– Dr. Kenny Burdine, Extension Professor, Livestock Marketing, University of Kentucky

As we prepare to turn the page on January, most cow-calf operations are well into their winter feeding programs. High fertilizer prices in the spring of 2022 likely resulted in less fertilizer being applied to hay ground. This was combined with a lack of rainfall in much of the US to result in a sizeable decrease in hay production for the year. Drought conditions also forced many cattle operations to begin feeding hay earlier than usual. All these factors together resulted in a 9% decrease in December 1 hay stocks for the year at the national level. James talked through much of these hay production and stock numbers two weeks ago and that article can be found here.

Tight hay stocks were seen across many areas of the US, including the three states that James, Josh, and I call home. In Arkansas, Kentucky, and Mississippi, December 1 hay stocks were down 15%, 17%, and 20% respectively. Of course, tight hay supplies result in higher hay prices, which increases winter feed costs for cow-calf operations. There is limited price data on the type of hay that is typically fed to cows, but USDA’s national hay price estimates can be seen above. Due to transportation costs, hay markets tend to be very regional and large differences can exist across relatively small distances. So, don’t focus too much on the nominal price levels in the chart above; instead notice the increase in hay prices throughout 2022. In the Other Hay category, prices rose by 28% from April to November (December prices were not yet available).

Winter feed is the probably the largest expense for most cow-calf operators and I wanted to put this in perspective for a typical operation. Often, grass hay can be purchased for $60-$80 per ton. Based on what I am hearing this winter, that same quality hay is selling for something closer to $100-$120 per ton. The table below uses this hay value range to estimate daily hay costs for a 1,300 lb cow consuming 2.25% of her body weight per day. It also looks at loss rates of 15%, 25%, and Continue reading →

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

FED CATTLE

Fed cattle traded $1 lower compared to last week on a live basis. Prices on a live basis were mainly $153 to $155 while dressed prices were mainly $247 to $248.

The 5-area weighted average prices thru Thursday were $153.84 live, down $1.23 compared to last week and $247.72 dressed, down $0.29 from a week ago. A year ago, prices were $136.93 live and $218.00 dressed.

In a typical week, the percent of cattle traded on a live basis makes up 15 to 25 percent of total cattle marketed for slaughter while the remainder of cattle are marketed on a dressed basis. Considering the cattle traded on a live basis, the majority of those cattle and sometimes as high as 75 percent are traded through a negotiated method, which is what contributes to price transparency and competition. Alternatively, only 12 to 20 percent of cattle traded on a dressed basis are traded using negotiation as most of these cattle are priced based on formula trading. The reason this is important is because negotiated cattle trade has taken a tumble since the beginning of the year and may be a value worth keeping an eye on.

BEEF CUTOUT

At midday Friday, the Choice cutout was $268.54 down $0.21 from Thursday and down $3.16 from a week ago. The Select cutout was $250.32 down $1.16 from Thursday and down $6.84 from last week. The Choice Select spread was $18.22 compared to $14.54 a week ago.

The big questions concerning beef prices revolves around the consumer. What can consumers Continue reading →

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

Feedlot inventories were below year-ago levels for the fourth consecutive month according to the latest USDA Cattle on Feed report.  There were an estimated 11.68 million head of cattle on feed as of January 1st, which is 3 percent lower than January 1, 2022.

December placements were down 8 percent compared to December 2022 which was in the range of pre-report expectations. All of the weight groups were lower except for the 900-999 pound group which was even with a year ago. December marketings were 6 percent and likely affected by the winter storms that impacted transportation. Overall, the lower placements, marketings, and total cattle on feed numbers were largely expected by pre-report analysts.

The feedlot supply dynamics are different this year than Continue reading →