Category: Livestock Marketing

Two big USDA reports in the last week have boosted livestock prospects at the expense of corn prices.  The annual Acreage report included larger-than-expected corn acres which put downward pressure on corn prices. The report listed corn acres at 91.5 million acres which was 1.4 million acres higher than the March Prospective Plantings report projected. After corn prices surpassed $6 for the 2022/23 marketing year, prices fell below $5 for the current marketing year, and are projected to be closer to $4 for the 2024/2025 marketing year. 
 
While higher than previously projected, corn acres will be slightly lower than 2023 totals. However, good growing conditions are supporting higher yield expectations when compared to 2023. The latest WASDE report included a yield estimate of 181 bushels per acre which would be higher than the 177.3 from a year ago. Stronger yields could lead to corn production for 2024 not being far off from the 2023 total. 
 
Also released last week was USDA’s Quarterly Grain Stocks Report which includes estimates of corn stocks held on farms and in elevators. Total corn stocks on June 1^st were estimated to be 5 billion bushels, up 22 percent from 2023 and the highest June 1 total since 2020. Most of these stocks are still being held on farms as farmers await better pricing opportunities. But, the old common problem arises of holding stocks while supplies grow and prices continue to fall.  On farm corn stocks were just over 3 billion bushels, which is roughly 800 million more than last year and is the largest June 1 total since 1988. 
 
Overall, the news is positive for livestock producers. The simple takeaway is that corn production and stocks are expected to be plentiful, and corn prices are back to lower levels after surging a few years ago. This should continue to bring relief to livestock feed costs and reduce the cost of gain for cattle.  This year’s corn crop is not in the bin yet, so production risks remain that could influence price. Falling corn prices should continue to push calf prices further into record territory.  Returns to hog and poultry production will get a much needed boost from lower feed costs.

Maples, Josh, and David Anderson. “Falling Corn Prices, Higher Calf Prices.” Southern Ag Today 4(28.2). July 9, 2024. Permalink

The fed cattle market hit some new record highs last week with fed steers pushing $200 per cwt in Northern Plains markets.  The weekly average fed steer price for the week ending June 30^th was $198.09 per cwt.  This price represented a negotiated, live, weighted average price across quality grades.  The comparable price in the Texas-Oklahoma market last week was lower at $190.19 per cwt.  

Beyond the record high fed cattle price, the widening price difference between the Southern and Northern fed cattle markets is very interesting.  Last week’s Northern-Southern price spread was $7.90 per cwt.  It was $10.11 per cwt two weeks ago, the largest difference of the year.  This large price spread has really developed over the last couple of years.  The price difference has a large seasonal component with the price difference peaking in the May-July time period.  Prior to 2022, a price difference greater than $4 per cwt was rare.  The average price difference from 2015 through 2021 was $0.20 per cwt.  That average has grown to $0.96 during 2022-2024.  The range of price differences has grown from about $6 per cwt to over $12 per cwt.

Several factors likely contribute to larger swings in regional price differences.  One may be simply varying relative supplies versus packer needs in each region.  Another contributor is the mathematical calculation of the average price across grades.  The Southern Plains average price includes head in lots 35-65 percent Choice compared to no lots with cattle in that category for the Nebraska prices which pulls down the Texas-Oklahoma average price.  So, there may be a USDA quality grade component to the price difference.  

Record high fed cattle prices are supporting calf and feeder prices across the South.  As fed cattle supplies further tighten, new record high prices will be recorded.  The widening price difference regionally in fed cattle may have some implications for Southern feeder cattle and calf markets.  Many of our cattle in the mid-South go to feedlots in Nebraska while feeders from the deep South often head to Texas or Oklahoma yards.  Regional calf and feeder prices may begin to be affected by changing premiums in the regional fed market.

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Anderson, David. “New Record High Cattle Prices.” Southern Ag Today 4(27.2). July 2, 2024. Permalink

Many analysts expect the beef cattle industry to expand the cowherd in 2025. This won’t be confirmed until the release of the January 2026 Cattle Inventory Report. When herd expansion begins, replacement heifers and bred cows will become increasingly valuable. As one might expect, replacement heifer and bred cow prices are correlated with feeder cattle prices. 

Cows that are open but otherwise healthy can enter two marketing channels: cull cow or bred cow markets. In most circumstances, cows leaving a cow-calf operation are sold as open cull cows. However, cyclical cattle inventories and supply dynamics provide scenarios where the value of bred cows dominates the value of open cull cows because of herd expansion.

The orange line in the figure is the price of a Breaking 75-80% cull cow sold in Joplin, MO. Breaker cows correlated approximately to a cow with a body condition score of 7-8. So, a cow that is open but in good condition. The green line in the figure is the price of a cow that is 4-9 months bred and sold in Joplin, MO. The blue line is the price of a bred cow compared to that of a cull cow. A price ratio that is less than one indicates that a cow is worth more as an open cull cow. A price ratio greater than one indicates that bred cow value dominates cull cow value. An increase in the price ratio implies that bred cow prices have increased faster than cull cow prices. This increase in the ratio is a function of where the industry finds itself in the cattle cycle.

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Mitchell, James. “The Relative Value of Bred Cows.” Southern Ag Today 4(26.2). June 25, 2024. Permalink

USDA’s next cattle on feed report is to be released on Friday, June 21^st.  This one is coming out against a backdrop of rising fed cattle prices, higher Choice beef cutout values, and beef production that is slightly larger than last year.  It’s going to be an interesting report because it should continue to show declining numbers of cattle in feedlots and indicate falling beef supplies in coming months.

Market analysts who publish pre-report estimates generally expect May feedlot placements to be smaller than those last May.  The range of estimates runs from placements down 5 percent to up 1 percent (I’m the analyst who is down 5 percent on placements).  USDA reports that the number of feeder cattle going through auctions, video and internet sales, and direct sales were down 4.8 percent compared to those last May.  The number of feeder cattle in May reported as part of the CME feeder cattle index was down 19.5 percent compared to a year ago.  Contrasting those data points, feeder cattle imports from Mexico were about 30,000 head larger than last year.  

Feedlot marketings should be about even with a year ago.  Daily steer and heifer slaughter during May was 100.4 percent of last May, with the same number of work days in the month.  Continued near record dressed weights of those cattle marketed, largely due to longer feeding periods, is adding to beef production.  

Combining placements and marketings should leave the number of cattle in feedlots on June 1 about 1.7 percent smaller than last year.  June 1 should mark the second straight month of smaller cattle inventories.  The number of cattle on feed for longer than 120 days should continue to decline, as well.  Shrinking cattle inventories will begin to cut into beef production in coming months limiting the impact of heavier weights on supplies.  On balance, fewer cattle on feed will keep pressure on for higher cattle and calf prices.

Anderson, David. “A Cattle On Feed Preview.” Southern Ag Today 4(25.2). June 18, 2024. Permalink

Supplemental feeding programs are a staple in beef cattle production systems. Something that is a constant battle is making it more economical. One sector of supplemental feeding is the use of byproduct supplemental feeds to achieve a more sustainable, yet economical way of production. Byproduct feeds are used throughout the southeastern US and include a wide variety of products. Availability of specific products is based on location. In the Southeast, some commonly used supplements include products from the processing of cotton, peanuts, soybeans, corn, ethanol and beer.         

We surveyed beef cattle producers across the southeastern states including Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Oklahoma, Tennessee, Texas and Virginia. The survey received 142 responses. Of those responses, 99 indicated use of some type of supplementation for their grazing cattle. Furthermore, 50% of respondents who used supplementation were using byproduct feeds for supplementation while the other 50% were using commodity feeds for supplementation. The results indicated that producers use a variety of different products based on availability, storage facilities and time of year. The most common products used in the southeastern US are whole cottonseed, corn gluten feed, soybean hulls, dried distillers grain, cotton gin byproduct, and peanut hulls (Figure 1). 

Cost is often a key difference between byproduct feed supplementation and commodity feed supplementation. Prices vary throughout the year depending on what products are being produced during that time. Current prices can be found on the USDA’s Agricultural Marketing Service’s National Grain and Oilseed Processor Feedstuff Reports. Considering the energy and protein concentration is important.  Knowing what your herd needs and finding a product that fits those needs will lead to the best results. 

The use of byproduct feeds for cattle is a promising way to promote both sustainability and economic gain in beef cattle production. By understanding the nutritional needs of your herd and the cost differences between products, producers can make decisions to benefit their operations. Our next step in this research is to analyze fertilizer value of feeding byproduct supplements to cattle on pasture. 

 Figure 1: Survey Results of Byproduct Feed Use by Southeastern Producers

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St. Andrew, Lauren. “From Byproduct to Beef: Revolutionizing Cattle Feeding for Sustainability and Savings in the Southeast.” Southern Ag Today 4(24.2). June 11, 2024. Permalink