Weekly Livestock Comments for November 20, 2020

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

FED CATTLE: Fed cattle traded steady com-pared to last week on a live basis. Prices on a live basis were primarily $108 to $110 while dressed prices were mainly $170 to $172.

The 5-area weighted average prices thru Thursday were $109.59 live, up $0.13 com-pared to last week and $171.73 dressed, down $0.15 from a week ago. A year ago, prices were $115.96 live and $183.56 dressed.

The steady trade compared to last week can probably be considered a win in that margins on most cattle remain positive. Packers continue to demand cattle to fill the holiday pipeline. It will be interesting to see if holiday meat purchases are different this year given that many family gatherings will be smaller and less traveling. If consumers lean heavier on beef then packers will continue to have a strong demand for cattle to keep the pipeline full and to re-stock meat counters following the holiday purchases. Heavy cattle continue to put pressure on some regional markets, but it is becoming Continue reading

Emerging Grain Market Conditions and Impacts on Calf Prices

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

Feed grain and oilseed prices have undergone some dramatic changes over the past couple of months. These changes are indicative of changes to underlying fundamentals in those markets and will impact the value of feeder cattle and calf prices well into next year. It is worth examining the changes to crop market conditions and thinking about possible prices.

Corn and soybean futures have advanced substantially since early August. The 2020 harvest corn contract has increased about $1 per bushel in that time period and the harvest soybean contract has increased roughly double that amount. Importantly, the increases have also been seen in the deferred contracts. DEC 2021 corn is a little stronger than $4 per bushel and NOV 2021 soybeans are just short of $10 per bushel. The price changes communicate more than Continue reading

International Beef Trade Dynamics

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

The latest monthly trade data were released by the USDA Economic Research Service last week. The September data continued to show adjustments from the beef production and beef price changes earlier in the year as well as the impacts of global beef demand. According to the ERS data, beef exports totaled approximately 239 million pounds during September. This was down 5.6 percent from September 2019. Through September, beef exports in 2020 were about 6 percent lower than during the first 9 months of 2019.

September showed stronger exports to South Korea, Canada, Taiwan, and Hong Kong. Exports to Japan, the largest volume destination for U.S. beef exports, were down slightly according to the ERS data. Beef exports to Mexico continued to lag behind the 2019 pace. During September, beef exports to Mexico were about 38 percent lower than in September 2019 and were 40 percent lower for the first 9 months of 2020 compared to the first 9 months of 2019. Exports to Mexico were 14 percent of total January-September 2019 beef exports in 2019; in 2020, that share has dropped to about 9 percent.

Following up on a topic brought up by David Anderson’s article in September, cattle exports to Mexico continue to be Continue reading

Livestock Risk Management Webinar

The national Extension Risk Management Education Program and the United States Department of Agriculture are collaborating to deliver a webinar for agricultural producers and professionals focused on livestock risk management. Recent developments and attention to livestock markets, price risk, and the need for better risk management have highlighted the challenges for producers as well as improved tools and opportunities for livestock producers to manage risk.

The webinar is scheduled for 2:00-3:00 PM Eastern on Thursday, November 12 and will start with an overview of current livestock market and risk management issues with two of the Under Secretaries at USDA, Greg Ibach and Bill Northey. The webinar will then include a panel to discuss livestock economics and marketing as well as the utilization of insurance tools including Livestock Risk Protection to Continue reading

Insuring Pastures

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

The deadline to purchase or change Pasture, Rangeland, Forage – Rainfall Index (PRF-RI) insurance is quickly approaching. The deadline is November 15, 2020 to purchase PRF-RI for calendar year 2021. A producer selects the grid they want to insure. Indemnity payments are computed if the rainfall falls short of the insured level. The indemnity payments can be used to offset the related loss of forage production. At times the product may not work perfectly, but the goal for the insured is long-run viability.

In the 2017 Census of Agriculture, there were 400.8 million acres in permanent pasture, 13.8 million acres of pastured cropland, and 56.9 million acres of forage in the U.S. Most of those acres would be eligible to be insured using PRF-RI. Covered acres have increased from 54.7 million acres in 2015 to 159.9 million acres in 2020. The product is popular on rangeland in the Continue reading

Kentucky Beef Cattle Market Update for November 1

– Dr. Kenny Burdine, Livestock Marketing Specialist, University of Kentucky

October has not been kind to cattle producers and traditional seasonal factors have been amplified this year by uncertainty over the election and back-and-forth discussions about another round of stimulus funds. Federally inspected cattle slaughter remains around 2019 levels. Beef cow slaughter has remained pretty high since summer, but dairy cow slaughter has been down over the same time. Dressed steer weights continue to run about 3% above last year. Seasonally, weights tend to peak in late November or early December.

Fed cattle prices decreased slightly from the first of the month, which is a counter-seasonal move. Spring CME© live cattle futures also dropped sharply throughout the month, which worked to pressure heavy feeder cattle prices in KY. Consistently rising corn prices have also weighed on feeder markets as that impacts feed costs this winter. It really wasn’t until the last two weeks of the month that full price impact was felt in Kentucky markets, so figure 1 really doesn’t show the extent of the drop over the last couple weeks. On a state average basis, an 850 lb M/L #1-2 steer has moved into the low-mid $120’s. Groups and higher quality feeder have not Continue reading

Freezer Beef Sales Explode During COVID-19 . . . Will Your Customers Be Ready to Buy Again?

Mike Estadt, OSU Extension Educator, Pickaway County

Do you know if your freezer beef customers are satisfied?

It is well documented that early in the coronavirus pandemic, major meat processing facilities across the United States became supply bottlenecks due to employee infections shutting down production.  In response to seeing less meat available in the retail case, or limits on the amount of proteins that a consumer could purchase, farm raised, direct marketed meat, especially beef, experienced high demand.

Today it is still unlikely that you can schedule the processing of a steer until the early part of 2021.  Due in part to limited space in coolers and limited workers skilled in meat processing, both custom and inspected processing facilities are struggling to meet the demand of producers wanting beef processed for direct sales to consumers.

Where is the beef supply currently and what can the consumer and local producer expect to see in the retail sector of the beef business?  Cattle coming to market are Continue reading

Beef Producers Should Consider Signing Up for CFAP-2

David Marrison, Extension Educator, ANR, Coshocton County

Deadline to sign-up for CFAP-2 is December 11, 2020

The COVID pandemic has created disruption in many areas of agriculture.  Instead of our usual market cycles, farmers saw prices move up and down in ways contrary to typical market cycles.  To help farmers mitigate the impact of the coronavirus, the Coronavirus Food Assistance program (CFAP) was released in April with program sign-up ending on September 11, 2020.

On September 17, the USDA announced additional assistance through a second version of this program titled Coronavirus Food Assistance Program 2 (CFAP 2). Nearly all agricultural commodities are eligible for payments under this program.  These payments will be made for three different categories which include Continue reading

Cattle on Feed Grows Again

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

The number of cattle on feed hit an October record in 2020, at 11.7 million head. Placements and marketings were up over a year ago, as well. Digging into USDA’s report a little deeper reveals some more interesting directions for the cattle market in coming months.

Marketings were up 6.2 percent over September 2019. Given one more working day in the month that means daily average marketings were above a year ago for the second month in row. The ability to slaughter more cattle per day, on average, than a year is welcome data considering all the adjustments forced on the industry this year. In terms of absolute numbers, marketings trend lower in the second half of the year, and that trend is holding this year, as well.

Placements were above a year ago also, up 5.9 percent. Larger placements might be seen in the light of sharply lower placements in March and April as response to corona virus effects. Kansas and Nebraska, two of the big three feeding states, had placements Continue reading

Is This A Year To Hold Calves?

– Dr. Jeff Lehmkuhler, Associate Extension Professor

This fall has provided us with another dry spell. The recent hurricane provided small amounts of precipitation to the Commonwealth, but much less than originally forecasted. Randomly selecting county Mesonet sites across the state for the month shows precipitation levels of 0 to 1 inch. Even with the dry conditions, we are much better off than the Western and Plains states (see figure below). Dry conditions appear to be forcing producers in the west to sell calves. Last week, Nebraska feeder cattle marketed were reported at 28,584 compared to 15,475 the week before. Colorado had similar increases selling 11,903 feeders compared to 6,660 the prior week. Wyoming another state hit hard by the dry conditions followed the same pattern moving 12,198 feeders this past week compared to 7,673 the previous week. It is not clear if this is strictly due to the dry conditions, the seasonal marketing pattern of spring calving herds or a combination of the two. Yet, when looking at the feeder cattle marketings for Arkansas, Georgia and South Carolina, states in the green vegetation index area, numbers were steady showing no large increases from the previous week.

With the August cattle feedlot placements being above a year ago, drought conditions increasing cattle marketings and concerns over wheat pasture conditions, it would not be unexpected to see these factors impact fall feeder prices here in the southeast. I am not an economist so be sure to follow the markets and Dr. Burdine’s market updates as wells other industry news as we move through the fall to make informed marketing decisions. Current situations may mean backgrounding calves this fall, if you have forage, could provide an opportunity to Continue reading