Tuesday, January 24, 2017

COW/CALF CORNER The Newsletter From the Oklahoma Cooperative Extension Service January 23, 2017

The Newsletter

From the Oklahoma Cooperative Extension Service
January 23, 2017

2017 World Beef Trade: Major Exporters
Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

Global beef exports are expected to increase year over year in 2017 with growth in several major beef exporting countries supported by growing production in most cases.  However, the situations vary among beef exporting countries and market conditions will keep international markets dynamic for the foreseeable future.  Beef exports from the top four exporting countries (Brazil, India, Australia and the U.S.) are projected in 2017 to account for 73 percent of total exports from the top ten beef exporting countries.

Brazil and India, with roughly equal beef export totals, are projected to lead the world in beef exports in 2017. Both countries are experiencing growing production and growing international market demand and access.  Brazil, which has a dominant position in European and Middle Eastern markets is seeing increased access to China as well as the U.S.  Late in 2016, the U.S. and Brazil announced an agreement that would allow Brazil to export fresh or frozen beef to the U.S. along with cooked product. Brazilian exports have also been boosted by the currency weakness of the Real.  India has also seen growing production and international demand for Indian beef, much of which is carabeef (water buffalo).  Recent announcements indicate that India has an agreement with China for direct access to the Chinese market.  Previous Indian beef shipments to China were transshipped through other countries such as Vietnam.

Australia has slipped to the number three beef exporting country as the extended herd liquidation through 2015 (which resulted in temporarily higher exports in 2014 and 2015) is now resulting in reduced beef production and exports.  Low cattle inventories, combined with herd rebuilding on better forage conditions, will suppress beef production and exports in 2017 and beyond.  Australia has enjoyed expanded beef market access in China and most recently began shipping live cattle to China as well.

The U.S. will maintain its rank as the number four beef exporting country in 2017.  Beef exports increased in 2016 (after dropping in 2015) as production increased and beef prices dropped from record levels.  Improved beef exports are projected for 2017 despite the headwind of a continued strong dollar.  However, considerable uncertainty surrounds potential changes in trade policy that may accompany the Trump administration.  Renegotiating the North American Free Trade Agreement (NAFTA) exposes the beef industry to less favorable trade conditions while the apparent demise of the Trans-Pacific Partnership (TPP) will maintain restricted U.S. access or less favorable tariffs in some markets, most notably Japan.  The U.S. does not currently have direct access to the rapidly growing Chinese beef market.  Unofficial U.S. beef exports to China have occurred in recent years as transshipments through Hong Kong and Vietnam.  In the fall of 2016, China announced a willingness to move forward with an agreement for the U.S. to export beef to China.  However, no agreement is in place at this time and the current status of these discussions is unclear given the political changes in the U.S. and the confrontational posture of the Trump administration towards China.

The next tier of beef exporting countries are significantly smaller in export volume compared to the top four beef exporting countries.  These include, in descending order based on projected 2017 exports: New Zealand, Canada, Paraguay and Uruguay. Combined beef exports from these four countries are smaller than the total of either Brazil or India. Each of these countries is expected to maintain or expand beef exports in 2017.  Mexico, with beef exports that have expanded sharply in recent years, ranks as the number ten beef exporting country just behind the European Union. Mexican beef exports are expected to continue growing in 2017 with significant expansion of Mexican feedlot and beef packing infrastructure in 2016. The majority of Mexican beef exports are imported by the U.S.

Oklahoma State University, in compliance with Title VI and VII of the Civil Rights Act of 1964, Executive Order 11246 as amended, Title IX of the Education Amendments of 1972, Americans with Disabilities Act of 1990, and other federal laws and regulations, does not discriminate on the basis of race, color, national origin, sex, age, religion, disability, or status as a veteran in any of its policies, practices or procedures. This includes but is not limited to admissions, employment, financial aid, and educational services.  References within this publication to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement by Oklahoma Cooperative Extension Service.

Friday, January 20, 2017

Quay County Beef Producers Workshop

The Quay County Extension Office will be hosting a “Beef Producers workshop” on February 22,2017 at the Tucumcari Convention Center. Topics that will be discussed are Rangeland Nutrition with Nick Ashcroft NMSU Rangeland Specialist, Applied Reproductive technologies with Craig Gifford NMSU Extension Beef Specialist, Grow safe System with Marcy Ward NMSU Extension Livestock Specialist, and Beef Cattle Vaccinations with John Wenzel NMSU Extension Veterinarian. The program begins at 8:30 am and is free and open to the public. Please RSVP by February 17th at the Quay County Extension Office at 216 E. Center Street, Tucumcari, NM (575)461-0562.

Monday, December 12, 2016

CATTLE OUTLOOK – Ron Plain and Scott Brown Ag Economics, MU December 9, 2016

CATTLE OUTLOOK – Ron Plain and Scott Brown
Ag Economics, MU   December 9, 2016

USDA made modest changes to 2017 beef projections in today’s monthly
WASDE release. The 2017 average mid-point fed steer price is now
projected at $107/cwt., up $1 from the projection made in November.
Despite the slightly higher projection, USDA still pegs next year’s
fed steer price more than 10% lower than 2016. Beef production is
estimated at 26 billion pounds for 2017, up 800 million pounds from
this year and the largest since 2011.

Cattle and beef prices lost some ground this week. Through Thursday,
the 5-area average price for slaughter steers sold on a live weight
basis was $110.31/cwt, down $4.07 from last week's average, and $8.14
lower than a year ago. The 5-area dressed steer price averaged
$170.50/cwt, down $4.87 from the week before, and $16.87 below last
year’s level. These losses erased last week’s gains and then some.

Beef cutout values were down this week, though not as much as the
cattle. This morning, the choice boxed beef cutout value was
$190.25/cwt, down just $0.04 from the previous Friday, but $12.80
lower than a year ago. The select carcass cutout this morning was
$171.85/cwt, down $1.74 from last week. At $18.40/cwt, the
choice-select spread remains relatively high, even accounting for
holiday beef demand.

Beef exports in October were at the highest level since August 2014.
Shipments to Japan and Korea continue to run well above last year’s
levels, with the YTD growth in those two markets now near 23 percent.
Total U.S. beef exports are now nine percent higher on the year, with
further gains needed to support prices as beef production increases

Preliminary December consumer confidence numbers were just shy of the
highest levels since 2004, with much of the consumer optimism centered
on expectations for President-elect Trump’s economic policies. This
bodes well for domestic meat demand moving forward, a necessary
condition to move heavy meat supplies for the next couple of years.

This week's cattle slaughter totaled 611,000 head, down 5,000 head
from last week but up 5.3% from a year ago. The average steer dressed
weight for the week ending on November 26 was 916 pounds, 2 pounds
lighter than the week before, and down 7 pounds from a year ago.

Cattle prices were steady to lower this week at the Oklahoma City
auction. Feeder steer prices were steady to $5 lower with steer calves
steady to $3 lower compared to the week before. Prices for medium and
large frame #1 steers by weight group were: 400-450# $169.50-180,
450-500# $150-$170, 500-550# $140-$165, 550-600# $136-$151, 600-650#
$120-$141.50, 650-700# $124.50-$137, 700-750# $119-$133, 750-800#
$125.50-$133.50, 800-900# $120-$135, and 900-1000# $124-$132.75/cwt.

Cattle futures were higher this week even as cash prices declined. The
December live cattle futures contract settled at $108.90/cwt today, up
$0.68 for the week. February live cattle gained $1.88 this week and
closed at $110.75/cwt. The April contract settled at $110.22.

The January feeder cattle futures contract ended the week at
$125.97/cwt, up $1.37 from a week earlier. March feeder cattle gained
$1.08 this week to settle at $122.60/cwt. April feeder cattle settled
at $121.90/cwt.