Category: Livestock Marketing

Many baking recipes call for eggs. Americans love to bake, especially during the holidays. This seasonal demand typically causes a short but often sharp uptick in table egg prices around this time of year, as seen in figure 1. Egg markets also typically experience a short price spike in early Spring corresponding with the Easter holiday. These price spikes are mostly demand driven but can certainly respond to supply pressure as well. We saw this distinctly around this time of year in 2022 when the egg inventory reached a historic low as Highly Pathogenic Avian Influenza (HPAI) decimated the layer populations in the egg producing states, losing more than 43 million laying-hens and producing almost 30% fewer eggs. Concurrently, Americans were entering holiday demand. High demand with low supply almost always produces increasing prices. Prices reached as high as $5.30+ per dozen during this time. 

A quick study of figure 2 shows that the current egg inventory (red bars) has rebounded strongly and is higher than both 2020 and 2021. Conversely, it is easy to see how the inventory shortage we suffered in 2022 contributed to the aforementioned high prices. When hen numbers rebounded, and HPAI impact subsided, egg prices went from the historic highs of 2022 to historic lows of below $0.90 per dozen after Easter 2023 and have stayed relatively low up until the current typical holiday increase began. Looking at the inventories currently on hand, consumers should reasonably expect egg prices to stay within “normal” ranges for the season and likely drop quickly back to the recent lows – all assuming HPAI does not cause the great loss of hens we saw last season. 

Unfortunately, HPAI is resurging again in commercial and backyard flocks, with 47 U.S. states reporting impacts and 24 states having confirmed infections in the last month. So far, the massive laying-hen losses of 2022 have not occurred. Only 5,108,800 commercial laying hens have been impacted in 2023 at the time of this writing. However, harsh weather has yet to spur on the major migration of wildfowl, HPAI’s primary vector for spreading the virus. It is yet to be seen if increased bio-security measures and ever improving quarantine procedures can keep the worst impacts at bay. But so far, holiday baking season looks to be in good shape for eggs!

Figure 1.

Figure 2.

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Brothers, Dennis. “Holiday Baking Gets a Boost.” Southern Ag Today 3(50.2). December 12, 2023. Permalink

Photo by Lukas: https://www.pexels.com/photo/eggs-in-tray-on-brown-surface-518538/

Long held tradition (and fact) states that feeder bulls will be discounted to feeder steers, obvious reasons.  Does this always occur and is it consistent?  It depends.  Observing USDA-AMS sale barn data from South Carolina between 2009-2023 for September marketings, when many calves are sold in the state, some interesting points appear.  Fig. 1. contains the movement of the price discount, or spread, between bulls and steers for two different weight classes, 400-499 lbs., and 600-699 lbs.

Fig. 1. 

Using the price data between 2009-2023 three points are noticed.

• The 2014-mid 2015 had a significant increase in the discount rate from steers to bulls for the heavier calves.
• 2021, COVID-19 timeframe, recorded a collapse in the spread discount between lighter and heavier feeder calves.
• Moving from 2021 to 2023, with higher marketing prices year by year, the discount spread increased. 

What to expect?  For feeder calves in the 400-499 lbs. weight class the average discount for feeder bulls to feeder steers was $5.43/cwt with a minimum discount of $1.25/cwt and a maximum discount of $10.00/cwt.  The feeder calves in the 600-699 lbs. weight class the average discount for feeder bulls to feeder steers was $12.30/cwt with a minimum discount of $6.07/cwt and a maximum discount of $26.60/cwt.  The bull calf discount changes based on overall market conditions and feeding profitability.  High prices may lead to a larger discount in some cases, see 2014 and 2015, due to the production risk on these calves.

So does this help?  A discount of feeder bulls to steers does exist for the 2009-2023 marketings.  In none of the years did the discount disappear but, the discount varied widely.  The spread on the discount between heavier and lighter calves can depend on prices movements toward or away from historical averages and impacts on cattle markets outside the expected. 

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Fischer, Matthew. “Feeder Bulls Discounted to Feeder Steers?” Southern Ag Today 3(49.2). December 5, 2023. Permalink

Lamb and mutton production has followed the usual historical pattern this year, hitting a peak in Spring and increasing from Summer lows this Fall. Production peaked at the end of the first quarter, outpacing 2022 numbers. Then, production declined, reaching a low in July. In recent weeks production has exceeded that of 2022.  You’ll notice the sharp production decline in the chart indicating the Thanksgiving shortened work week.

From January to November 2023, federally inspected (FI) lamb and mutton production totaled 102.1 million pounds. This represents a 2.7 percent drop compared to the same period of 2022. Despite that production decline, the number of sheep and lambs slaughtered jumped 3.4 percent, from 1.38 to 1.63 million head. Weight is the crux of the matter. Average FI live weight declined by 6.3 percent. Over the abovementioned period, the average sheep and lamb live weight dropped from 132.7 to 124.3 pounds. Likewise, dressed weight has decreased, on average, by 6%. Lighter weights reflect more, lighter hair sheep, lambs going to non-traditional markets at lighter slaughter weights, and likely fewer fed in feedlots this year.

Total supplies include imports and cold storage stocks. The cold storage reached 26.1 million pounds in October, 9 percent less than the same month in 2022. Lamb and mutton imports plummeted 17.4 percent so far this year. From January to September 2023, the U.S. imported 174 million pounds. The country brought in 211 million pounds during the same period last year.

Live lamb prices collapsed midway through 2022 and have spent most of this year trying to recover.  By mid-year 2023 lamb prices had recovered to exceed those of 2022. After that, national negotiated live prices have hovered at around $200 per cwt.  Even though prices have begun to decline in recent weeks, tighter overall supplies from domestic production, reduced imports, and less in cold storage have boosted prices above year ago levels.

There appears to be renewed interest in lamb production in the South, based on questions some of us livestock economists here at SAT receive.  Price recovery should continue that interest over time and provide a boost to those who have started production.

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Clemets Daglia Calil, Yuri. “Lamb And Mutton Production Shrinks This Year.” Southern Ag Today 3(48.2). November 28, 2023. Permalink

We might not think much about turkey prices and production much of the year, until now.  Thanksgiving is when turkey gets all the center of the plate attention.  Record high turkey prices raised a lot of eyebrows last year.  High Pathogenic Avian Influenza (HPAI) cut supplies leading to higher prices.  The unexpected HPAI impact was on top of reduced production driven by a lack of profitable production.  

Those record high prices spurred production increases in 2023.  Halfway through November, turkey production is 5.5 billion pounds, up 4 percent from the same period last year.  It’s worth pointing out that while production is higher than last year, third quarter production is the smallest since 2015 (not counting last year) which was the last time we had a major HPAI outbreak.  Production for 2023 will be higher than last year but is still likely to be the second smallest production year since 2000.

Prices have responded to increased production by falling dramatically.  Frozen tom turkeys weighing 16-24 pounds were $0.88 per pound, 50 percent lower than last year in mid-November.  Smaller frozen hens were 44 percent lower than last year.  Fresh whole birds are normally higher priced than frozen birds.  Fresh hens were $1.47 per pound in mid-November compared to $1.88 last year. 

USDA reports retail turkey prices featured or on special at more than 29,000 retail, grocery stores around the country.  Turkey item specials normally ramp up right before Thanksgiving and this year is the same with 72.5 percent of stores reporting some feature on a turkey item.  That is compared to 56.3 percent of stores last week.  Featuring is a little slower than last year when 86 percent of stores had some feature.  USDA defines specials as a sale with some kind of “no price” or a buy one, get one free special.  Twelve percent of stores had a special advertised this year compared to only 4 percent last year.  So, while there are slightly fewer features, there are more buy one, get one free specials this year.  Grocery stores often use turkeys to boost sales throughout the store, so, you may pay a lot less for your turkey than quoted wholesale prices.  

Us livestock economists at SAT have a lot to be thankful for this year.  We hope you have a great Thanksgiving!

Anderson, David. “It’s Turkey Time!” Southern Ag Today 3(47.2). November 21, 2023. Permalink

Cattle markets finished October on a weak note with the CME Feeder Cattle Index around $237 per hundredweight. This price represents a $17 per hundredweight decline compared to the peak value, which occurred in September. However, the decline in prices is not the worst of it. The worst of it was that many cattle producers missed out on the opportunity to hedge cattle to be sold in the fourth quarter of 2023 and the first eight months of 2024 and will likely receive lower prices.

Traders and market participants clearly had high expectations for feeder cattle as can be seen in Figure 1 with most contracts finding their life of contract high in September. Most contracts are $20 to $30 off their contract high as of this writing with more weakness evident in the market. Despite a favorable opportunity to hedge the sale of cattle in September and early October, not all hope is lost. One could easily compare the Christmas tree in A Charlie Brown Christmas with cattle market prices, but most would look at it from the glass half empty perspective instead of the glass half full perspective. One could certainly sulk in the losses and the missed hedging opportunities, but one must remember that markets are still alive just like the Christmas tree Charlie Brown chose. This means there are opportunities for gains in the current market.

The first aspect to consider is that feeder cattle futures are still offering a favorable price to hedge the sale of feeder cattle through most of 2024. If a profitable price can be achieved with current futures prices, it could still be a wise move to secure those profits. If there is concern of missing out on larger profits if the market price strengthens, then there are strategies using put and call options to capitalize on a stronger market. The primary objective is to be an active marketer instead of passive.

Figure 1. Daily feeder cattle futures close price by contract month.

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Griffith, Andrew P. “A Charlie Brown Christmas for Cattle Prices.” Southern Ag Today 3(46.2). November 14, 2023. Permalink