Economics

Gaining Greater Market Access for Ohio Feeder Calves

– John F. Grimes, OSU Extension Beef Coordinator

You do not have to look long and hard to find plenty of evidence that feeder calf marketing is undergoing significant changes across the country. The market is currently sending a clear message that buyers are demanding more for their purchasing dollars. Significant discounts are occurring in the market place for feeder calves that are not weaned 45-60 days, castrated & healed, dehorned, and given 2 rounds of a modified live vaccine for the shipping fever complex. In 2019, a major restaurant chain is going to start requiring their suppliers of fed cattle to be Beef Quality Assurance certified. This will in turn be pushed down to the producer level. Exports to China and other countries are going to require age and source verification. These are growing realities for cow-calf producers if they want access to as many markets as possible.

The OSU Extension Beef Team is pleased to announce that they have completed two pre-recorded presentations under the theme of “Gaining Greater Market Access for Ohio Feeder Calves”. These videos contain Continue reading →

Initial Hay and Pasture Data Don’t Look Good

– Levi Russell, PhD, Assistant Professor & Extension Livestock Economist, Department of Agricultural and Applied Economics, University of Georgia

The recently-released hay and pasture conditions report doesn’t look particularly good for producers across most of the country. The bearish May WASDE report – higher production and larger ending stocks for 2018 – compounds the problem, but pasture conditions could very well improve as the season goes on.

May 1st hay stocks are down significantly across vast swathes of the country. Texas, Indiana, Missouri, and Louisiana are all down 60% or more relative to May 2017 and another 7 states across the West, Plains, and Midwest are down more than 40%. These reduced stocks are consistent with Continue reading →

Weekly Livestock Comments for May 18, 2018

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

FED CATTLE: Fed cattle traded $6 lower than last week on a live basis. Prices on a live basis ranged from $110 to $117 while prices on a dressed basis were mainly $182 to $186.

The 5-area weighted average prices thru Thursday were $114.88 live, down $6.33 from last week and $184.28 dressed, down $7.47 from a week ago. A year ago prices were $134.27 live and $212.74 dressed.

Finished cattle prices have declined $10 per hundredweight in a two week period which has resulted in the basis narrowing $8. In other words, cattle feeders are not happy with how basis is narrowing, because all of the narrowing is coming from losses in the cash market and very little change in the futures market. Basis may not be cattle feeders’ biggest worry as this week’s cash cattle trade is the lowest price they have accepted since the middle of October. Looking back one year, finished cattle prices declined Continue reading →

Entering the Summer Doldrums

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

Memorial Day is soon to pass and the impact of the holiday on cattle and beef markets, if not already, is soon to be complete. The impact on prices was positive, especially the Choice-Select spread, but the fundamentals going forward look to be a very mixed bag. There is bullish information, there is bearish information, but there will likely be a lot of beef and other protein production through the remainder of the summer. This is and will continue to weigh on cattle markets.

The bullish news is as follows: the packer margin is strong, as are net exports of beef, Saturday and total slaughter volumes have been strong, slaughter weights continue their seasonal decline and boxed beef composite values have been relatively high. The Choice-Select spread, as mentioned, is also very strong indicating excellent demand going into summer. All of these indicate strong beef movement and good demand in the face of high production. But the bearish news is Continue reading →

Kentucky Beef Cattle Market Update

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

After focusing on cattle inventory in February, summer stocker programs in March, and fall calving cow-calf profitability in April, I want to focus more specifically on the market this month. Overall, the first four months of 2018 have not been kind to cattle producers. Fed cattle prices fell by more than $10 per cwt from late February to early April. While slaughter has been up in 2018 (especially for cows), uncertainly about trade was also at play. Cash fed cattle prices had actually improved some by early May.

It’s really the expectation for late fall / early winter fed cattle prices that is driving our current feeder cattle market. As I write this (May 9, 2018), December CME© Live Cattle futures had decreased by $7 to $8 per cwt from where they were in late winter. This translates back directly into feeder cattle values and Continue reading →

2018 Beef Exports Off to a Strong Start

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

Beef exports during the first quarter or 2018 have continued (and built upon) the increases seen last year. According to the latest Livestock and Meat International Trade Data released on May 4th by the Economic Research Service (ERS), beef and veal exports during the month of March totaled approximately 261 million pounds. This is the largest total for the month of March on record and is an 11.4 percent increase over March of 2017. This follows year-over-year increases in January and February. Year-to-date, exports are Continue reading →

Why ‘veggie meat’ Won’t Replace Beef

– Justin Sexten, Ph.D., Director, CAB Supply Development

Lately the news is overrun with features on how we humans plan to shift away from meat as we’ve always known it to plant protein alternatives. Personally, I refuse to call it meat; vegetables and legumes in a meat-like form perhaps, but meat it is not.

“Lab meat,” despite not being commercially available, continues to garner news coverage with the implication it may be coming soon to a store near you. The troubling aspects of these products are the claims they make against the Continue reading →

A Nice “Second Spring” Rally is Under Way

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

After touching $130 per cwt back in February, the fed cattle market dropped dramatically into the $110s. The early Spring rally appears to be giving us a second act. Cash fed cattle prices ranged from $124 to $126 to end last week. That leaves fed cattle up a good $8 per cwt during April.

Higher cutout values are feeding into higher fed cattle prices. The Choice beef cutout started this week at $224.50, up $13 in the last 7 week days. The Choice cutout was about Continue reading →

Weekly Livestock Comments for April 27, 2018

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

FED CATTLE: Fed cattle traded mostly $2 to $3 higher compared to a week ago on a live basis. Prices on a live basis were mainly $124 while dressed trade was not well established.

The 5-area weighted average prices thru Thursday were $120.84 live, down $0.47 from last week and $193.93 dressed, up $6.72 from a week ago. A year ago prices were $136.25 live and $216.81 dressed.

The talk around cattle pens is not about how impressive live cattle prices are but rather how steep a discount June live cattle futures are relative to current cash prices. The live cattle market is experiencing a record strong basis for the June contract. Currently, cash live cattle trade is $17 per hundredweight higher than where the June contract is trading. If futures were assumed to be correct then it will take a precipitous decline in live cattle prices the next two months to have Continue reading →

“This is a Family Business!?”

– Dr. Roy Burris, Beef Extension Professor, University of Kentucky

After more than forty years of visiting farms, I still cringe when folks describe their farming operation as a “family” business. That’s the way it should be and there’s no better place to raise a family, but I still find that statement “cringe worthy”. It’s because family is family and Business is Business! A family business may have to ultimately decide whether it is a family or a business. And sadly, business principles usually win out. I’ve seen that too many times.

Dave Pratt, a ranch management consultant, says that we have only three choices in any business: (1) We can be profitable, (2) We can subsidize the business, or (3) We can go out of business (bankruptcy). Many family farms choose the second option until they are sometimes forced into the third one. Any business needs to be profitable and all family members or employees need to work toward that goal.

I was on a recent farm visit when I suddenly realized that I had been there before – many years before. This farm had been Continue reading →