Ohio BEEF Cattle Letter

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

Ordinarily, I would use my February article to discuss the USDA cattle inventory report that typically comes out in late January or early February. However, due to the shutdown, that report is scheduled to come out at the end of the month, so we can have that discussion in March. With beef cow slaughter at such high levels, I do think we are starting to see early signs of beef cow herd growth slowing. But, I still look for a slight increase in beef cow numbers when the estimate comes out. In reality, anything between no change and a 1% increase would not surprise me.

Calf markets really haven’t moved since December. A 550 lb steer remains in the low-mid $140’s, as can be seen in Figure 1. January 2019 prices were roughly $11 per cwt below 2018 levels. Note that February just includes one week of prices, but I did choose to include it in the chart. I still feel that this calf market can rally significantly, probably $20 per cwt, between now and Continue reading →

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

Fed cattle and boxed beef cutout values entered 2019 and have stayed at levels similar to or better than last year. Fed cattle prices are about $124 with last year being close to $126 at this time – this is about 2% weaker. The cutout value is currently close to $217 and was $209 last year – this is 4% stronger. FI slaughter is up better than 5% compared to last year when slaughter weights appear to off almost a percentage point. The wet winter weather in enter cattle feeding region, from the upper Midwest and all the way south through the southern plains will hold weights down and likely create some variability in finishing times. Regardless, beef and slaughter prices are holding strong through this first two-month window into the year.

Feeder cattle and the both live and feeder futures offer some warnings as to likely Continue reading →

– Derrell Peel, Oklahoma State University Extension

Extreme cold temperatures and heavy snow will grip much of the eastern half of the country this week (the week of January 29th). From eastern Montana, across the Great Lakes and the Midwest to the east coast and the southeast, wind, snow and winter mix will likely impact cattle, travel and a host of markets in the coming days.

Beef markets will mostly be impacted by reduced feedlot performance and carcass weights; possible disruptions in movement of cattle to packing plants; and potential transportation delays of products through wholesale and retail markets. Production losses due to winter weather can reduce beef supplies and may have residual impacts for several weeks. Individual cattle producers, in feedlots and in the country, will face numerous management challenges and increased production costs. Beef demand may also be impacted as Continue reading →

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

This issue was supposed to contain a synopsis of the Cattle report. Assuming the USDA remains open, the report has been rescheduled for release on February 28. Knowing inventory levels such as cattle grazing wheat pastures, calf crop levels and replacement heifer levels helps producers make better-informed decisions. It does not seem like the trade became overly concerned about the lack of or lag in getting fundamental information. The futures markets for live and feeder cattle have not been overly volatile and the forward-looking volatility remains low. Here is a breakdown of the volatility and its implications for protection strategies.

Volatility in this context is how much a price fluctuates over a period of time. One can look back and see how much a futures price has changed over the past 20 or 60 days. One can also look ahead and surmise how much a price may change over a period of time. That is where implied volatility is often examined. The implied volatility is the volatility level that is consistent with observed or known market parameters. One can observe futures prices and interest rate levels. One can also Continue reading →

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

FED CATTLE: Fed cattle traded $1 lower compared to last week on a live basis. Prices on a live basis were mainly $123 while dressed prices were primarily $197.

The 5-area weighted average prices thru Thursday were $123.04 live, down $1.96 from last week and $196.49 dressed, down $0.51 from a week ago. A year ago prices were $123.05 live and $194.00 dressed.

Cattle feeders were able to hold the line this week as prices were mainly steady. The wet and cold pen conditions have cattle feeders on edge because it is negatively impacting feed efficiency and average daily gain. However, the same conditions could be one factor contributing to strong finished cattle prices as slaughter weights are sure to be declining due to the unfavorable conditions. The conditions will eventually improve, but winter does not appear to be coming to an end anytime soon. This may continue to provide Continue reading →

– Brenda Boetel, Professor and Extension Economist, Department of Agricultural Economics, University of Wisconsin-River Falls

Last week appeared to bring no movement toward a resolution regarding the partial government shutdown. As such, several reports were not available, including the World Agriculture Supply and Demand Estimates, Quarterly Grain Stocks, Winter Wheat and Canola Seedings and weekly export sales. Next week will see the absence of the Livestock Slaughter and Cattle on Feed report, and if this shutdown goes into February, the semi-annual Cattle report will be affected.

The markets will continue to make assumptions about the content of these missing reports. The longer the lack of information prevails, the greater the market correction may be when the reports resume, especially if the reports say something different than the market assumed. The cattle markets care about last week’s missing reports, because Continue reading →

– Derrell Peel, Oklahoma State University Extension

A major winter storm this past week extended in a belt across the middle of the country from Denver east to the mid-Atlantic coast. Heavy snow hit parts of feedlot country across eastern Colorado, Kansas, southeastern Nebraska, southern Iowa and the eastern Corn Belt. Much of Nebraska and the northern Plains along with the Texas panhandle were spared the worst of the snow but rain has created wet, sloppy conditions in many places that will impact cattle performance in feedlots and in the country. Recent weather may delay fed cattle marketing enough to help support fed cattle prices or push prices higher. Whether or not weather impacts are widespread enough to noticeably impact overall market conditions, cattle producers in many areas face significant management headaches due to the weather.

Winter weather often impacts feedlot performance and efficiency. Feedlots typically post the lowest seasonal average daily gains (ADG) for cattle marketed in March to May which reflects cattle fed over the previous four to six months. This likely includes the negative impacts of Continue reading →

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

The first of the year is typically a good time to review cattle markets and think about the upcoming year. While there will always be debate about which is worse, drought or mud, there was little question about which was the greater issue in 2018. One doesn’t have to drive around rural Kentucky very long to see multiple examples of challenges created by excessive rain. Pasture growth was good well into fall, but muddy conditions brought its own set of challenges. And, winter feeding certainly tends to put those challenges on showcase.

Despite showing a lot of resilience through summer, calf prices fell sharply in the fourth quarter of 2018. The state average price for a 550 lbs steer fell by roughly $12 per cwt from August to December, settling in the low $140’s to end the year. This was approximately $8 per cwt lower than December 2017. Figure 1 tells the story best. Calf prices in 2018 actually averaged Continue reading →

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

We start the New Year with the federal government 17 days (as of this writing on January 7) into the shutdown. So far, not much appears to be missed in terms of publicly available market information. My regular consumption of AMS reports has not much changed. (Of course, Colorado continues to report no fed cattle prices because of confidentially requirements.) Then again, many commodity markets are inactive over the past two weeks. But that will not be the case as we proceed through week three and for certain into week four of the shutdown. I will miss the monthly WASDE next week, the monthly Cattle on Feed report the week after that, the accumulated weekly livestock slaughter data, and the trade data from Commerce. To date, the substantial volatility that has been seen in the equity markets has not Continue reading →