Louisiana Cattle Market Update Friday, January 22 nd, 2009 Ross Pruitt, Department of Agricultural Economics and Agribusiness Louisiana State University AgCenter Beef production has been above year ago levels for the past several weeks, but for the first few weeks of this year, increased boxed beef purchases were occurring without a drop in price. This trend only lasted about two weeks as wholesalers and retailers re filled their beef supply following holiday purchases. A continuation of this trend would represent the change in demand needed to increase the movement of beef without decreasing the price of that beef (all along the cattle supply chain). So what caused the change? Wholesalers and retailers had re filled their depleted supplies of beef and are unwilling to make large purchases of beef with other cheaper supplies of meat available. Additionally, consumer spending has not suddenly returned which is still a big piece of the puzzle in order to lift cattle prices to levels that producers want to see in 2010 and beyond (see the previous newsletter for a more detailed discussion of the savings rate). Consumer confidence is still fragile and what happens on Wall Street still occasionally spills over into the commodity markets as occurred on Thursday. Movement of beef may be falling off for the time being, but upward movement in beef prices is tied to the recent increases in pork. This surge has been tied to the recent bad weather in hog country that has left supplies tight as well as increases in value for pork trimmings and ham. Some hog market analysts see the possibility of a decline in hog prices due to lingering problems from overproduction in 2008 09. This could put boxed beef prices on the defensive if a bear market develops in the hog sector. 900.00 Choice Boxed Beef Price and Movement $155 Number of Loads 800.00 700.00 600.00 500.00 400.00 $150 $145 $140 $135 $130 $125 $/Cwt Number of Loads Sold Choice Boxed Beef Price 300.00 $120 Source: USDA AMS & LMIC
If you were unable to attend the AgCenter s AgOutlook Conference yesterday in Alexandria, the presentation made by Jay Grymes on climate change was an outstanding presentation and is well worth your time. He made some comments about the rise in methane and nitrous oxide that can be attributed to agriculture which may impact agricultural policy in the future. Presentations from the conference may be found here. Antibiotic use in agriculture has been gaining the attention of the mainstream media (i.e. nonagricultural focused outlets) in the past year. CBS Evening News is planning on running a story on antibiotic use in agriculture next week. The exact date the story will air is not known although meatingplace.com is reporting that the story will focus primarily on the pork and poultry industries. Good beef demand and lighter cattle weights helped push fed cattle futures higher early in the week with feeder cattle futures following along. A strengthening dollar helped push fed cattle values lower during the week with plans by the Obama administration to more heavily regulate banks being not well received on Wall Street or in Chicago causing lower values on Thursday. As the futures market closed the week, traders started to position themselves for the release of the Cattle on Feed report. Last week s USDA Crop Production and WASDE (World Agricultural Supply and Demand Estimates) saw increased estimates of corn production which the corn market has still not recovered from. USDA estimated a record 13.2 billion bushels of corn were produced last year. This number is not final as USDA is re surveying certain states. Quality concerns about the corn are still present, but the futures market was still being affected by this news as the trading week began. Buyers have taken a stand off approach to see if the price will drop further with sellers waiting for the price to go higher. This drop in corn prices helped push feeder cattle futures higher since the reports were released. A strengthening dollar has also hurt corn prices. Spillover effects from the soybean and wheat markets also pulled corn lower. January Cattle on Feed Report summary: Pre Report Estimates 1,000 head % of 2008 Avg. Range Placed in December 1,546 93.9 95.7 85.9 99.6 Marketed in December 1,742 103.5 102.3 99.2 103.5 On Feed January 1 11,009 97.9 98.5 97.0 99.3 On first glance, this is another favorable Cattle on Feed report to follow up the report issued December. Analysts expectation on December placements was variable, but USDA had placements about 2% below trade expectations. This is still within the range of pre report estimates and likely will not provide as much momentum to prices as did the release of higher than expected corn production last week. Some analysts thought that placements in the heavier weight ranges would be up over concerns of producers waiting for feeder cattle prices to rally, but this is not the case as only cattle weighing less than 600 pounds showed an increase. There was also a small decrease in the number of heifers placed from year to suggesting attitudes toward beef herd expansion have not changed as of yet. Cash fed cattle trade developed on Thursday with Nebraska and Colorado sales in the $83 to $84 range on a live basis ($138 dressed). Kansas reported sales of $85 live and $136 dressed on Thursday and Friday. Texas trade was $86 live and $136 on a dressed bassis. Louisiana slaughter cows were steady to $2 higher this week according to AMS with cull bulls quoted as steady. Feeder steers and heifers were steady to $4 higher.
Table 1. Louisiana Auction Prices for the Week Ending January 22, 2010. Weight Steers Heifers Slaughter Classes 200 250 $140 148 $105 120 Breaking $45 53 250 300 $115 130 N/A Boners $44 56 300 350 $110 129 $86 105 Lean (850 1200) $40 50 350 400 $100 127 $88 102 Lean (750 850) $34 47 400 450 $95 120 $83 100 450 500 $93 114 $82 100 Bulls, YG 1 2, <1,500 lbs $54 58 500 550 $91 106 $80 96 Bulls, YG 1 2, >1,500 lbs $59 63 550 600 $88 103 $78 93 600 650 $89 102 $79 92 650 700 $83 95 $80 89 Note: All prices are in $/cwt, steers and heifers are Medium and Large 1 2 Price ranges may reflect higher prices received in northern areas of the state in the middle of the week Source: USDA AMS Table 2. Louisiana Auction Prices for the Week Ending January 15, 2010. Weight Steers Heifers Slaughter Classes 200 250 $109 135 1 N/A Breakers $48 53 250 300 $109 135 1 N/A Boners $44 54 300 350 $106 125 $87 110 Lean $38 46 350 400 $98 123 $84 102 400 450 $96 120 $83 100 Bulls, YG 1 2, >1,500 lbs $54 64 450 500 $92 112 $75 98 500 550 $90 103 $72 95 550 600 $86 101 $78 90 600 650 $80 93 $76 85 650 700 $80 90 $79 85 Note: All prices are in $/cwt, steers and heifers are Medium and Large 1 2 Price ranges may reflect higher prices received in northern areas of the state in the middle of the week 1 Represents the price was reported in hundred pound increments as opposed to fifty pound increment. Source: USDA AMS
Table 3. Futures Prices Live Feeder Month Cattle Change* Cattle Change* Corn Change* Jan $ 97.10 0.88 Feb $ 86.63 0.72 Mar $ 99.60 0.95 364 3/4 6 3/4 Apr $ 90.55 0.02 $ 100.65 1.17 May $ 101.20 1.47 375 1/2 7 Jun $ 88.30 0.37 Jul 385 1/2 6 Aug $ 87.80 0.22 $ 102.10 0.95 Sept $ 101.80 0.80 391 3/4 7 1/4 Oct $ 90.20 0.10 $ 101.30 1.20 Nov $ 100.88 0.17 Dec $ 90.50 0.05 397 1/4 8 3/4 Source: DTN * Change is from the previous Friday s close
Table 4. State and National Market Information Commodity This Week Last Week Last Year 5 Area Fed Steer Price Live $ 84.30 $ 84.97 $ 81.91 Dressed $ 138.41 $ 136.91 $ 131.80 Oklahoma City Feeder Cattle Prices 5 5.5 cwt Med and Large #1 $ 112.57 $ 109.06 $ 109.14 7.5 8 cwt Med and Large #1 $ 94.12 $ 95.03 $ 94.46 Boxed Beef Cutout Values (weekly average) 600 900 lb Choice cutout $ 144.95 $ 144.91 $ 150.98 600 900 lb Select cutout $ 140.46 $ 139.65 $ 144.49 U.S. Pork Cutout Value $ 77.01 $ 72.69 $ 57.67 Georgia Dock Broilers $ 83.09 $ 82.98 $ 86.98 Georgia B/S Breasts $ 151.00 $ 147.50 $ 138.50 Georgia Leg Quarters $ 38.00 $ 38.50 $ 34.50 Meat production (million lbs) Beef 515.6 505.6 503.3 Pork 440.9 438 456.5 Slaughter (1,000 head) Cattle 665 652 642 Hogs 2,182 2,176 2,242 Broilers/Fryers 157,237 167,194 152,125 Average Dressed Weight Cattle 778 778 786 Hogs 203 202 204 1/16/2010 1/9/2010 1/17/2009 Poultry Placements (in thousands) 1 LA Broiler Egg Sets 3,471 3,378 3,454 US Broiler Egg Sets 200,734 202,106 201,674 LA Broiler Chick Placements 3,018 2,908 3,391 US Broiler Chick Placements 167,190 166,813 167,469 Source: USDA Agricultural Marketing Service, USDA National Agricultural Statistics Service and Livestock Marketing Information Center 1 Note the placements numbers are lagged by one week prior to publishing.