Weekly Livestock Comments for July 12, 2019

– Dr. Andrew Griffith, Assistant Professor, Department of Agricultural and Resource Economics, University of Tennessee

FED CATTLE: Fed cattle traded $3 higher compared to last week on a live basis. Live prices were mainly $112 to $115 while dressed prices were mainly $181 to $184.

The 5-area weighted average prices thru Thursday were $114.64 live, up $3.43 from last week and $183.06 dressed, up $2.94 from a week ago. A year ago prices were $110.00 live and $174.79 dressed.

Feedlots have been moving out inventory which has made managers hungry to fill those pens with feeder cattle. At the same time, feedlot managers found a way to push packers into higher finished cattle prices which is a rarity for the time of year. One might assume the higher prices this week means the market has reached its summer low and that may be the case. However, the finished cattle market will continue to be pressured the next several weeks moving through July and August. Thus, there is a good chance finished cattle prices Continue reading

Corn Price Impact on Feeder Cattle Prices

– Brenda Boetel, Professor, Department of Agricultural Economics, University of Wisconsin-River Falls

Feeder cattle prices are determined by several factors, with feed price and fed-cattle price having the greatest impact. The corn price has typically had an inverse relationship to both fed and feeder cattle prices. This means, as the price of corn increases, the price of feeder cattle decreases. This assumes that all other factors have remained constant, including other feeding costs as well as fed-cattle price.

Since the beginning of May 2019, new crop corn prices have increased approximately $0.70 on late planting and concerns over prevented planting. The USDA reports highlighting fundamental corn data on planting, yield and storage would indicate that corn price should be decreasing. The July 11 World Ag Supply and Demand Estimates reported the corn acreage at the June estimate of 91.7 million acres. Additionally, old crop stocks increased due to a reduction in export estimates.

The market obviously isn’t believing the USDA data. On top of that disbelief, the July 15 crop progress report indicates Continue reading

Weekly Livestock Comments for July 5, 2019

– Dr. Andrew Griffith, Assistant Professor, Department of Agricultural and Resource Economics, University of Tennessee

FED CATTLE: Fed cattle traded steady compared to last week on a live basis. Live prices were mainly $108 to $111 while dressed prices were mainly $178 to $182.

The 5-area weighted average prices thru Thursday were $111.17 live, up $0.59 from last week and $180.10 dressed, up $0.74 from a week ago. A year ago prices were $110.00 live and no dressed trade.

Most of the finished cattle trade this week occurred prior to Independence Day which made for a quiet day in feedlot country on Friday. Feedlot managers were likely to be satisfied in that they held the price line with the previous week’s prices, but they were probably still a little disappointed. Cattle continue to be marketed with a positive basis as the early week trade on August live cattle futures was mainly $104 to $105. It would appear that many in the industry are antsy about Continue reading

Finding a Bottom Through Grains and Holiday Meat Demand

– Elliott Dennis, Assistant Professor & Extension Economist, Department of Agricultural Economics, University of Nebraska – Lincoln

Nearby and deferred live and feeder cattle contracts settled up this past week. The nearby August feeder cattle contract settled at 138.825 up nearly $7 from the contract low 10 days ago. The nearby August live cattle contract settled at 107.000 up nearly $5 from its contact low likewise 10 days ago. While the last 10 days have been relatively positive for live and feeder cattle futures contracts, the markets are still significantly lower over the last 60 days. The nearby, and deferred, contracts for both livestock products appears to have found a bottom. This strong upward movement appears to be supported by both fundamental and technical information. Bottoming prices appears to have been driven by projected grain supplies, weather driven pasture conditions, and wholesale meat demand.

There was some market confusion about the “true” number for corn and soybean acreage reported by the USDA on June 28th. Corn acreage handily outpaced market expectations while soybeans were well below market expectations. In response and to paint a more accurate crop size and planted area, the USDA announced that it would Continue reading

“Increase the feed, or reduce the need”

Stan Smith, PA, Fairfield County OSU Extension (published originally in The Ohio Farmer on-line)

Seldom have we ever been challenged by wet weather, mud and adverse conditions for such an extended period of time!

Seldom do we talk about forage shortages and above normal precipitation in the same breath. Regardless, that’s where we are now throughout Ohio and much of the Midwest. Over the past year abundant rainfall has allowed us to grow lots of forage. Unfortunately, it seems the weather has seldom allowed us to harvest it as high quality feed.

Since last fall the demand for quality forages has been on the increase. It began with a wet fall that forced us from pasture fields early. Followed by constantly muddy conditions, cattle were requiring more feed and energy than normal. At the same time, even though temperatures were moderate during much of the fall of 2018, cows with a constantly wet hair coat were, yet again, expending more energy than normal to remain in their comfort zone. Then, as a cold late January 2019 evolved into February, in many cases mud had matted down the winter coats of cattle reducing their hair’s insulating properties, thus causing them to require even more energy in the cold weather.

Reduced supplies of quality forages coupled with increased demand over the past year have led us to Continue reading

Livestock Risk Protection (LRP) to Cost Less

– Matthew Diersen, Risk & Business Management Specialist, Ness School of Management & Economics, South Dakota State University

Feeder cattle have been under seasonal price pressure, similar to last year. Thus, locking in cattle prices or spending money for insurance may not be a high priority at this time. However, it is never a bad time to plan nor to look for cost-effective ways to manage risk. Livestock Risk Protection (LRP), price coverage sold by insurance agents, is similar to the purchase of put options on cattle futures contracts. LRP is administered by the Risk Management Agency (RMA) with a federally-subsidized premium that is set to increase soon.

Interest in and usage of LRP has fluctuated since first being offered in the early 2000s. Nationally, coverage with the feeder cattle endorsement peaked at over 300,000 head in crop year 2014. Such a total was still less than 1 percent of the U.S. calf crop. Coverage for the most recent crop year, which ends on June 30, is unlikely to exceed 90,000 head. Demand for the product has fallen with lower prices. Demand in South Dakota remains relatively high at over 27,000 head covered in crop year 2019, but the absolute level covered remains Continue reading

Surprises in Reports

– Stephen R. Koontz, Department of Agricultural and Resource Economics, Colorado State University

The USDA NASS Acreage report and Hogs and Pigs reports released last week were quite the surprise. A good indicator of that is the amount of follow up discussion by folks that don’t do surveys – like myself – that the numbers in the reports may change – I will resist piling on. Corn acreage was surprisingly large and soybean acreage was surprisingly small compared to the pre-report trade expectations. Both USDA statistics were well outside the anticipated ranges. The pre-report trade estimates of corn acres were an average of 87.0 million acres with a range of 85.6-88.8 million. The report statistic was 91.7 million acres. The acreage estimate from the Prospective Plantings report in March had corn acres at 92.8 million. The pre-report trade estimates of soybean acres were an average of 84.7 million acres with a range of 82.6-86.5 million. The report statistic was 80.0 million acres. The acreage estimate from the Prospective Plantings report in March had soybean acres at 84.6 million. The trade talk between March and June was about the delays in corn planting due to cool wet weather and the potential shift to soybeans. The report clearly does not communicate Continue reading

Cattle Prices, Pasture Conditions, and Feed Costs

– Josh Maples, Assistant Professor & Extension Economist, Department of Agricultural Economics, Mississippi State University

August feeder cattle futures prices are down about $25 per cwt from the contract high on April 18th. Similar declines have occurred in cash markets in most areas. A steady rise to start the year pushed Southern Plains feeder steer prices above 2018 year-ago levels where they remained for several weeks into April. Since then, the trend turned downward, and prices are below a year ago.

Much of the recent declines are impacted by seasonal patterns. The usual peak in March or April is generally followed by a decline into the summer. Add in a bearish April Cattle on Feed report, weaker export totals, and the corn market rally, and there was not much Continue reading

Farming with Family through the Tough Times

Christine Gelley, Agriculture and Natural Resources Educator, Noble County, OSU Extension

There are days where every farmer wonders what they got themselves into. Days where the work ahead is overwhelming, the kids are sick, the cows are calving, your 4×4 is stuck in the mud, and to top it off, you are running low on stored feed and stored energy in your soul. Farming is tough. No doubt about that.

When the weather and the markets are uncooperative with your plans, the stress can pile up on the farm and on your family. One temporary way to deal with that stress is to be thankful for what you have. Someone out there always has it worse than us and we should be thankful for the things we have each day, instead of dwelling on the things we do not.

This past winter at the American Forage and Grassland Council Annual Conference, a beef farmer named Buron Lanier of Piney Woods Farm in North Carolina, shared a story of forage tragedy and triumph that can help put ‘thankfulness’ into perspective.

Mr. Lanier had presented at last year’s conference about the efforts made to convert his farm from KY-31 fescue to novel endophyte fescue. A significant portion of his farm is dedicated to silvoculture, combining the production of pine trees and feeding stocker cattle. With great effort, he progressed into a 365-day grazing system. He had no need to feed hay and very little supplemental feed. The system was Continue reading

Assessing Relationship Management and Leadership Skills

– Michael Langemeier, Center for Commercial Agriculture, Purdue University (originally published in farmdoc daily (9):109, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, June 13, 2019.)

As farms continue to consolidate it becomes increasingly important to assess a farm’s management skills. At a certain farm size, it is no longer easy or feasible for the manager or managers to wear every management hat. How does the management team determine when to focus on professional development, delegate management tasks among mangers, and seek outside assistance?

Continue reading Assessing Relationship Management and Leadership Skills