Cattle Situation and Outlook

Transcription

1 Cattle Situation and Outlook January 2011 Tim Petry Livestock Economist Carrington-Jan /27/11

2 Northern Plains Calf Markets In The Cattle Markets November 8, 2010 Tim Petry, Livestock Economist North Dakota State University Extension Service The fall calf marketing season started a little later than normal in the Northern Plains, but is now ramping up. Good pasture and range conditions, plenty of crop aftermath grazing, and ideal fall weather for harvesting late maturing crops limited fall calf marketing. So, unlike the relatively poor pasture conditions and short hay supplies in the Southeastern U.S. that John Michael Riley reported in the In The Cattle Markets column last week; the Northern Plains is in very good shape. Hay prices reported by NASS, USDA are lower in North Dakota than in any other state. A rain and snow storm in parts of the Dakotas and Montana on October further limited movement of calves to market, but put producers in the mood to start weaning and marketing. Last week (Nov. 1-6) saw the biggest runs of calves at Northern Plains auction barns for the season. This week should be another big week for marketing calves. Authors: Printer Friendly Version Darrell Mark, Ph.D. University of Nebraska Lincoln Dillon Feuz, Ph.D. Utah State University Tim Petry, M.S. North Dakota State University John Michael Riley, Ph.D. Mississippi State University Calf prices in the Northern Plains have generally been declining seasonally the last couple of months as corn prices have surged. But prices have averaged about $15 per hundredweight above the last two year s depressed levels. A wide range in prices for the same weight and grade of calves at the same auction market is being reported due to the many factors that affect calf value. North Dakota auctions last week reported a $12 to $13 per cwt. range in prices as typical for a 50 pound weight range in steer prices. Some value added calves were reported to bring $15 to $16 per cwt. more than the lowest priced calves in the weight range. A 575 pound steer calf that brings $12/cwt. more returns an additional $69 per head. So, producers are encouraged to contact their market soon for tips on marketing and management practices that can help bring the highest possible prices. Several Northern Plains auctions reported contra seasonally higher calf prices in the last couple of weeks, just as the heavy runs started. There are several reasons for that. Higher corn prices have caused the spread between the lighter weight calves and the heavier feeder cattle to narrow as feedlots prefer to purchase weight. That has created an opportunity for backgrounding programs that can utilize cheaper forages, co-products, silage, and alternative feed grains such as feed barley in rations. With the ample supply of these in the Northern Plains, the demand for calves to background has picked up. Another interesting recent development is the renewed interest in Northern Plains calves from Canadian feedlots. For the first time since 2003, there are reports of U.S. feeder calves heading north into Canada. Feed barley prices in the Northern Plains and Canada have not increased as much as corn prices. I have been traveling to producer meetings with Dr. Frayne Olson, NDSU Extension crops economist. When giving the crop price outlook he has been mentioning the above average amounts of wheat and field peas in Canada that have suffered from adverse weather conditions and are feed grade. These will also cheapen rations for the Canadian livestock feeding sector. For the week ending November 5, the average price of lb. steer prices on a $U.S. basis at cattle auctions in Saskatchewan was reported at $132.09/cwt. compared to across the border in Montana at $ So the cheaper cost of gain there is evident and shows why there may be interest in Northern Plains calves.

3 Bear VS Bull Demand Supply

4 Source: National Restaurant Association National Restaurant Association s Restaurant Index Values Greater than 100 = Expansion; Values Less than 100 = Contraction 20% 15% 10% 5% 0% -5% -10% -15% 18% U.S. Meat Trade Percent Change, 2010 from 2009 Jan-Nov -12% 16% 2% -11% -2% Beef Exports Beef Imports Cattle Imports Pork Exports Hog Imports Broiler Exports Turkey Exports 7%

5 Livestock Price and Production Patterns 1. Seasonal 3. Long term 2. Cycle 4. Unexpected

6 Livestock Marketing Information Center Data Source: USDA/NASS Mil. Head 7 HEIFERS HELD AS BEEF COW REPLACEMENTS July 1, U.S % C-N-37 07/23/10 Mil. Head 55 JULY 1 FEEDER CATTLE SUPPLIES Residual, Outside Feedlots, U.S % C-N-32 07/23/10

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8 Is the Cattle Cycle Dead? When will beef cow slaughter decline? When will beef herd rebuilding start?

9 Cattle Price Outlook or LOOK OUT!

10 Corn Prices New Plateau! $ Per Bu. OMAHA CORN PRICES Weekly Avg G-P-02 Data Source: USDA-AMS, Compiled by LMIC

11 2010 Corn Prices JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Omaha Southern Plains Hunter

12 2009 Hay Prices J F M A M J J A S O N D ND Other ND Alfalfa US Other US Alfalfa

13 MED. FRAME #1 STEER CALF PRICES Pounds, Dakotas, Weekly JAN APR JUL OCT

14 $ Per Cwt. MED. FRAME #1 STEER CALF PRICES Pounds, Dakotas, Weekly Livestock Marketing Information Center

15 MED. & LRG. #1 FEEDER STEER PRICES Pounds, Dakotas, Weekly JAN APR JUL OCT Fut 2011

16 $ Per Cwt. MED. & LRG. #1 FEEDER STEER PRICES Pounds, Dakotas, Weekly Livestock Marketing Information Center

17 SF_LS796 Sioux Falls, SD Fri Jan 21, 2011 USDA-ND Dept Ag Market News North Dakota Weekly Auction Summary - For the week ending Jan 21, 2011 Receipts: 9,831 Last Week 13,705 Last Year 16,527 Combined results of 4 auctions this week: Kist, Napoleon, Stockmen s and West Fargo. Compared to last week s larger receipt numbers feeder steers lbs 3.00 to 7.00 higher; over 800 lbs steady. Feeder heifers lbs mostly 4.00 to 6.00 higher; lbs 1.00 to 3.00 higher. All other weights lacked comparable sales for trending purposes. The action at the auction barns remains very good for most calves offered. Buyers remain very active in their pursuit of feeder cattle. The corn and live cattle futures continue their positive outlooks. Feeder Steers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price Fancy Calves Calves Calves Fancy Value Added Calves

18 SF_LS796 Sioux Falls, SD Fri Jan 21, 2011 USDA-ND Dept Ag Market News North Dakota Weekly Auction Summary - For the week ending Jan 21, 2011 Receipts: 9,831 Last Week 13,705 Last Year 16,527 Combined results of 4 auctions this week: Kist, Napoleon, Stockmen s and West Fargo. Compared to last week s larger receipt numbers feeder steers lbs 3.00 to 7.00 higher; over 800 lbs steady. Feeder heifers lbs mostly 4.00 to 6.00 higher; lbs 1.00 to 3.00 higher. All other weights lacked comparable sales for trending purposes. The action at the auction barns remains very good for most calves offered. Buyers remain very active in their pursuit of feeder cattle. The corn and live cattle futures continue their positive outlooks. Feeder Heifers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price Calves Calves Fleshy Calves Replacement Fleshy Fleshy

19 CHOICE SLAUGHTER STEER PRICES 5 Market Weighted Average, Weekly Fut JAN APR JUL OCT

20 Billion Dollars 400 U.S. Monthly Retail and Food Sales J F M A M J J A S O N D Source: U.S. Census Bureau

21 Livestock Marketing Information Center Data Source: USDA-AMS $ Per Cwt WHOLESALE BEEF LOIN STRIP PRICES Boneless 0x1, Weekly Avg /03/11 JAN APR JUL OCT WHOLESALE BONELESS BEEF PRICES Fresh, 90% Lean, Weekly $ Per Cwt Avg JAN APR JUL OCT M-P-24 01/03/11

22 Competing Meats BARROW AND GILT PRICES Iowa - So. Minnesota, Carcass Base Price, Weekly BROILER PRICES 12-City Composite, Weekly $ Per Cwt JAN APR JUL OCT Avg H-P-09 01/18/11 Cents Per Pound JAN APR JUL OCT Avg P-P-01 01/18/11 Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC $ Per Cwt SLAUGHTER LAMB PRICES Wooled, lbs, Sioux Falls, Weekly JAN APR JUL OCT Avg S-P-05 01/18/11

23 $ Per Cwt. SLAUGHTER COW PRICES 85-90% Lean, Weekly Avg JAN APR JUL OCT Data Source: USDA-AMS, Compiled by LMIC C-P-35 01/05/09

24 Price Risk Management Tools Cash forward contract Video and internet auctions CME futures CME options Livestock Risk Protection (LRP) Livestock Gross Margin (LGM) Which one or combination fits your marketing plan?

25 A Pot of Gold for the Next Several Years Questions?