– Kenny Burdine, Livestock Marketing Specialist, University of Kentucky

On Friday July 23^rd, USDA-NASS released their mid-year estimates of US cattle inventory. Most all beef related inventory categories were lower, with all cattle and calves down 1.3% from July 1, 2020. I tend to focus more on beef cow inventory, which was off a little more than 2% from last year. This was the largest mid-year decrease in beef cow numbers since 2012, but still leaves the beef cow just 3% off its recent high in 2018. USDA does not make state-level estimates in July, but I suspect drought conditions in the west, and in the northern plains, have impacted this. Beef cow slaughter levels in the first half of 2021 have been relatively high although most culling tends to occur in the fourth quarter as fall-born calves are weaned and we move into winter.

Heifer retention estimates also paint a picture of decreasing beef cow numbers in the future. While beef heifer retention in nominal terms has been pretty flat the last three years, I like to examine that number as a percent of beef cow numbers. Put simply, if heifer retention is smaller than the culling rate, this suggests decreases in beef cow inventory. The figure below attempts to Continue reading →

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

USDA ERS released the estimates for beef trade during the month of May on July 6th. The export data show a sharp increase as compared to the pandemic-disrupted levels from a year ago.

Beef and veal exports were 69 percent higher in May 2021 as compared to May 2020. Of course, May 2020 was far from normal. As shown in the export chart above, May and June 2020 were exceptionally low export months as trade was disrupted due to the pandemic.

Even though the comparison to a low level from 2020 leads to the large percentage increase, that shouldn’t Continue reading →

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

Cow slaughter continues to run ahead of a year ago, led by beef cows.  Even with larger slaughter, prices are ahead of last year.  Over the last three months, beef cow slaughter totaled 818,000 head, the most since the 837,000 during the same period in 2010.  Total cow slaughter over the same period are the largest since 2013.  At that time, the industry was reducing the number of beef cows due, mostly, to low prices and then the drought in Texas and the Southwest hit.

Weekly beef and dairy cow slaughter is reported by region.  Region 6 includes Texas, New Mexico, and Oklahoma.  Beef cow slaughter in Region 6 over the last three months totaled 204,000, the most since 2011.  Slaughter in Region 9, which includes Arizona, California, and Nevada, was the most since 2013.  Region 10, the Pacific Northwest (Washington, Oregon, and Idaho), had their largest beef cow culling in more than a decade.  While drought is likely driving more culling, expanded cow packing capacity in the region likely skews the data.  Region 8 includes the rest of the mountain West and the Dakotas.  Beef cow culling in those states totaled 73,600 head, the most since 2019.

On the dairy side of the ledger, cow culling totaled 667,000 over the last Continue reading →

– James Mitchell, Livestock Marketing Specialist, University of Arkansas

Recently our colleague David Anderson at Texas A&M wrote an article that provided an update on cow slaughter and cull cow markets. You can read his article here. This week, I thought I would continue this discussion by examining one of the main drivers of cull cow markets, ground beef demand.

To review, cull beef cows contribute to ground beef production as a source of 90% lean trimmings, which are blended with 50% lean trimmings to make the majority of our ground beef and hamburger. The other two sources of lean trimmings are Continue reading →

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

USDA released the annual Acreage report last week. The report showed estimates of 92.7 million acres of corn in the U.S. This would be about 2 percent higher than in 2020 and is 1.6 million acres more than USDA estimates of Prospective Plantings back in March. The corn market reaction to the report was bullish on June 30th. Despite the increase in corn acres in the report, it wasn’t as big of an increase as many expected and futures prices jumped sharply. December corn futures increased by 40 cents last Wednesday.

However, that same contract is limit-down (40 cents) in trading today (7/6/21). The December corn contract is currently trading around $5.40 per bushel. Much needed rains and cooler weather are a key reason for the drop today. The weather forecast for growing corn in the Midwest is much improved since last week. The map above shows the precipitation forecast over the next seven days. Compared to the drought map at the bottom of this newsletter, the rainfall is Continue reading →

– Kenny Burdine, Livestock Marketing Specialist, University of Kentucky

USDA released the June Cattle on Feed report on Friday June 25^th. This monthly report estimates feedlot inventory in feedlots with one-time capacity over 1,000 head as of June 1^st. Total feedlot inventory on June 1^st was estimated at 11.7 million head, which was just fractionally higher than June 1^st of 2020. On feed numbers had been running well-above year-ago levels for the last several months.

But, as can be seen in the chart above, 2020 on feed inventory rose sharply from May to June. So, this is the first time in a while that Continue reading →

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

USDA will release their annual Acreage report on June 30th. This report will include an update of how many crop acres are planted this year. These reports can have a big impact on futures markets. We have already seen an example of that from the Prospective Plantings report released in March which showed lower prospective planting corn acreage than expected and led to sharp increases in corn future prices.

The chart above is for CME December 2021 Corn futures prices. Kenny discussed last week how the higher corn prices are a longer-term impact because of the Continue reading →

– Kenny Burdine, Livestock Marketing Specialist, University of Kentucky

The JBS cyber-attack was another blow dealt to a cattle market that has been hit with challenge after challenge since last spring. James did a good job last week talking through the impacts on slaughter volumes and how quickly they returned to pre-attack levels. We saw something similar in the spring of 2020 as slaughter levels pushed back towards pre-COVID levels. I think both of these responses speak to the resiliency of our meat system and I am including the weekly slaughter chart again this week. High boxed beef prices are also creating incentives to push cattle through the system.

Market reactions to shocks like these are always interesting to watch. The price response in the cattle markets to the cyber-attack was relatively limited as the market seemed to view this as a short term impact. Conversely, the market response to COVID was much greater, as the impacts were expected to last longer and there was a lot more uncertainty about what would happen. In both cases, the impacts on feeder cattle markets were Continue reading →

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

Fed cattle, feeder cattle, and calf prices have been displaying substantial volatility since April. There is simply much uncertainty about the path through the rest of the year. And it is unlikely the volatility will dissipate.

There is considerable optimism about cattle markets. Beef margins are at extraordinary levels and boxed beef product cut prices are rather high. And this is in the face of substantial production. There is some refilling of meat product pipelines, the supply chains continue to adjust to changes in product flows, and there is substantial improvement in consumer demand. All three are occurring, strengthening prices, and some portion will likely persist into the future. How will these markets react if production tightens some this fall? It appears unlikely that downstream prices and packer margins will Continue reading →