the highest price, he does so today.  When the yard manager wants to buy replacement feeders for the cheapest price, he does so today.  Not a bad swap. 

    Lastly, the reason for so much interest in this market is perceived the fundamental factor of basis and the opportunity that it sometimes presents.  In this case, the basis has been exceptionally wide with futures moves of $10.00 and $20.00 produced to close the basis.  As long as there is a positive basis, traders are anticipated to remain active in this market.  Very few traders will allow a penny to lay on the sidewalk for long.  At this spread width, there are several pennies to be had for those assuming the risk.

    Feeder cattle remain lagging behind the fats as there is no basis issues in feeders.  Yard managers, the only ones interested in feeders, have little reason now to pay $7.00 to $17.00 more for feeders in the near future than at present.  Again, remember the swap above.  A 1350# fat at $1.34 is $1,809.00 and a 850# steer at $1.45 is $1,232.50.  That $576.50 difference goes a long way in not needing to hedge cattle at the discount of futures.  Feeders appear to be completing their intermediate wave 4 as well.  I would anticipate traders to push the basis back towards the - $17.12 low made on the 3rd of May.  The oscillator reading is tepid suggesting it could turn higher on not much of an up move.  A reversal of the oscillator without it having returned to the zero line would lead me to continue with the wave count at present and anticipate a new contract high to approximately $168.00 August. 

    Corn took a sympathy bow to beans on Thursday.  By Friday's open though, corn was back higher and above the level from which it fell so sharply from.  I continue to like owning corn for two reasons now.  One to make sure I don't get caught feeding cattle and feed costs jump and now because of the long dormant period corn has sat in this trading range.  It's viewed as a powder keg, but not sure what may ignite it. 

    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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    May 19th: Fed Cattle Weights - A Real Shocker
    Daily Livestock Report

    The latest data on fed cattle weights was a real shocker. The latest report covers the period April 30 - May 6 (two week lag in reporting) and it shows the following: steer dressed weights for that week were on average 832 pounds, down 15 pounds from the previous week and 30 pounds lighter than they were during that same week a year ago. The 3.5% decline in weights has a direct impact on total amount of beef pounds coming to market and a disproportionate impact on the amount of fat beef available (lighter cattle will generate less fat trim). The decline also helps explain the widening choice/select spread. 

    For the week ending May 6 steer slaughter was reported as 333,976 head implying a total beef production for the week of 277.9 million pounds. Last year, steer slaughter was 335,800 head but on average those steers yielded an 862 pounds carcass and a total beef production of 289.5 million pounds. So you have a shortage of about 4% in total pounds coming from fed steers at a time when the retailer has this stuff on sale and retail ground beef prices are at the lowest point they have been in about five years. Heifer weights also showed a similar decline. USDA pegged average heifer weights at 769 pounds per carcass compared to 801 a year ago, a 32 pound or 4% decline. There were 16.4% more heifers that came to market during the week than last year and this added to overall pounds even as weights were down. Still, combined steer/heifer (fed beef) production for the week was just 403 million pounds, only 0.4% higher than it was last year. 

    The numbers are also surprising because they deviate so much from what we have been seeing from the Mandatory Price Reporting numbers. We have derived a series of weighted average steer weights from the MPR system, using steers priced on negotiated and net formula basis. It is a significant sample and generally it has an R2 of almost 96% with the actual data that USDA reports. Based on that model, weights for the week of May 6 should have been around 849 pounds, instead they came in at 832. But we have seen outliers like this before, specifically during the market turmoil in September 2015. The reason likely has to do with the data going into our sample, which do not seem to capture extreme market events. 

    As for the choice-select spread, it has exploded in the last few weeks as market participants struggle to find high quality beef now that green cattle being pulled forward. The increase also reflects increased promotions of choice beef at retail going into the grilling season. Last year choice beef premiums declined sharply in the fall as weights increased and demand soffened. How quickly cattle weights recover will dictate the direction for choice premiums.

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    May 18th: North American Cattle Groups Say Don’t Jeopardize NAFTA

    The National Cattlemen’s Beef Association (NCBA) joined its cattle-industry partners in Canada and Mexico in sending a joint letter to President Trump, President Justin Trudeau of Canada, and President Enrique Pena Nieto of Mexico, urging the three leaders to not “jeopardize the success we have all enjoyed as partners of the North American Free Trade Agreement.”

    The letter was signed by NCBA President Craig Uden, Dan Darling, president of the Canadian Cattlemen’s Association, and Oswaldo Chazaro Montalvo, president of the Confederación Nacional de Organizaciones Ganaderas.

    “Recent statements about the possible dissolution of NAFTA or potential renegotiation of NAFTA are deeply concerning to us because of the unnecessary risk it places on our producers,” the letter states. “While there may be general agreement among the countries to improve some parts of the NAFTA trade framework, we urge you to recognize that the terms of the agreement affecting cattle producers are strongly supported as they currently exist and should not be altered.”

    The groups also urged them to “reject efforts to use NAFTA as a platform to resurrect failed policies, especially the misguided mandatory country-of-origin labeling policy that was the law of the United States for over seven years.”

    “COOL failed to deliver its proponents’ promise to increase consumer demand or consumer confidence,” the groups said. “Instead, it created massive disruptions in live cattle trade that hurt beef producers across North America and jeopardized the jobs of American workers that depend on processing those cattle.”

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    May 18th: Adjusting Retail Meat Prices
    CME Group

    One of the lines of argument for beef prices moving lower in the coming weeks has to do with the fact that buyers appear to have moved to the sidelines and have significantly reduced their forward purchases. This was evident in the last USDA comprehensive cutout report. Beef sales for delivery 22-60 days out were down 20% from the average in the previous four weeks while sales for delivery 61-90 days out were down 78%. For those not familiar with these data, here’s an example. USDA reported that packers sold just 40 loads of beef that will deliver 61-90 days forward, basically July through September. In the previous four weeks, sales of product for delivery 61-90 days out averaged 184 loads/week, hence the 78% decline. Does this mean that beef prices will collapse as packers suddenly find that they will have to sell more beef in the spot market? 

    Maybe but that is far from guaranteed. In the end, what will cause the quantity demanded to decline is not what buyers but what the consumers do. A buyer that needs two loads a week and opts to buy just one because prices are high does not really affect demand. That buyer now has three loads to buy the following week and there is only so long one can rely on inventories or forward bookings. The hope (guessing) in the market at this time is that the retailer will increase prices quickly enough to cause consumers to change their purchasing behavior. We saw this at play earlier this year when retail bacon features caused significant shortages in the spot market but which were quickly alleviated once retail prices reset and consumers curtailed how much bacon they were taking from the meat case.

    And this brings us to the topic of retail prices and how quickly they will have to adjust in order to affect wholesale and live values. USDA updated at the end of last week its monthly retail price series based on data from the Bureau of Labor Statistics (inflation data). The average price of beef at retail in April was reported at $5.93.lb, 0.5% higher than the previous month but 2.8% lower than the previous year. The choice beef cutout in April was 2.5% lower than a year ago. One item that has really exploded in price at the wholesale level is 50CL beef, with prices for fresh product over $2/lb. This for an item that last December packers could not give away and was trading in the low 30 cents, near rendering value. 

    What happened? The official average ground beef price in April was pegged at $4.08/lb., 5.8% lower than a year ago. The chart above shows an indexed value of ground beef prices. This is nothing but a fancy way of saying that we are comparing current prices to a set period a while back. In this case the set period is 2011 average. The average price of ground beef back then was $3.46/lb. Compared to that level, the April ground beef price was about 18% higher. The problem is that retailers may feature ground beef at less money and studies have shown that when you put product in features it tends to sell more volume. According to the USDA weekly beef retail features report, the average price of 80-89% ground beef in the first two weeks of May was $3.12 a pound, down about 9% from a year ago and just 5% higher than the 2011 average. 

    In other words, consumers today are looking at prices in ground beef features that are up just 5% from where they were in 2011, well below the rate of inflation during this period. Sales much be great. Add to this the sharp reduction in fat trim availability due to lower steer weights and there is very little fat trim floating around in the spot market these days. The chart above shows a similar comparison for bacon . Note the sharp decline in bacon feature prices in Q4 of last year. The decline was even bigger than the official numbers suggested. Following record Q1 prices, prices quickly rebounded in March and April. It should be interesting to see how quickly retailers respond to current beef market signals. Thanks to the timely USDA reports, the data is there for those that want to see it.

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    May 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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    May 17th: Gloom in the Cattle Markets
    AgriMoney.com

    The slump in cattle prices - which hit a five-week low in Chicago amid ideas that "fund liquidation has officially begun" – should be curtailed by demand for packers for animals, supported by lower slaughter weights.

    Live cattle futures in the last session hit their weakest close in more than a month on a spot contract basis, at 121.90 cents a pound for the June lot.

    The lot is now down 9.4% from a contract high set two weeks ago, weakness attributed by many observers to seasonal factors, with the passing of peak retailer stocking ahead of the US Memorial Day holiday.

    This holiday, on May 29, typically sees a rash of barbecues, and is seen as ushering in the US grilling season.

    'Rallies will most likely fail'

    In the cash market, cattle fell to some $137-138 per hundredweight on Tuesday, from levels as high as $147 per hundredweight a week before – a trend some commentators saw continuing.

    Jerry Stowell at Kansas-based broker Country Futures forecast "$130-133 cash fed trade in the south this week," saying that "we remain bearish cattle into late spring and summer".

    He added that "the fund long liquidation has officially begun," and reversal of the buying which drove the managed money net long in Chicago live cattle futures and options last month to a three-year high of 138,355 lots.

    "All rallies will most likely now fail. Sell them," Mr Stowell advised.

    Meatpacker profits

    However, USDA officials cautioned against overpessimism, saying that "expectations are that prices will remain relatively strong, despite declining from recent peaks".

    They flagged a drop in average cattle slaughter weights – estimated at 1,325 pounds, down 11 pounds year on year – as the higher cattle prices have encouraged feedlots to make timely sales of animals, rather than fattening them on.

    "Packers maintain relatively high rates of cattle slaughter to mitigate the effects of lower carcass weights," the USDA said.

    Indeed, the dent to cattle prices has revived packers' margins, which stood at $109.45 per head of cattle on Tuesday, up $24 from Monday, and compared with negative margins of $6.25 per head a week before.

    Feedlot margins to fall?

    The USDA highlighted the potential for some support for cattle prices from a slowdown in marketing by feedlots, after a period when their margins have been boosted by the high animal values and "relatively cheap feeders purchased two quarters earlier".

    "Feedlot operators could face declining returns if fed cattle prices decline with increased supplies of cattle in the second half of the year.

    "To the extent that declining fed cattle prices squeeze feeders' margins, feedlot operators may opt to keep cattle on feed longer in an attempt to push bids higher."

    The comments come amid ideas of a crossover in feedlot dynamics from a period of squeezed supplies of fattened cattles – their inventories of cattle fed for more than 120 days hit a 10-year low last month, according to Steiner Consulting Group – to a richer pipeline ahead.

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    May 17th: What Is China’s Global Food Objective?
    John Nalivka... President -- Sterling Marketing

    In the U.S., per capita red meat and poultry supplies hit a low of 202 pounds in 2014. That was down nearly 9% from a record 222 pounds produced in 2007. The low point in production caused record prices which produced our rapid herd expansion. This year, per capita red meat and poultry supplies will reach 218 pounds, up 8% from the 2014 low. In 2018 we are projecting the red meat and poultry supply will be pushed to 223 lbs. per person, 11% higher than in 2007 and a new record.

    Simply put, the supply of total meat over at least the next 2 to 3 years will outpace the domestic demand necessary to maintain current prices across the beef complex. The key to beef prices as we go forward, given the supply outlook, will be export demand. Asia, and more specifically China, will be the prominent player in the demand outlook. In 2017, beef and pork exports to Asia are up sharply to date. While future trade deals are obviously critical to the future of U.S. meat, dairy, and grain trade, I believe we may be overlooking another option for China.

    Chinese imports of agricultural commodities largely rest on the notion of food security. They have recently shown their willingness to once again open their market for U.S. beef. But this is likely a short to intermediate-term decision that is consistent with a longer term goal of self-sufficiency.

    So where does that lead? It leads to the acquisition of food production in global markets by Chinese companies. Think Smithfield Foods accounting for 28% of U.S. pork production and acquired by Shienwa (now WD) a Chinese company in 2013. Smithfield recently purchased Farmer John in California which brought their share of U.S. pork production to 30%. The reality is that every pound of pork produced by Smithfield can be sold to China.

    Chinese food companies have also acquired three beef plants in Uruguay as well as several dairy operations in New Zealand. I submit that at some point a Chinese interest will purchase a major beef processing company or perhaps a major beef, pork, and poultry processing company in the U.S. It fits a strategy of food security through self-sufficiency.

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    May 16th: Hay Stocks Down Year-Over-Year
    Livestock Marketing Information Center

    USDA released the monthly Crop Production report by the National Agricultural Statistics Service (NASS) on Wednesday of this week.  The crop report covered commodities mostly unrelated to the livestock sectors, but did contain the May 1, 2017 hay stocks.  The report is based on a NASS survey of producers.  U.S. hay stocks for May 1st give a carryover number as of that date which marks the national transition to a new hay crop-year.  Besides national totals, stocks by state are reported.  The major users of hay are the U.S. beef cowherd, feedlots, and dairies.

    Nationally, as of May 1, 2017, U.S. hay stocks were 24.4 million tons.  Stocks were down 750,000 tons (3%) year-over-year.  Even though stocks were the smallest since May 1, 2014 (19.1 million tons), they remained plentiful.  NASS does a producer survey on their hay stocks twice each year, as of December 1 and May 1.  U.S. winter hay usage (disappearance from December 1, 2016 until May 1 of this year) was less than expected earlier this year.  Still, in several regions, early winter feeding requirements were above levels of recent years and lower hay prices encouraged use.  Of course, year-over-year cowherd increases supported hay consumption, too.  Overall hay disappearance this past winter was the largest since the time period from December 1, 2009 to May 1, 2010 and the year-over-year increase was 2.3%, while the number of roughage consuming animal units increased 2.0% year-over-year. 

    Of the 48 reported states (all except Alaska and Hawaii) 22 had declines in hay stocks compared to a year ago.  Several Northern Plains and Western states reported lower hay stocks compared to a year ago.  In contrast, Texas, Oklahoma and most Midwest states had increased hay stocks to start the new crop-year.

    The national average price for all hay in 2016/17 was the lowest since the 2010/11 crop-year.  Based on current stock levels and very preliminary projections regarding 2017 production, hay prices may increase modestly year-over-year in 2017/18, but not enough to be a factor influencing most producer management or marketing decisions.

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    May 16th: A Look at Cattle, Beef, & Exports
    Daily Livestock Report

    After surging during late April and the first week of May, cash fed cattle prices declined last week by several dollars per cwt. Still, fed cattle prices remained above a year ago. Cash feeder cattle prices were mostly unchanged early in the week, but then tended to erode. Hog prices strengthened significantly last week, with national prices averaging nearly $5.00 per cwt. (dressed basis) higher week-over-week. Cash hog prices remained below 2016’s. Both the Choice beef and pork cutout values increased last week. 

    After setting life of contacts highs recently, last week both the Live Cattle (fed) and Feeder Cattle futures prices declined. Using the average of the daily closes, the October 2017 Live Cattle contract was $117.14 per cwt., dropping $1.09 week-over-week. The October Feeder Cattle contract averaged $150.00 per cwt. down $3.16 from the prior week’s average. Still, hedgers should note that the October Feeder Cattle contract last week was $30.00 above where it began the year (the week ending January 6, 2017 that contract was $120.01 per cwt.). For the May through November 2017 hog futures contracts, prices increased week-over-week. Last week, the August Lean Hog futures contract increased compared to the prior week’s average by $1.58 per cwt. and posted its highest level since the week ending March 17, 2017. The December 2017 contract posted a slight price decline.

    Looking at the news, at the top of the list was Thursday’s joint announcement by the U.S. departments of Commerce and Treasury that progress had been made on the “U.S.-China Economic Cooperation 100-Day Plan”. Eleven items were listed and at the top was beef. Per the announcement, following one more round of technical consultations, China is to allow imports of U.S. beef beginning no later than July 16, 2017. Background and comments regarding the situation and recent announcements have been provided in earlier editions of this newsletter and elsewhere. The U.S. beef industry awaits the details and then assessments of impacts can be developed.

    The other item we bring to attention was the release last week of a USDA Foreign Agriculture Service (FAS) report regarding U.S beef exports to Japan, our largest foreign market. Global Agricultural Information Network (GAIN) reports are done by experts stationed at our foreign embassy offices. A GAIN report from Tokyo, titled “Beef Market Share Competition to Intensify in 2018“, was released May 8th. The report provides insight into the competitive position of U.S. beef in Japan relative to other countries, especially Australia. From the report: “Monthly total U.S. beef exports to Japan outpaced Australian beef shipments in February 2017 for the first time in 14 years. These recent successes have occurred in spite of a comparatively stronger dollar and an eight percentage point tariff disadvantage relative to Australian chilled beef, the dominant beef supplier in the Japanese market.” Looking ahead, Australia’s significant tariff advantage and their rebuilding beef herd will challenge the U.S. Further, at the end of the report the authors state: “Improved market access for Australia and other Pacific Rim beef exporters (New Zealand, Canada, and Mexico) under a modified TPP, or a comparable successor agreement, could further reduce U.S. competitiveness in its most valuable export market.” 

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    May 10th: USDA World Agricultural Supply & Demand Estimates

    LIVESTOCK & POULTRY: Total red meat and poultry production for 2018 is projected higher than 2017 on increased livestock and poultry production. 

    Cattle placements during second half 2017 and early 2018 are forecast higher; these cattle will be slaughtered during 2018, supporting higher beef production. Carcass weights are expected to be higher. Pork production is forecast higher on expected increased farrowings and continued gains in sow productivity. Higher broiler and egg production reflects expanded production in response to moderate feed prices and relatively strong 2017 prices. Turkey production is forecast higher as demand strengthens.

    Total red meat and poultry production for 2017 is reduced from the previous month on lower beef, pork and broiler production. Beef and pork production is reduced on lighter expected cattle and hog carcass weights.

    Broiler production is lowered on lower forecast second-quarter production. Turkey production is raised on higher first-quarter slaughter data.

    For 2018, larger beef supplies and lower prices are expected to support stronger U.S. beef exports. Beef imports are forecast higher as supplies of domestic processing-grade beef remain relatively tight and supplies of beef increase in key exporting countries. Pork exports are forecast to increase as expanding supplies and competitive prices support demand for U.S. pork. U.S. pork imports are forecast to decline as domestic supplies are expected to pressure prices. Broiler and turkey exports are forecast higher on expected continued gains in foreign demand.

    The 2017 beef and pork export forecasts are raised as demand is expected to remain strong. The beef import forecast is raised on recent trade data for the first quarter, but pork imports are reduced. Changes to the 2017 poultry and egg trade forecast reflect first-quarter trade data.

    Cattle and hog prices for 2018 are forecast to decline relative to 2017 as both cattle and hog supplies are expected to increase. Turkey and egg prices are forecast to increase in 2018 on increased demand. The 2018 broiler price is forecast lower, as production increases and supplies of competing meats are higher.

    The 2017 cattle and hog price forecasts are raised on recent price strength and expectations that demand will remain relatively firm through the year. The broiler price forecast is increased as second quarter prices are raised due to recent price strength. Turkey and egg prices are forecast lower for the remainder of the year as relatively large supplies pressure prices. 

    WHEAT: U.S. wheat supplies for 2017/18 are projected down 9 percent from 2016/17 on lower production, which is partially offset by higher beginning stocks. All wheat production for 2017/18 is projected at 1,820 million bushels, down nearly 500 million bushels from the prior year. The year-to-year decline is due to a sharp reduction in planted area and projected lower yields. The all wheat yield is projected at 47.2 bushels per acre, down 10 percent from last year’s record. The first survey-based forecast for 2017/18 winter wheat production is down sharply with the lowest harvested area in more than a century and lower yields. Winter wheat benefited from diminishing drought conditions in the Plains and Midwest. However, a late April snow storm affected large portions of the Hard Red Winter wheat belt, especially western Kansas. Combined spring wheat and Durum production for 2017/18 is projected to decline 10 percent on lower area and a return to trend yields.

    Total use for 2017/18 is projected down 2 percent on lower exports and feed and residual use. Exports are projected at 1.0 billion bushels, down 35 million from the previous year’s revised level but above the five-year average. The EU is expected to regain export market share following last year’s small crop and quality problems. U.S. feed and residual use is projected down 20 million bushels on lower supplies. U.S. ending stocks are projected to decline 245 million bushels to 914 million, the lowest in three years. The
    season-average farm price is projected at $3.85 to $4.65 per bushel. The mid-point of this range is up $0.35 from the previous year’s low level.

    Global wheat supplies are projected to decline fractionally as higher beginning stocks are more than offset by a production decline following last year’s record. Total wheat production is projected at 737.8 million tons, the second highest total on record. Global wheat consumption is projected down slightly from last year’s record with reduced feed and residual usage partially offset by increased food use. Global imports are expected to be a record for the fifth consecutive year. Global ending stocks are projected at a record 258.3 million tons, up 2.9 million from 2016/17.

    COARSE GRAINS: The U.S. feed-grain outlook for 2017/18 is for lower production, domestic use, exports and ending stocks. The corn crop is projected at 14.1 billion bushels, down from last year’s record high with a lower forecast area and yield. The yield projection of 170.7 bushels per acre is based on a weather-adjusted trend assuming normal planting progress and summer weather, estimated using the 1988-2016 time period. The yield model includes a downward stochastic adjustment to account for the
    asymmetric response of yield to July precipitation. The smaller corn crop is partly offset by the largest projected beginning stocks since 1988/89, leaving total corn supplies down from a year ago but still the second highest on record. 

    Total U.S. corn use in 2017/18 is forecast to decline 2 percent from a year ago as a slight increase in domestic use is more than offset by lower exports. Food, seed, and industrial (FSI) use is projected to rise 80 million bushels to 7.0 billion due to increased use of corn to produce ethanol for fuel and expected  growth in non-ethanol FSI. Corn used to produce ethanol is up 50 million bushels, reflecting expectations of gasoline consumption growth, reduced sorghum used to produce ethanol, higher expected blending and continued global ethanol import demand. Projected feed and residual use declines as a smaller crop and increased use of ethanol by-products more than offsets growth in grain consuming animal units. U.S. corn exports are down 350 million bushels, as a 1.0-billion-bushel year-over-year increase in the combined corn exports of Brazil and Argentina during 2016/17 (local marketing years beginning in March 2017 and ending February 2018) is expected to cut into the 2017/18 U.S. shipping season. With total supply falling faster than use, 2017/18 U.S. ending stocks of corn are down 185 million bushels. The season-average farm price is projected at $3.00 to $3.80 per bushel, unchanged at the midpoint from 2016/17.

    The global coarse grain outlook for 2017/18 is for lower production, increased use and sharply reduced ending stocks. Corn production is forecast down from a year ago, with the largest declines in China and the United States. Partly offsetting are larger crops projected for the EU and Canada. Global corn use isup 9 million tons (1 percent), while global corn imports are projected to increase 7 million tons. Notable increases in corn imports include Vietnam, Egypt, the EU, Saudi Arabia, Mexico and Iran. Global corn ending stocks are down from last year’s record high and if realized would be the lowest since 2013/14. The drop largely reflects forecast declines for China and the United States. 

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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
    Millions of Head
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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 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 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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    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 is1 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 percentfrom 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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