Category: Livestock Marketing

While poultry remains the least expensive animal protein, prices are at a sustained multi-year high. Prices normally fluctuate in somewhat of a seasonal fashion, as seen in the 3-year average line above. COVID caused an extreme disruption to the downward side in Q2 2020. Then 2021 changed everything again. Early spring brought the market back to somewhat normalcy as dining away from home regained popularity. Then the highly touted “chicken sandwich wars” heated up as restaurant chains pushed for ways to get customers back through the doors. These and other improving market conditions began to drive prices up in early Q2 ‘21. At the same time, company processing plants struggled with employee absenteeism. Combined with sustained transportation issues and other supply chain weaknesses from the last year, the supply of chicken was unable to keep up with the new soaring demand. The result is sustained high and rising 2021 prices (brown line in chart). 

Monthly Composite Broiler Price, Weighted Average $/cwt

What will 2022 bring? As poultry companies try to expand live operations to meet demand and keep plants operating at full capacity, they are meeting difficulties on both fronts. Despite increasing plant wages, many are still reporting sustained 20%+ absentee rates for many shifts. Then along came increasing prices for building materials and labor. Contract growers who raise the chickens are finding it almost impossible to afford to build the new housing integrators need to supply more birds to the market. To secure new housing, integrators are having to invest more into the farms, increasing live production costs. It is suspected that these factors along with continued supply chain struggles will ultimately influence prices to stay high in 2022, and possibly beyond. 

Brothers, Dennis. “Poultry’s Perfect Storm in 2021-22“. Southern Ag Today 2(4.2). January 18, 2022. Permalink

Drought conditions have troubled livestock producers in many parts of the U.S. over the past few years. According to the latest report, approximately 50 percent of cattle inventory is in an area currently in some level of drought conditions. Most of the severe drought areas are in the Great Plains and Western U.S. The Western and Great Plains regions ended 2021 with about 60 percent of pasture in poor or very poor condition. Drought has contributed to beef cow herd liquidation in severe regions. 

Drought areas in the Southeast are not widespread, with many areas receiving much precipitation in recent weeks. However, some drought areas have developed in the Southeast in recent months across TX, LA, AR, and MS. Cool season forages such as winter ryegrass or winter wheat are the primary forages grown during this time of the year and will need moisture through the winter. The latest drought monitor shows approximately 65 percent of U.S. winter wheat production is in an area experiencing drought. While most of this production is in the Plains region, some is in the Southeast. Cattle producers with lower winter forage production due to lack of moisture may need to increase supplementation for cattle over winter – with higher feed and hay costs. 

Maples, Josh. “Cattle Areas in Drought“. Southern Ag Today 2(3.2). January 11, 2022. Permalink

Maybe we’re starting the new year on a high note with calf prices higher.  Lighter weight steer calves in the Southern Plains topped $200 per cwt at the end of 2021.  5-600 pound steers were over $180 and heavier feeders were over $160.  All of those prices were at least 10 percent higher than at the end of 2020.  Markets across the country were above a year ago along with those in the Southern Plains.

Expectations are for higher calf prices in 2022 than in 2021.  The continuing contraction in beef cow numbers means fewer calves for sale later in the year.  Tighter supplies combined with good demand means higher prices.

High feed costs will create some management choices this year.  Fine tuning fertilizer needs this year may pay off.  Targeting hay quality to cow needs could cut costs.  The area of the country in drought has been expanding across the South.  Some planning ahead for drought management strategies might include culling earlier, reviewing stocking rates, reserving some pasture for later needs, or even buying some feed ahead.  

On balance, the new year brings a bunch of reasons for optimism, in spite of higher costs.  The higher prices to start the year promises more to come later.  Best wishes to you in the new year!  

Anderson, David. “Calf Prices Start the New Year Higher“. Southern Ag Today 2(2.2). January 4, 2022. Permalink

Against a backdrop of rising cattle and calf prices and falling wholesale beef prices, USDA is to release the final Cattle on Feed report of the year on December 23^rd.  Cattle producers in the South are significant suppliers of feeder cattle throughout the Plains and Corn Belt.    

Both feedlot marketings and placements in November 2021 are expected to be about 4.5 percent larger than November 2020.  There was one more slaughter day this November implying slightly lower daily average marketings than last year.  If correct, these marketings would also be larger than in 2019.  While placements this year are expected to be larger than in 2020, if the estimates are correct, they would be fewer than in each November from 2017 to 2019.  Fewer feeder cattle were imported from Mexico during the month while slightly more were imported from Canada.  Placements in the expected range would follow the normal pattern of declining sharply from October’s placements.

The combination of marketings and placements leaves the number of cattle on feed slightly below last year.  On feed inventories typically increase from November to December and the December inventory is often the highest for the year.  December 2021 should be an exception to that with on-feed inventories in February being larger.  If the estimates are correct, this December would be the 6^th consecutive month with fewer cattle on feed than the year before.  

Merry Christmas!

Anderson, David. “More Cattle Placed and Marketed Expected.” Southern Ag Today 1(52.2). December 21, 2021. Permalink

The November estimates of retail meat prices were released last week by the USDA Economic Research Service (ERS). This dataset sheds light on average retail meat prices using data from the Bureau of Labor Statistics (BLS). Retail prices for beef, poultry, and pork were all up sharply from year ago levels. The all-fresh beef retail price was reported at $7.52 per pound during November. This was a few cents below the October level but still about 21 percent above the same month a year ago. Pork and chicken retail prices were also higher as compared to a year ago.  Retail pork prices were up about 18 percent and chicken prices were up about 10 percent compared to November 2020.

The monthly BLS Consumer Price Index summary was also released last week and showed the all-items price index has increased 6.8 percent over the past 12 months. This is the largest 12 month increase since 1982. Higher energy prices were a contributor to the CPI increase. The energy price index was up 33 percent over the past 12 months. The food price index was up 6.1 percent over the past 12 months with meat price increases being a key factor. 

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Maples, Josh. “Meat Prices and CPI.” Southern Ag Today 1(51.2). December 14, 2021. Permalink