Ohio BEEF Cattle Letter

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

One question that I receive on a regular basis is “Why do we import so much beef?”

First, the top four import sources of beef include Canada, Australia, New Zealand, and Mexico and the majority of imported beef is used as processing beef which means it is ground and not marketed as a muscle cut. In 2018, the U.S. exported about 150 million more pounds of beef than it imported. It is actually more common for the U.S. to import more beef than it exports.

Back to the question at hand, “Why do we import so much beef?” The answer is rather simple. If a person has a product that can achieve a goal and it is worth $5 per pound and they could purchase a similar product for $3 per pound that would achieve the same goal then the person would sell their product for $5 and purchase the similar product for $3 which would leave them with $2 per pound assuming no transaction costs.

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

The USDA Prospective Plantings and the Quarterly Grain Stocks reports were released at the end of March and showed an increase in expected corn acres above 2018 levels. Corn planted area is estimated at 92.8 million acres which is four percent or about 3.66 million acres above last year. The 92.8 million number was on the high end of expectations going into the report. Combined with larger than expected stocks reported, there was a bearish impact on markets. December Corn futures prices dipped 18 cents in a day in reaction to the reports.

The increase in corn acres comes at the expense of soybean acreage. Soybean planted area for 2019 is estimated at 84.6 million acres which is down five percent from last year. Soybean expected margins are very tight as prices continue to be pressured by large supplies and tariff concerns. March 1 soybean stocks were 29 percent larger than a year ago and a record-high 2.72 billion bushels. It should be noted that the survey for the planning report was administered in the first two weeks of March and might not reflect the impact of the major flooding seen in many areas of the country.

So what are the implications for cattle markets? The cattle markets pay attention to Continue reading →

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

Cull cow prices are sharing in the Spring cattle price rally. Normally, cull cow prices increase from the Fall into late Spring, and that increase is well underway. Cow prices are climbing along with fed cattle prices.

Cow prices in the Southern Plains have increased about $13 per cwt, or 32 percent, from about $40 per cwt in January to $53 at the end of March. The meat market indicates higher values for the meat from cull cows. Ninety percent lean beef prices have climbed 10 percent to $218 per cwt since January. Over the same period the cow-beef cutout value is up 7.7 percent.

Cow Slaughter Historically Large

The rally in cow prices has come in the face of Continue reading →

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

I received a question recently concerning the impact of trucking regulations on cattle prices in Tennessee if livestock haulers have to begin using electronic logging devices (ELDs). For clarity, there is an 11-hour driving limit following ten consecutive hours off duty and a 14 hour on duty limit. These regulations did not change with the institution of ELDs.

If and when livestock haulers must begin using ELDs with the established service hours, this will increase the cost of shipping cattle from locations farther than an 11 hour drive from their final destination. It is reasonable to expect that Continue reading →

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

The returning to normal of U.S. federal government reports and data sources are revealing the impact of the cold and wet winter on the fed cattle production. As pointed out in last week’s ITCM, cattle on feed inventories are very high: 11,678 thousand head in the seven major states. This is above last year’s 11,630 thousand head and average of the prior five years for February 1 of 10,781 thousand head. The inventory of long-fed cattle – cattle calculated to have been on feed over 120 days – is also substantial. This inventory is 3,993 thousand head, is well above last year’s 3,558 thousand head, and the average of the prior five years for February 1 of 3,500 thousand head. There are a lot of cattle to be marketed through the end of March and into April and May. Slaughter volumes reported in the weekly Livestock Slaughter report do not communicate that this is happening. Total cattle slaughter is up modestly. Within total cattle, cow slaughter is higher some weeks by 10 thousand head, fed heifer slaughter is up some weeks 10-20 thousand head, and the largest portion – that being fed steer slaughter – is even with the prior year or softer. April marketings will be an important indicator of the potential strength of the cattle markets through the summer. Weak marketings will suggest a backlog of animals.

The Livestock Slaughter reports are also revealing the Continue reading →

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

After some delay due to the federal government shutdown, USDA released their January 1 estimates for cattle inventory on February 28th. At the national level, beef cow numbers were estimated to have grown by 1% from 2018. This is a lower rate than was seen last year, but growth nonetheless. Going back to 2014, the beef cow herd has grown by almost 10%. Heifer retention estimates provide further evidence that herd growth is slowing as the number of heifers held for beef cow replacement was down by 3%.

My preferred way to consider heifer retention is to look at it as a percentage of beef cow inventory. Based on these most recent estimates, heifer retention is running at 18.7% of beef cow inventory, which is slightly above the average going back to 1973 (see figure 1). Figure 1 really illustrates how high Continue reading →

– Matthew A. Diersen, Professor and Extension Specialist, Department of Economics, South Dakota State University

Following the shutdown, fundamental information is slowly returning to normal. The February Cattle on Feed report was released last Friday, with the March report scheduled for its normal date of March 22. The February report gives the January activity and February 1 totals. Also, the report contains the monthly and quarterly summaries of prior-year activity and includes an annual breakdown by feedlot size. Thus, it is a good reference report.

The trade expectations were for lower placements and higher marketings compared to a year earlier, which would have resulted in slightly higher on-feed totals. The actual numbers had placements at 95% and marketings at 103% of last year’s levels, both at the upper end of expectations. The resulting on-feed total of 11.7 million head was Continue reading →

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

A couple of questions have come up recently about price risk management tools and how certain tools can be used in cattle operations. The simple answer to this question is there is Livestock Risk Protection insurance for any size operation, futures contracts for operations that can either fill a 50,000 pound feeder cattle contract or a 40,000 pound live cattle contract, and then there are forward contracts if they can be had.

For small cattle producers, there are no good price risk management tools worth using or worth the cost of the insurance. That does not mean there are not some local opportunities when working with an individual, but those opportunities are Continue reading →