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
continue.

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.

COW/CALF CORNER The Newsletter From the Oklahoma Cooperative Extension Service December 12, 2016 Meat trade positive for livestock markets



COW/CALF CORNER
The Newsletter

From the Oklahoma Cooperative Extension Service
December 12, 2016

Meat trade positive for livestock markets
Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

October meat trade was positive for pork, poultry and beef.  Pork exports were up 9.1 percent year over year for the month leading to a year to date total up 2.0 percent.  Broiler exports were up 8.1 percent in October compared to last year.  Year to date broiler exports for the first ten months of the year are up 2.5 percent over one year ago.  Beef exports in October were 16.9 percent above last year with year to date beef exports up 9.4 percent. Meat exports have accelerated recently with year over year July to October pork exports up 6.3 percent; broiler exports up 14.5 percent; and beef exports up 20.3 percent.  Moving additional meat offshore helps to moderate growing U.S. meat supplies due to increased pork, poultry and beef production in 2016.  The U.S. dollar continues strong and will continue to represent a headwind for meat exports but exports continue to grow despite this adversity.

Beef exports are strong to most Asian markets with South Korea up 66.0 percent in October compared to last year and up 35.2 percent for the year to date.  Exports to Japan were up 35.9 percent year over year in October and are up 15.9 percent for the first ten months of the year.  Taiwan and Vietnam are smaller beef export markets but were up 91.3 and 71.4 percent respectively in October compared to last year.  Hong Kong, however, was down 14.7 percent in October and is down 5.6 percent so far this year.  In North America, beef exports to Mexico were down 12.1 percent year over year in October but remain 8.5 percent higher for the year to date so far this year.  U.S beef exports to Canada in October were down 5.9 percent and contributed to an 8.0 percent year over year decrease for the first ten months of the year.

Conversely, total beef imports continued declining in October, down 4.9 percent year over year and are down 13.1 percent for the January to October period compared to last year.  After rising sharply in 2014 and 2015, beef imports from Australia were down 51.6 percent year over year in October and are down 39.4 percent so far this year compared to the same period last year.  Beef imports from New Zealand were 9.0 percent lower in October than one year ago and are down 7.8 percent through October this year compared to last year.  October beef imports from Mexico were up 58.3 percent over last year and are up 17.7 percent for the year to date.  Beef imports from Canada are also up; increasing 27.8 percent in October over last year and up 15.6 percent for the January to October total compared to last year.  Beef imports from Brazil were up 30.8 percent year over year in October.  This would include the first fresh beef shipments under the new beef trade agreement between the U.S. and Brazil.  For the year to date, beef imports from Brazil are down 13.4 percent from year ago levels. Just smaller than Brazil as beef import sources, beef imports from Uruguay are down 16.9 percent for the year to date while Nicaragua is up 3.4 percent so far this year over the same period in 2015.

Total cattle imports were down 29.9 percent in October and 19.3 percent for the year to date compared to last year.  This includes 9.0 percent fewer cattle from Canada and 27.1 percent less cattle from Mexico so far this year compared to the same period in 2015.  More slaughter cattle have been imported from Canada including 43.0 percent more slaughter steers and heifers that more than offsets a 6.7 percent decrease in imported slaughter cows and bulls.  Overall slaughter cattle imports from Canada are up 17.7 percent year over year so far this year.  Feeder cattle imports from Canada are down 41.2 percent year over year through October.  Mexican feeder cattle imports were down 50.5 percent year over year in October and total cattle imports from Mexico are down 27.1 percent through October compared to last year.  Reduced feeder cattle imports from Canada and Mexico are providing a significant offset to the larger 2016 U.S. calf crop, thereby limiting the increase in feeder supplies in 2016.

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.

Monday, November 28, 2016

COW/CALF CORNER The Newsletter From the Oklahoma Cooperative Extension Service November 28, 2016

COW/CALF CORNER
The Newsletter

From the Oklahoma Cooperative Extension Service
November 28, 2016

In this Issue:

Beef cold storage myths and realities
Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

Prepare now for the spring calving season
Glenn Selk, Oklahoma State University Emeritus Extension Animal Scientist


Beef cold storage myths and realities
Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

Considerable ado has been made about large beef cold storage totals for the past year.  This has resulted in questions, concerns and confusion among cattle producers and others about the implications of large cold storage holdings.  I have gotten numerous questions about “huge supplies of beef in cold storage that would keep beef markets depressed”.  Misunderstanding has been increased by misleading media stories about cold storage.  One such recent article by a major news service was entitled “U.S. Beef Supplies at Highest in Records Dating Back a Century”.  The article was referring to the reported October beef cold storage total of 532 million pounds, the largest monthly total since records began in December 1915.  However, beef cold storage, which is frozen beef supplies maintained in commercial warehouses for more than 30 days, represents roughly two percent of annual beef production. In other words, 98 percent of beef is marketed as chilled fresh beef and does not pass through cold storage.  Record cold storage inventories do not imply record beef supplies.  Indeed, beef supplies, as measured by total annual beef production, exceeded the projected 2016 beef production total in 17 of the past 21 years.

October cold storage represented 2.15 percent of annual beef production (a rolling twelve month total of beef production), fractionally less than the 2.16 percent from one year ago and less than the record monthly level of 2.19 percent in January, 2016.   Cold storage inventories typically increase seasonally in the winter and decrease into the middle of the year. Since beef in cold storage is typically held for six to twelve months, a twelve month average of monthly cold storage inventories provides a good measure of cold storage management over time.  The twelve month average of cold storage inventories for October was 1.97 percent of annual beef production compared to 2.01 percent at the same time last year.  Since 2012, the monthly cold storage pipeline has averaged 1.82 percent of annual beef production and has ranged from 1.61 percent (October and November, 2014) to 2.07 percent (January, 2016). Therefore, cold storage inventories, or more correctly, changes in cold storage inventories from month to month are too small to be a direct beef supply issue except possibly in a few specific markets. 

While cold storage is only a minor component of total beef supplies, cold storage behavior is indicative of market conditions and challenges.  Cold storage inventories include an unspecified mix of boneless beef trimmings and muscle cuts along with bone-in beef cuts.  Bone-in beef cuts in cold storage have generally declined over time and represented 7.2 percent of October total cold storage inventories; the lowest proportion in over 20 years.  The bulk of cold storage inventories are boneless product and are believed to consist mostly of trimmings and end meats.  Rarely, and only under exceptional circumstances, significant quantities of middle meats may be put into cold storage.  These frozen high quality steaks do not enter normal chilled meat markets when marketed and are typically sold at a discount.  Trimmings and end meats are more commonly frozen though maintaining frozen stocks is expensive and is not done without a good economic reason.

Holding beef in cold storage is motivated primarily by two separate but related market activities: the ground beef market and international beef trade.  Changing flows of beef imports and exports may contribute to variation in cold storage inventories.  For example, the build-up of cold storage in late 2015 was undoubtedly related to the dramatic increase in beef imports last year, most of which was frozen processing beef and was pulled out of cold storage over several months. Beef destined for frozen exports may contribute to increased cold storage inventories when exports are growing.  Increased fed slaughter in 2016 has produced more fed trimmings and lean beef supplies are larger due to additional cow slaughter.  Sharply growing beef production and a relatively weak ground beef market in 2016 likely account for the build-up to record cold storage supplies in October.  Despite being only a small part of the overall beef supply, large current cold storage inventories of beef certainly reflect the marketing challenges that accompany growing beef production in 2016. 


Prepare now for the spring calving season
Glenn Selk, Oklahoma State University Emeritus Extension Animal Scientist

Someone once said “that Success occurs when Opportunity meets with Preparation”.  Planning and preparing ahead for next spring’s calving season can help increase the chances of success.  There are several key preparation steps that would be good to conduct in December to insure success in February, March, and April.

Before calving season starts do a walk-through of pens, chutes, and calving stalls.  Make sure that all are clean, dry, strong, safe, and functioning correctly.   Check the gates and the squeeze panels to make certain that they are ready for use. 

Many calving sheds are storage facilities during the off season.  Do you have the extra barbed wire and steel posts, as well as grass seed and motor oil stored in the calving shed?  Now would be a good time make certain that these items are placed in another facility or at least out of the way.  This is a lot easier to do on a sunny afternoon than on a cold dark night when you need to have the calving area ready in a short time.

If calf diarrhea has been a significant issue in your herd in the past, now is a good time to visit with your large animal veterinarian.  Ask about a scours vaccine given to the cows before calving, and about other management strategies that help reduce the pathogen exposure to baby calves when they are most vulnerable.

Larger cow calf operations may want to learn about the Sandhills Calving System.  This is a calving time strategy that is meant to reduce the incidence of calf diarrhea by keeping cow/calf pairs pastured together by calving date.  This system requires several pastures and weekly movement of cows that are yet to calve.  The goal is to prevent newborn calves from being exposed to disease-causing organisms being shed by older calves.  Several articles have been written about the Sandhills Calving System.  Here is a link to one from the University of Nebraska: http://beef.unl.edu/beefreports/symp-2007-17-xx.shtml

More information about management of cows and heifers at calving time can be found by downloading and reading the Oklahoma State University Circular E-1006 Calving Time Management for Beef Cows and Heifers.

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.