David Anderson

USDA is scheduled to release the August Cattle on Feed report this coming Friday, so this is a good opportunity to look at some pre-report estimates.  

I think placements will be the most interesting number in the report.  A couple of years of a shrinking cow herd leads us to fewer feeders to place. However, drought in some major cattle areas, falling feed costs, profitable feeding returns, more cattle imported from Mexico compared to a year ago, and high feeder heifer prices may cause placements to not be down as much as we might expect. My estimate of placements is 96 percent of a year ago (down 4 percent).  I am on the high end of placements among the market analysts who publish estimates ahead of the report.  

Placements are where the most uncertainty lies.  The number of heifers placed in feedlots are a large source of this uncertainty.  Heifers can be held back to enter the cow herd or they can be sold to go on feed.  Currently, high calf prices and expectations of even higher record prices in the future should eventually begin to encourage producers to hold back heifers to enter the cow herd.  But, high current calf prices also encourage ranchers to take the money and sell heifers now as feeders.  Examining cattle auction prices suggests that, in some cases, feeder heifer prices are higher than prices of animals designated as replacement heifers and bred cow prices.  There is certainly anecdotal evidence of some producers selling heifers they had intended to keep because current prices were too good to pass up.  

The number of heifers on feed is reported quarterly and was in last month’s Cattle on Feed report.  It indicated that the number of heifers on feed was equal to the same quarter of last year while fewer steers were on feed.  We’ll get another quarterly report of heifers on feed in the October Cattle on Feed report. 

Based on steer and heifer slaughter, July marketings from feedlots with more than 1,000 head should be about 5.4 percent lower than a year ago.  Combined with fewer placements, this leaves the number of cattle on feed at about 98.5 percent of a year ago.  Some more data this Fall will shed some light on how much we are “robbing Peter to pay Paul” by using heifers to boost near term beef production at the expense of future production.

It seems like a long way to Thanksgiving but, in a production sense, most plans are already made for turkey production for the Fall.  Thanksgiving turkey prices have been a hot topic for the last couple of years as high prices were fueled by reduced production due to High Pathogenic Avian Influenza (HPAI), high feed, other costs, and changing demand.  Now, producers have had a chance to respond to high prices by increasing production.  Increasing supplies are driving down prices providing some hope for lower prices this Fall.

For the year, turkey production is 3.4 percent greater than last year but that masks that production has jumped even more dramatically in the last 8 weeks.  In the last 8 weeks ending July 15^th, turkey production is 12.3 percent greater than the same period last year.  Last year’s production was greatly impacted by HPAI. Normally, production peaks seasonally in October just in time for Thanksgiving.  With the latest June data indicating that poults placed for grow out is 3.5 percent greater than June 2022 and poults hatched were 4.3 percent more than a year ago, it looks like production will remain above a year ago.

The amount of turkey in cold storage increases throughout the year before being drawn down in the Fall.  Total turkey cold storage stocks in June were about 6.3 percent above a year ago. It’s important to note that the increase is in breasts and other cuts.  Whole birds in storage are about 5.5 percent below last year.  While we normally think of the whole birds for the holiday, turkey breasts are an important part of grocery deli sections, sandwich restaurant chains, and other retail outlets.  

Turkey prices have declined since the first of the year and are now below a year ago for both whole birds and boneless, skinless breasts.  For the week of July 22, 2023, 8-16 pound frozen hens were $1.45 per pound compared to $1.55 per pound the same week last year.  Bigger, 16 to 24 pound, toms were $1.40 compared to $1.57 a year ago.   The breast market has seen a much more dramatic decline in price, 61.5 percent, from $6.65 a year ago to $2.56 per pound this year.

More turkey production and lower wholesale prices are providing the opportunity for lower turkey prices this Fall.  After the last couple of years, that’s some good early Thanksgiving news!

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Anderson, David. “Is It Too Early to Talk Turkey?” Southern Ag Today 3(31.2). August 1, 2023. Permalink

Dairy cow culling has increased this year due to low milk prices causing unprofitable conditions for many dairies.  In fact, milk supplies in excess of processing ability has caused some milk to be dumped out instead of being used in some regions of the country.

Total dairy cow slaughter in the U.S. is up 5.5 percent (81,300 head) compared to last year.  Culling is higher in the big milk production regions of the country, including the Midwest (region 5) and the West Coast (regions 9 and 10) which are up 3.4, and 10.3 and 5.4 percent, respectively.  

Three regions concern Southern dairy producers, regions 3, 4, and 6.  Region 3 includes Virginia and Maryland but, those states are likely swamped in the data by Pennsylvania, one of the largest milk producing states in the country.  Dairy cow slaughter for region 3 also likely includes a lot of cows from New York, another large milk producer.  Region 4 runs from Mississippi in the West to Kentucky, the Carolinas, and down to Florida.  Region 6 includes Texas, Arkansas, and Louisiana.  New Mexico is a large producer and is also part of region 6.  Slaughter in region 3 is actually 7 percent below last year.  Region 4 is about even with a year ago given that slaughter is only 600 head more than last year.  The big change is in region 6 where dairy cow slaughter is up 24.6 percent, or 42,800 head, over last year.  That represents more than half of the increase in total U.S. dairy cow slaughter this year.  

High cull cow prices are likely adding a little encouragement to dairy cow culling.  But low milk prices are the driving factor.  We are likely to see larger culling than a year ago until milk prices show some improvement.  Dairy cow slaughter tends to decrease seasonally until this time of the year then begins to increase.  Increasing numbers of dairy cows going to market in coming weeks and months would not be a surprise.

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Anderson, David. “More Dairy Cow Culling.” Southern Ag Today 3(28.2). July 11, 2023. Permalink

I hope you all have a great holiday, celebrating our country’s independence.  I suspect a bunch of us will spend some time out tending a grill or smoker for a bit this week.  With that in mind today’s article looks at retail and wholesale meat prices.

Retail meat prices for beef, pork, and chicken, reported monthly by the Bureau of Labor Statistics and USDA, have been moving in different directions.  Retail pork prices were below a year ago while chicken and beef prices were above a year ago.  Each market is responding to their own supply and demand issues which are causing prices to move in opposite directions.  But, all share the issues of higher production costs including those to get the products from where they are produced to your local meat case.

Choice beef prices hit a record high of $8.08 per pound in May (the latest data), surpassing the $7.90 per pound in October 2021.  The all-fresh beef price data series was just a couple of cents per pound off its record high.  Tighter beef supplies, down 4.8 percent compared to a year ago, coupled with continued consumer buying is pushing prices higher.  Fewer cows going to market and fewer fed cattle have led to higher ground beef prices.  The start of summer grilling season provides a little demand boost too.

The retail pork price was $4.73 per pound in May.  That was 3.2 percent below last year and unchanged from the month before.  Pork production for the year is 0.3 percent more than last year.  In the wholesale pork market, prices for cuts like loins, bellies, and ribs have languished this year, in part, due to a little more production but, also due to some apparent demand problems.  Wholesale pork cut prices have started to increase in the last couple of weeks and that will likely bring pressure for higher retail prices if the consumer demand is there.

Chicken (broiler) production is 1.5 percent larger than last year, so far.  The reported monthly retail price was $2.45 per pound, just slightly above last year’s $2.42 per pound.  Wholesale chicken cut prices have been well below last year’s level most of the year.  Boneless, skinless breasts were $1.29 per pound compared to $3.02 at this time last year.  Wings were $0.88 per pound versus $1.82 last year.  USDA’s weekly featuring report indicated a few more grocery stores with retail features and specials on chicken prices this week and lower prices than year ago on breasts and wings.

Regardless of your grilling choices this holiday, I hope you have a great holiday celebration!  Happy Fourth!

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Anderson, David. “Hot Dog! It’s Fourth of July!” Southern Ag Today 3(27.2). July 4, 2023. Permalink

Cattle ranchers continue to have a significant interest in direct-to-consumer marketing of their own beef. These ranchers are typically aiming to build their own brand and integrated business from the land: from their cattle, to the beef, and on to the consumer.  Some of this beef might be grain finished in a feedlot or grass fed and finished.  Those looking to start selling to consumers often struggle for a bit to figure out pricing their product.  USDA’s Agricultural Marketing Service (AMS) publishes some price data on wholesale, direct-to-consumer retail, and carcass prices for grass fed beef.  

Grass fed, direct to consumer retail prices for whole, half, and quarter carcasses were $8.08, $8.28, and $9.30 per pound in April.  All were higher than April 2022 but, whole and halves were lower priced than in March of 2023.  Ribeye steaks were quoted at $31.12 per pound, the highest price in the data which goes back to 2013.  Almost all the reported cuts were higher in price than a year ago ranging from $17.28 per pound more for filet mignon to $0.95 higher for skirt steaks.  

There is also some carcass price data through the Small and Very Small (SVS) Producer verified program. The weighted average grass fed carcass price reported under this program was $4.31 per pound in April.  As you might suspect, the weighted average price was the highest, $4.99 per pound in 2020 during the pandemic.  A range of prices are reported and the range at the peak of the pandemic was from $3.20 to $6.75 per pound.  In recent months the range was $3.15 to $5.45 per pound.

The last report we’ll mention here is the National Monthly Negotiated Grass Fed Beef Report.  These prices represent negotiated grass fed wholesale beef prices for a variety of cuts.  Ribeye steaks in April were reported to be $28.65 per pound slightly higher than the $27.79 per pound last April.  Ninety percent lean bulk ground beef was $16.20 per pound, a $6.24 increase over a year ago.  

This data, while perhaps not well known, should be a good resource for folks moving into the direct-to-consumer area.  The data allows you check your prices compared to some national average pricing trends and plan for pricing future products.  

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Anderson, David. “Grass Fed Beef Prices.” Southern Ag Today 3(22.2). May 30, 2023. Permalink