Weekly Livestock Comments for January 17, 2020

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

FED CATTLE: Fed cattle traded steady compared to last week. Prices on a live basis were mainly $124 while dressed prices were mostly $198 to $199.

The 5-area weighted average prices thru Thursday were $124.00 live, even com-pared to last week and $199.07 dressed, up $0.43 from a week ago. A year ago, prices were $125.00 live and $197.00 dressed.

Following the strong run in finished cattle prices in December and a strong start to January, fed cattle prices have stagnated the past couple of weeks. Despite the appearance that prices have stalled, this should still be considered positive for cattle feeders. January and February are not known as strong beef demand months nor are they known for having the best finished cattle prices. The upside to current prices is that beef and cattle demand are strong in the spring which should bode well for the price of finished cattle moving into the spring. There remains potential for the cash market to trade over Continue reading

Beef Exports (again) a Key Factor to Watch in 2020

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

The latest Monthly Trade data for November 2019 was released by USDA Economic Research Service last week. The report continued the recent trend of lower monthly exports as compared to 2018. After three consecutive years of double-digit increases (2016-2018) in beef exports, current data show January-November 2019 exports to be down 4.6 percent compared to the same period in 2018. There are also new and hopeful trade deals to add to the mix with Japan, Canada, Mexico, and China. Needless to say, there are plenty of moving parts for 2020.

November 2019 beef exports were 8 percent below the same month of 2018 at just under 245 million pounds. For January-November 2019, exports to four of the top five destinations were lower (Japan, Mexico, Canada, Hong Kong) with the exception of South Korea which is up 6.3 percent. Japan is still the top destination for U.S. beef though the gap between first and second place narrowed. Through November 2019, 26.5 percent of U.S. beef exports went to Japan and 22.6 percent went to South Korea. In 2018, 28 percent of beef exports went to Continue reading

Goals for Your Cow Herd in 2020

Garth Ruff, OSU Extension Henry County

Group lots of calves with uniform weight, frame, and genetics sell for a premium in the market place.

Each year I like to look evaluate any upcoming opportunities and set goals for the New Year in an effort to better myself both professionally and personally. I prefer to call them goals rather than New Years Resolutions because many people tend to let resolutions fall through the cracks. When developing goals, the key is to write them down! Call them whatever you want, in just a few minutes of looking back and reflecting on some observations made in the last year I was able to come up with a few goals focused on improving profitability and the quality of calves marketed in 2020.

Sharpen the Pencil. Do you have a projected budget for the year? How much does it really cost you to feed a cow for the year? Put together an enterprise budget to use as a decision making tool. There are many templates available online from various universities and institutions, chose one that’s geographically relevant and considers the variables that affect your operation (find the OSU Farm Budgets linked here). Be realistic in valuing feed, labor, and livestock values. Knowing cost of production and breakeven points are useful in making Continue reading

Big Fed Cattle Price Rally to End Year

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

And kept it going to begin the new year. Rising fed cattle prices continued their run into the first week of the new year, hitting $124-125 per cwt.

Fed cattle prices tend to increase seasonally from late summer lows to the end of the year. It’s also not uncommon for prices to weaken between Thanksgiving and Christmas and again in February before the Spring rally. Fall’s price rally has been stronger than average. Over the 2013-2017 5-year period the average rally has been about $11 per cwt, or 8.8 percent, from the last summer low to the end of the year. The Fall rally in 2018 totaled $15 per cwt or a Continue reading

Trade and Animal Health Practices: Are they paying?

– Dr. Elliott Dennis, Assistant Professor, Livestock Marketing Economist, Department of Agricultural Economics, University of Nebraska – Lincoln

This past year has seen several important trade agreements agreed to which will directly benefit the beef complex. The Japanese-U.S. trade deal will effectively lower tariffs for 90% of beef commodities from 38.5% to 9% between 2019 and 2033. The European Union-U.S. trade deal will increase the quota limit of hormone free beef for the U.S. to 35,000 tons (~80% of quota limit) over the next seven years. Lastly, this past week the U.S. House of Representatives voted to pass USMCA which will now go on to the Senate for final approval. This deal will continue to allow livestock products to be exported to Canada and Mexico, the two largest export destinations for U.S. livestock products.

So why has there been so much attention on securing export deals that are favorable for livestock products and in particular for beef? The short answer is because that is where demand is growing. Figure 1 clearly illustrates this story. I plot monthly data from Glynn Tonsor’s Domestic and Export Demand Indices (see Meat Demand) from 2010 to 2019 side by side. Domestic demand (left panel) for beef products fluctuates year to year but overall demand is trending sideways. Chicken has shown the largest increase in domestic demand since the late 1980’s. Export demand (right panel) tells a different story. Since 2010 export demand for beef has increased 100% and Continue reading

A Strong Finish to the Year

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

Without a doubt, the cattle markets are closing the year far stronger than I expected.  Live cattle futures have pushed into new highs and cash fed cattle prices are back to tracking the price levels and seasonal patterns of last year.  There were some unique market drivers that I discussed last month.  Most are still present, are not typical, and are worth talking through again.

The market has handled the steady seasonal climb in fed animal dress weights, continues to move fed animals in a timely manner, the packing sector continues to run substantial Saturday slaughter, and we are on the cusp of Tyson’s Holcomb facility returning to substantial operations.  Packer margins are softer but remain above $400 per head and atypically retailer beef margins continued to shrink.  I see the retailer and food service as driving the strength into Continue reading

Farm Succession and Red Angus: An Eye to the Future?

Clifton Martin, OSU Extension Educator, Muskingum County (originally published in the Ohio Farmer)

Utilization of an advisory team can help with the support required to sustain a farm business for future generations.

This was a game-changer. When I departed a farm tour this fall I was struck by a deep sense of the importance of what I had just witnessed. The layers were peeled back to provide a brief glimpse into the life of one particular farm family, their farming operation and their triumphs and struggles. In an effort to improve what they do and out of a commitment to their continued success, they allowed our tour group into the potentially vulnerable space that is their lives, finances, and future of their farm.

When I stepped foot on the farm I felt I had entered a fairly average farm, though as many are it was a place of beauty and pride. A long farm lane took a sharp left and ended in the drive of a small older home. Behind the home off the right corner were a few grain bins one hundred yards out. Down the slope to the right was the main farm lot with two smaller-sized farm buildings: one for equipment and the other for handling livestock. The buildings were older, painted white, unheated, showing a few signs of Continue reading

Weekly Livestock Comments for December 13, 2019

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

FED CATTLE: Fed cattle traded steady to $1 higher compared to last week on a live basis. Prices on a live basis were mainly $119 to $120 while dressed prices were mostly $188 to $190.

The 5-area weighted average prices thru Thursday were $118.81 live, down $0.14 from last week and $188.11 dressed, up $0.37 from a week ago. A year ago, prices were $117.00 live and $186.51 dressed.

The strength in live cattle futures provides a little promise that finished cattle could trade over $120 before the end of the year. Whether it does or does not, there is likely to be few complaints from cattle feeders. A few cattle traded at $120 this week, but the weekly weighted average has yet to reach that level. The two thoughts on many cattle feeders’ minds now is avoiding Continue reading

Regional Feedlot Marketings

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

At a recent producer meeting, people were talking about mandatory livestock price reporting in the broader context of fed cattle marketing. South Dakota has enough fed cattle to be reported in cattle on feed statistics. The large feedlots (1,000+ head) in the state typically have a strong seasonal pattern in placements, peaking in October, with limited variability in marketings. However, as a smaller feedlot state not many direct price reports have much information specific to South Dakota. An exception are the various committed and delivered reports, which give a breakdown by region of origin for fed cattle transacted for harvest. The region Northern Plains / Eastern Mountain contains North Dakota, South Dakota, Montana and Wyoming. The monthly version of the report, LM_CT143, is available here: https://www.ams.usda.gov/mnreports/lm_ct143.txt

The focus here is mainly on the Northern Plains / Eastern Mountain region, both for specific insights and to provide a possible template to analyze other regions. In November of 2019 the volume of cattle delivered from this Continue reading

OCA Replacement Female Sale Results

John F. Grimes, OCA Replacement Female Sale Manager

93 lots of bred heifers, bred cows, and a cow-calf pair averaged $1382

The Ohio Cattlemen’s Association (OCA) held their seventh annual Replacement Female Sale on November 29 at the Muskingum Livestock Auction Company in Zanesville, Ohio.  A large crowd was on hand to bid on 93 high quality females in the sale.  The sale represented an excellent opportunity for cow-calf producers to add quality females with documented breeding and health records to their herds.

Buyers evaluated 93 lots of bred heifers, bred cows, and a cow-calf pair at the auction.  The sale included 75 lots of bred heifers that averaged $1,379, 17 lots of bred cows that averaged $1,375, and one cow-calf pair that sold for $1,700.  The 93 total lots grossed $128,525 for an overall average of $1,382.  The females sold to buyers from Ohio, Michigan, and West Virginia.  Col. Ron Kreis served as the auctioneer.

The Ohio State University Beef Center of Dublin, OH consigned the top selling lot at Continue reading