– Jordan Buerck, Research Assistant and Brenda Boetel, Professor, Department of Agricultural Economics, University of Wisconsin-River Falls

As winter in the Midwest begins in full force, one of the more important decisions for producers is whether or not to continue feeding open cows throughout the winter period in hopes of attaining higher market value for that animal in the spring. This decision must be analyzed based on each individual’s location and access to feed and labor. Typically, the cull cow market reaches a seasonal low in November and December due to the large influx of cull cows and cull bulls on the market. Following the 1st of the year, the market routinely increases and reaches a high in July and August.

The simplest method of managing open cows is to sell immediately following pregnancy checking from September-November, while the cull cow market is on its descent. According to USDA NASS data, between 2016-18, national cull cow prices averaged $61/cwt, placing the gross value of a 1200lb cow at $732. With this marketing decision, there are no costs associated with an open animal after determining that she is not carrying a calf. During years of high feed prices, this may be the most financially responsible decision, provided the cull cow market isn’t too depressed at the time of selling and that BCS is adequate. Under this system it is crucial to Continue reading →

– Dr. Elliott Dennis, Assistant Professor, Livestock Marketing Economist, Department of Agricultural Economics, University of Nebraska – Lincoln

The Holcomb packing plant fire has certainly been a black swan event – rare, unpredictable and has had dramatic effects on the cattle industry. These dramatic effects have ranged from massive selloffs in the futures market, record packer profit margins coupled with increases in Saturday harvest numbers, and volatile feeder and fed cattle prices.[1] But to date, most of the cattle market commentary has focused on packing plant and feedlot responses. Little has focused on how cow-calf producers have responded due to this event and resulting feeder futures market volatility. Responses between these groups will be fundamentally different since packers and feedlots operate off margins whereas cow-calf operations rely on market price levels where profitability is largely driven by controlling costs (Bowman, Pendell, and Herbel 2019).

To illustrate the market uncertainty cow-calf producers were making decisions in this past year, let’s take a representative Northern Plains cow-calf producer who calves in Mar or Apr and then sells weaned calves in Oct. At calving, Oct 2019 feeder cattle futures prices were $157 per cwt. Poor planting conditions caused a run up on Continue reading →

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

Fed cattle, feeder cattle, and calf cash prices have all been stronger than expected through this fall. Live cattle and feeder cattle futures contract prices have also shaken off the pessimism of abundant supplies compounded by the unexpected closure of the Tyson beef plant in southwest Kansas. How did the market turn this corner?

There has been the standard discussion of timely marketing of fed cattle, slaughter weights being modestly behind last year’s, packer’s running substantial fed cattle slaughter on Saturdays, and other supply focused points. What is being discussed less in the strong retailer and, by definition, consumer effects? Packers margins have been very strong in August and September, and likely October, approaching $500 per head. These are the live-to-wholesale beef price spreads. This value is much higher than other months and much higher than prior year highs. This is, of course, due in part to the Continue reading →

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

I have been asked to do a program early next year that focuses on step-by-step marketing. At first thought this would seem extremely elementary to most readers and maybe it is to some. However, my experience has been that many producers who have been in the cattle business for decades do not even consider that every decision they make influences their final product and the marketing scheme.

Thinking about the basics, the breeding season, breed of cattle, and cattle genetics would be the starting point for most producers. However, those decisions should not be made until an intended market is identified such as selling feeder cattle at the auction market, retained ownership through the feedlot, direct marketing of beef or whatever market is the intended endpoint. After identifying an endpoint, every management decision can influence the final market, but a producer does not have to stay with the initial endpoint if market conditions present a better opportunity.

This is a fluid business which is one reason it is so enjoyable.

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

The October Cattle on Feed report was very close to trade expectations. Placements during September were 2.1 million head, slightly above expectations. Marketings during September were 1.7 million head, even with expectations. The 11.3 million head on feed is 99 percent of a year ago. The placements by weight categories reflected a slight decrease in the volume placed at the heaviest weight classes, which should be somewhat supportive of prices in the short run. There was also a slight decrease in placements in the lightest weight class, suggesting limited selling pressure from cow-calf producers.

As it was the beginning of the quarter, there was also a breakdown of inventory levels by steers and heifers. The heifer mix, at 39.1 percent of cattle on feed, is larger than last quarter and a year ago. The continued high proportion of heifers confirms fewer held as replacements. It also suggests that lower production is expected as heifers are harvested at lighter weights than steers. The higher heifer mix should be supportive of live cattle prices for the next quarter.

Using data from recent Livestock Slaughter reports, beef cattle slaughter volume for the third quarter was Continue reading →

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

The latest Livestock and Meat Monthly Trade data from the Economic Research Service (ERS) was released on October 7th and included the month of August 2019 as the most recent data available. The purpose of this article is not just to discuss the export data from this report, but also to discuss an important but complex factor that impacts trade: the value of the U.S. dollar.

To the ERS report first, beef exports were lower in August 2019 as compared to July 2019 and also to August 2018. For January-August, beef exports were 3.8 percent lower than in the same period of 2018. Exports to Japan, the top U.S. beef export destination, were down 8.6 percent during this time period. Exports to South Korea were up 8 percent. Together, these two countries accounted for 50.5 percent of U.S. beef exports during data available for 2019. The October USDA World Agricultural Supply and Demand Estimates (WASDE) report lowered the 2019 projection for beef exports to 3.126 billion pounds which would be about a 1 percent decline compared to 2018.

Now let’s shift focus to the value of the U.S. dollar. For many of us, we might first think about Continue reading →

– David P. Anderson, Professor and Extension Economist, Texas A&M AgriLife Extension Service

Beef production has dipped below a year ago over the last couple of weeks, leading to some higher fed cattle prices and a widening Choice-Select price spread.

Over the last four weeks total beef production is more than half a percent below the same period a year ago. As we all know, not all beef is the same. Over this period, fed steer and heifer slaughter is down 1.7 percent, while cow slaughter is up 4.2 percent. Digging in a little deeper, fed steer slaughter is down 6.5 percent while fed heifer slaughter is up 6.7 percent. Dressed weights continue to be down about 2 pounds per head over the last month for steers, heifers, and cows. Combining weekly slaughter and dressed weights leaves fed beef production about Continue reading →