Category: Livestock Marketing

The title of this article is not meant to incite regret over our holiday excesses but, instead, to take a look at cattle dressed weights in late 2023 that set new record highs.  Heavier weights contributed to more beef production than expected helping to pressure prices late in the year.  

Fed cattle weights have a distinct seasonal pattern through the year.  They usually hit their seasonal lows in May-June and their highs late in the year.  Days on feed, placement weights, weather, and prices all effect dressed weights.  Dressed weights were below 2022 until early May contributing to some tighter beef supplies.  Steer dressed weights climbed seasonally, about equal to the year before until late in the year when they climbed to a record 940 pounds.  The increase in steer dressed weights contributed an additional more than 3 million pounds of beef per week in November and December.  

Record high dressed weights should not be a surprise to long-term participants in the cattle market.  The steady growth in weights over time has been one of the remarkable achievements in productivity growth of the industry.  In 1964, steer dressed weights averaged 662 pounds per head.  In 2023, steer dressed weights were an estimated 907 pounds per head.  Weights in 2022 hit an annual record high of 910 pounds.  The 3 pound annual decline in 2023 is largely due to lower weights in early 2023.  Bigger cattle, feeding efficiency gains, and economics have driven this long-term trend of heavier weights.

What’s to come in 2024?  We should expect the seasonal pattern to continue.  But, the seasonal pattern will be impacted by days on feed.  We entered December 2023 with more cattle on feed over 120 days than the year before, likely meaning some heavier weights are ahead at least early in the year.  Lower feed costs than the year before implies some heavier weights.  Winter weather will be important in coming months.  A series of severe storms would pull down weights.  Beef demand will be a major factor in weights.  A boost in consumer demand resulting in higher cutout values, boosting margins and fed cattle prices would speed up fed cattle marketings and pull down weights.  Fed cattle weights will be something interesting to watch in the coming year.  

Happy New Year!

---

Anderson, David. “Weight Gain.” Southern Ag Today 4(1.2). January 2, 2024. Permalink

Environmental Quality Incentives Program (EQIP) has been a very popular program with livestock producers for many years.  EQIP is a working lands conservation program administered by the Natural Resources Conservation Service (NRCS) to provide conservation programs for farmers, ranchers, and forest landowners. It’s meant to help producers improve water and air quality, build healthier soils, and improve wildlife habitats by providing both financial and technical assistance. The good news for livestock producers is that fifty percent of the EQIP funding is mandated for livestock related practices. 

Some practices that cattle producers may find beneficial are fencing, cross fencing, forage harvest management, heavy use area protection (gates, feeding areas), herbaceous weed control, pasture and hay planting, nutrient management, livestock shelter protection, prescribed grazing, watering facilities.

Other practices that are livestock related are in the following list. (This is not a complete list.)

Access control

Animal mortality management

Brush management 

Composting facility 

Conservation Crop Rotation

Constructed Wetland

Contour Farming 

Dam

Energy Efficient Agricultural Operation, Insulation, lighting

Firebreak

Groundwater testing

Irrigation 

Land Clearing

Livestock Pipeline

Obstruction Removal

Organic Management

Pond

Short term storage of Animal waste and By-products

Silvopasture

Sinkhole Treatment

Stream crossing

Watering Well

Woody Residue treatment 

Many of the eligible practices might also overlap with production systems related to carbon payment opportunities.  If you are thinking about carbon options, it might be worth exploring the potential for EQIP participation.  Several past SAT articles have discussed carbon programs and contracts here.   

There are many practices that NRCS can provide financial and/or technical assistance that is beneficial for environment and sustainability. Look at the EQIP page for more information.

https://www.nrcs.usda.gov/programs-initiatives/eqip-environmental-quality-incentives

Here are some important points to keep in mind in learning more about EQIP.  

To get started, you need to register with the Farm Service Agency to participate in the USDA programs. 

https://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/Outreach/pdfs/Brochures/4%20Steps%20to%20Assistance.pdf

Even though the deadline for signing up for is typically the end of October or early November, producers are encouraged to sign up any time during the year.

Available practices and practice standards can vary by state and by year so check with you local NRCS office to see what is available in your area. State contacts can be found at:

https://www.nrcs.usda.gov/conservation-basics/conservation-by-state

Finally, get to know you’re the local USDA staff at your USDA service center or offices. They can provide valuable information on how best to get assistance for the programs that are offered.

---

Runge, Max. “EQIP Overview for Livestock Producers.” Southern Ag Today 3(52.2). December 26, 2023. Permalink

Beef cow culling normally peaks in the Fall and this year has been no exception to that.  The big surprise is just how big culling has been this Fall given a smaller cow herd.  Several reasons are probably combining to keep culling high.  Drought in many areas, including the South, high cull cow prices, and high hay costs.  Grabbing the high cull cow price today looks better than the future net returns from keeping her for another calf.  

For the year, U.S. beef cow slaughter is 11.6 percent, or 424,000 head, smaller than last year.  But, over the last 6 weeks beef cow slaughter has only been 2.4 percent below last year.  Culling for the week ending November 18^th, at 83,200 head, was actually larger than the same week the year before and was the largest week in 2023.  Any week with slaughter over 80,000 head is a big week.  

The national slaughter data masks some regional differences over the last few weeks.  Beef cow slaughter in the South, Region 4 in the federally inspected slaughter data, was 2.6 percent larger than the year before. Drought is likely a factor in culling in this region.  Region 6 slaughter, which includes Texas, Oklahoma, Arkansas, and Louisiana, was 8.5 percent smaller than last year over the same period.  Much of the Corn Belt region also had cow culling above a year ago. 

Reduced dairy cow slaughter has kept total slaughter well below last year over the last few weeks which has worked to boost cull cow prices.  The normal Fall decline in price appears to be over with auction prices increasing from about $70 per cwt to $87 per cwt into mid-December.  

The next weeks will be shortened due to the Christmas and New Year’s holidays.  Early in January cow slaughter tends to jump higher led by more dairy culling.  Overall, culling should continue to shrink in 2024 with higher cull cow prices.

Merry Christmas from the livestock economist gang at SAT!  

---

Anderson, David, and Josh Maples. “Large Cow Culling Continues.” Southern Ag Today 3(51.2). December 19, 2023. Permalink

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.

---

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. 

---

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