Category: Livestock Marketing

  • Dairy Rollercoaster

    Dairy Rollercoaster

    2024 has been a roller coaster year for the dairy industry.  The year started with low prices, and continuing financial problems that began in 2023. But, price recovery by mid-year spurred some profits and herd growth. 

    Low prices led dairy farmers across the country to reduce the number of milk cows in 2024. Dairy cow numbers bottomed out in July at 9.319 million head. That was the fewest since February 2016.  Milk production per cow actually declined, year-over-year, which is a historical rarity. The combination of fewer cows and less production per cow led to lower milk production than the year before in 5 of the first 6 months of 2024. 

    Strategies to cut production in response to low prices have led to very tight supplies of replacement heifers. Replacement heifer prices, for those looking to buy, surged to record highs late in 2024. For example, springer heifers hit $2,700 per head in early December at the Smiths Grove Kentucky dairy auction.

    Herd expansion due to rising prices later in 2024 was led by Texas dairies. By October, Texas’ milk cow numbers hit a record of 675,000.  That was 40,000 head more than October of 2023.  This herd expansion led to growing numbers in the broader Southern Plains.  Dairy cow numbers continued to decline in other areas of the country.  Across the Southeast, monthly dairy cow inventory is reported for Florida, Georgia, and Virginia.  Compared to the previous year, Georgia and Virginia cow numbers declined by 5,000 and 3,000 head to 85,000 and 66,000, respectively.  Florida cow numbers held constant at 100,000 compared to October 2023. 

    Dairies in the Southeast have largely been spared from HPAI. It began in late 2023 or early 2024 with a mystery illness that was identified in the Spring as HPAI.  The illness led to reduced milk production and some more culling. 

    Reduced milk production led to higher milk prices. Cheese, butter, powder, and whey prices all increased. Weekly 40 pound cheddar cheese blocks in the wholesale market began the year at $1.53 per pound and climbed to the mid-$1.90s by mid-year, then climbed again to $2.28 per pound.  The bottom dropped out after that peak, much like a rollercoaster, to $1.77 per pound at the beginning of December.  Butter prices did much the same, a year-long climb to $3.19 per pound then a drop to $2.59 per pound, back to where the year began.  Federal order uniform milk prices climbed to over $25 per cwt by late in the year but will start to decline reflecting the lower cheese and butter prices.

  • Rising Prices at Year End

    Rising Prices at Year End

    Cattle and calf prices keep climbing towards the end of the year.  It’s not uncommon for prices to rise late in the year, but this time between Thanksgiving and New Year’s can be volatile.  This year-end rain in areas of the Southern Plains and fewer calves for sale are working to boost calf prices while.  There is also a week’s worth of data on feeder cattle imports from Mexico which gives some insight on the potential impact of import restrictions on Mexican cattle due to screwworm regulations.  

    In the Southern Plains, lighter weight, 400-500 pound, calf prices have jumped about $30 per cwt over the last month.  In the South, the same weight calves are higher, but have not seen quite as large of increase, up about $25 per cwt.  Heavier 500-600 pound steers are up around $20 to $25 per cwt in the Southern Plains and South, respectively.  From Texas across the south to Georgia, 700-800 pound feeders are up about $8 per cwt over the same period.  Seasonal lows in the calf market are in the rearview mirror for 2024.  

    Recent rains have helped stocker prices.  The drought monitor map indicates some significant improvement across wheat pasture country.  Better late than never.  The rains have boosted prospects for late pasture grazing and likely boosted supplies of pond and tank water that had run short.  

    It appears that fewer calves are for sale following the larger Fall runs.  Over the last month, fewer cattle have been reported in USDA’s weekly market receipts data.  The daily CME feeder cattle index indicates fewer cattle changing hands.  Local auction markets around the country also report fewer animals.  When combined with rain boosting stocker demand, tighter supplies are further helping prices.

    Fed cattle prices are climbing too.  Southern Plains fed steers hit $190 last week rebounding from about $185 a month ago.  It looks like the cow market has already passed its seasonal low as beef cow slaughter is declining.  

    The first full week of data on feeder cattle imports from Mexico were released last week.  For the week ending November 30th no cattle (0 head) were reported imported through the 11 ports of entry.   It’s worth remembering that was Thanksgiving week and mid-week holidays can lead to some wide swings in data.  Feeder cattle imports are normally large in November and December as cattle are imported for winter grazing and direct feedlot placement.  The timing of the import restriction is likely causing a bigger price impact than it would at other times of the year when imports are typically lower.

    Rain and tighter supplies are some fundamental factors at work in boosting calf prices.  Those positive factors are likely offsetting the impact of some increasing corn prices. Tighter supplies of claves will continue to boost calf prices in the new year.


    Anderson, David. “Rising Prices at Year End.Southern Ag Today 4(50.2). December 10, 2024. Permalink

  • A Look at the Livestock Forage Disaster Program 

    A Look at the Livestock Forage Disaster Program 

    The foundation of cattle production is forage availability and management.  Poor forage growing conditions require cattle producers to incur increased feed costs or forced culling decisions. With drought conditions looming it’s a good time to think about the Livestock Forage Disaster Program (LFP) program.  USDA Farm Service Agency (FSA) administers the LFP designed to financially assist livestock farmers burdened with increased costs associated with a loss of forage due to drought and/or wildfire.

    Prior to 2008, livestock and forage producers had limited options to manage risk from disasters, except post-hoc disaster funding.  The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) formed LFP, funded by the Agricultural Disaster Relief Fund.  Permanent authorization of LFP occurred in The Agricultural Act of 2014 (2014 Farm Bill), with funding authorized through the Commodity Credit Corporation (CCC).

    While the Southeast may not be an area of the country considered prone to drought and lost forage due to drought, from 2011-2021, Southeast livestock producers received approximately $3.7 billion in payments from LFP. Provided that a producer meets FSA eligibility requirements, payments are calculated based on the number of months of eligible drought and a payment rate. The payment rate is based on the type of livestock and also is a percentage of a measure of monthly feed costs or carrying capacity of the land. The number of payments or months of payment is based on drought severity and duration based on the U.S. Drought Monitor.  In this way, total payment calculations are a function of drought conditions, cattle inventory, and producer participation. 

    As shown in Figure 1, at a state level, total payments over the 2011-2021 period are greatest for Oklahoma, Texas, and Arkansas. This makes sense as the 2011-2012 drought resulted in a large number of payments with a high payment amount for producers in Texas, Oklahoma, and Arkansas in 2012 and 2013. Yet, Figure 1 also shows that producers across the Southeast have utilized this program. In 2016 and 2017, a total of $106 million for Alabama producers and $29 million for Mississippi producers was disbursed following a particularly devastating drought. 

    Figure 1: County-level total payments distributed to livestock producers as part of the Livestock Forage Disaster Program for accounting years 2011-2021.

    As 2024 draws to a close, it is important to consider growing conditions over the last year and potential payments under LFP. On November 12th, 83% of the contiguous United States was in D0-D4 or experiencing abnormally dry to exceptional drought. In the Southeast, drought conditions have shifted over the summer, with some parts of the region experiencing severe and exceptional drought. The USDA publishes weekly county-level eligibility for LFP payments based on pasture type.  As of November 14th, 247 counties in the Southern Ag Today region were eligible for payments on improved pastures, 234 counties were eligible for payment for native pastures, and 123 counties were eligible for payments on improved mixed pastures. While some counties are only eligible for 1 month of payment, others are eligible for 5 months this year. Other types of pastures are also eligible for payment but are not discussed here. Eligible producers have 30 days from the end of the calendar year when the qualifying drought occurred to apply. For more information, consult the USDA Fact Sheet and your local FSA office. 

    Figure 2: Eligible counties and number of program months for payment under improved pasture as part of the Livestock Forage Disaster Program for 2024 as of November 14, 2024.

    Figure 3: Eligible counties and number of program months for payment under native pasture as part of the Livestock Forage Disaster Program for 2024 as of November 14, 2024.


    Thayer, Anastasia, Matthew Fischer, and Braeden Mull. “A Look at the Livestock Forage Disaster Program.Southern Ag Today 4(49.2). December 3, 2024. Permalink

  • An Old Menace

    An Old Menace

    Over the weekend, USDA APHIS announced a new restriction on livestock from Mexico due to an occurrence of New World Screwworm (NWS) in the Southern Mexican state of Chiapas.  APHIS is restricting the importation of animal commodities originating from, or transiting through, Mexico immediately while awaiting more information of the size and scope of the outbreak.

    History

    The screwworm, Cochliomyia hominivorax, is a fly that is a flesh-eating parasite. The screwworm fly spreads by depositing its eggs around an open wound.  The larvae then crawl into the wound feeding on the animal’s flesh.  The adult female fly mates only once in its lifespan, which led to the strategy of controlling the screwworm fly by releasing sterile male flies, thus preventing reproduction.  Eradication efforts through releasing sterile male flies began in the 1950s and resulted in eradication from the U.S.  In fact, it was ranchers who donated money and raised $2.8 million to match the federal appropriation that ramped up eradication in Texas in the early 1960s.  Later coordinated efforts with Mexico and Central American countries pushed the flies down to Panama.  But in recent years, the flies have been making a comeback in Central America overwhelming the strategy of sterile fly release.  The last reported occurrence in the U.S. was in deer in Big Pine Key, Florida in 2016.  

    During the eradication efforts in the 1950s, ranchers could send in sample tubes of flies for identification.  Knowing the location of occurrences allowed for pinpointing release areas.  Figure 1 is a picture of the sample tubes.  Figure 2 is a map of the screwworm overwintering range in average years (Graham, 1985).   

    Imports

    Feeder cattle imports from Mexico are an important source of cattle for U.S. cattle feeders and beef production.  Imports have a highly seasonal pattern with the most entering in the Spring and late in the year.  These steers and spayed heifers often first go to stocker grazing programs and then to feedlots.  Imports in 2024 have amounted to about 5 percent of feedlot placements.  Cattle enter the U.S. through 11 ports of entry: 3 in Arizona, 2 in New Mexico, and 6 in Texas.  Year to date, 1,195,702 feeder cattle have entered the U.S.  Of those, 29 percent have entered through Arizona, 51 percent through New Mexico, and 20 percent through Texas.

    A simple, back of the envelope analysis would estimate that a 5 percent decline in feeder cattle supplies would lead to about an 8.6 percent increase in feeder cattle prices, all else held equal.  We might also consider the impact regionally, as most of these feeder cattle would be fed in the Southern Plains or the Southwest.  The limitation on imports would likely have a significant effect on feeders in those areas. 

    Other Considerations

    One of the major differences today compared to pre-eradication is the presence of many more deer and exotics.  In the “old days”, there were few deer in parts of Texas due to the impact of screw worms on deer survival.  Eradication allowed rapid increases in the deer population.  The recent development of the exotic wildlife industry presents the potential for much larger economic harm from re-infestation.

    Old timers will speculate that one reason there were so many great team ropers from Texas is because of the constant checking cattle closely and doctoring them for screw worms.  The pest even enters popular literature in The Good Old Boys by Texas writer Elmer Kelton.  In this novel the protagonist, Hewey, spends a ton of time roping, checking, and doctoring their calves.

    It’s important to remember that screw worms can be controlled.  The use of sterile male flies allows proven and effective control.  Cooperation with our southern neighbors pushed eradication as far as Panama.  But, as is often the case, these old menaces return.  Fortunately, control is possible but, it requires vigilance.

    Figure 1.  Tubes for Ranchers to Return Screwworm Samples to the Eradication Program.  From the library of David Anderson.  

    Figure 2.  Map of Screwworm Range.  

    Source: Graham, 1985.

    For Further Reading:

    Graham, O.H. (editor) “Symposium on Eradication of the Screwworm from the United States and Mexico.” Entomological Society of America.  1985.

    Kelton, E.  The Good Old Boys.  Doubleday.  1978.

    Novy, J.E.  “Screwworm Control and Eradication in the Southern United States of America.”  FAO.


    Anderson, David, Josh Maples, and Charley Martinez. “An Old Menace.Southern Ag Today 4(48.2). November 26, 2024. Permalink

  • A Look at the Hog Market

    A Look at the Hog Market

    The Fall is often an interesting time to look at hog and pork markets because production typically increases seasonally, and prices decline.  Holiday ham demand usually kicks in to partially offset supply driven lower prices.  This year has some notable differences happening.

    The hog industry has had a 7-month run of profits according to Iowa State University’s estimated farrow-to-finish returns.  Profits have been generated by much lower feed costs in recent months.  But, those profits are following huge financial losses in 15 of the preceding 17 months.  Losses have led to a reduction in the breeding herd and in sows farrowing.  USDA’s September 1 hogs and pigs report indicated the smallest breeding herd since 2016.  About 18 percent of the nation’s breeding herd are in the South.  June through August farrowings were estimated to be the smallest since 2013.  Only increasing numbers of pigs per litter, hitting 11.72 in the third quarter of the year, supported slaughter numbers.  Over the last month hog slaughter and pork production have been almost equal to a year ago.

    While pork production has increased seasonally this Fall, supplies appear to be tightening compared to a year ago.  Hog prices are enjoying a counter-seasonal increase.  Iowa-Southern Minnesota barrow and gilt carcass prices have increased from about $75 per cwt to $84 per cwt over the last month.  The cutout is up about $7 per cwt over the same time.  Wholesale prices are higher for pork bellies, trimmings, ribs, and hams.  Bellies are up about $30 per cwt over the last month to $2.02 per pound.  They were $1.24 per pound a year ago. Trimmed pork spareribs hit $1.75 per pound last week compared to $1.18 a year ago.  

    In the meantime, more retail pork features and specials are occurring compared to a year ago.  Retail prices for boneless hams are a little higher than a year ago while bone-in hams are a little cheaper than a year ago in the week leading up to Thanksgiving according to USDA’s retail price report. 

    It’s going to take some sustained higher hog and pork prices to boost profitability enough to increase production in the coming year.  It’s likely that higher pork prices are ahead for 2025.

    Anderson, David. “A Look at the Hog Market.” Southern Ag Today 4(47.2). November 19, 2024. Permalink