Category: Livestock Marketing

Whether or not herd rebuilding has started is among the most frequently asked questions.  For the most part, the answer is there is not much evidence of rebuilding yet.  The number of heifers held for herd replacement in the January 1 inventory report was the smallest on record.  The quarterly cattle on feed reports indicated more heifers on feed than a year ago which implies more heifers placed in feedlots rather than kept in producers’ herds to produce a calf next year.  However, there is a different set of data that might shed some more light on heifer retention.

Monthly cattle imports from Mexico have been greater than a year ago during every month of 2024.  We import both feeder steers and spayed feeder heifers which eventually go to feedlots.  The quarterly cattle on feed reports, which indicate the number of heifers on feed, would include those heifers that came from Mexico. If the number of feeder heifers imported from Mexico is large enough, it could suggest fewer U.S.-born heifers have been placed on feed in 2024. This could be an indication of fewer U.S. heifers available or that more heifers were held back for replacement.  

We have the weekly data for feeder steers and feeder heifers imported from Mexico beginning in January 2012.  Through the week of August 24, there were 347,401 feeder heifers imported during 2024.  That is 176,644 more than the same period last year.  It is also the most feeder heifers imported for this time period going back to at least 2012 when 303,290 head were imported.  Feeder heifers make up 37 percent of total feeder cattle imports, the highest since at least 2012. Over the same number of weeks, total feeder cattle imports (including steers) are the second largest behind only 2012.  

What does this mean for U.S. herd rebuilding?  If we take the total number of heifers on feed on July 1 and then subtract the number of feeder heifers imported from Mexico during January-June, it would indicate 126,784 fewer domestic heifers on feed than last year.  It is probably too big of an assumption to think all of those imports have already been placed in feedlots since many imported feeder cattle go to pasture before heading to feedlots.  Still, this result might indicate that a few more domestic heifers have been held back, although some of this decline could simply be due to fewer heifers born in the U.S. We certainly aren’t convinced of any widespread expansion yet.  However, larger heifer imports from Mexico are propping up the percentage of U.S. heifers on feed and need to be carefully considered when making comparisons to previous years.  

Anderson, David, and Josh Maples. “Feeder Heifer Imports from Mexico and U.S. Herd Rebuilding.” Southern Ag Today 4(36.2). September 3, 2024. Permalink

Cattle prices have reached record highs, and the cattle herd is the smallest since the 1950s. USDA predicts high domestic prices will result in increasing imports in the coming years. The U.S. is an attractive market, particularly for lean beef trimmings for ground beef. This article briefly discusses the recent spike in live animals, fresh/chilled, and frozen meat imports.  

During the first half of 2024, imports of beef and live cattle soared. From January to June 2024, the U.S. imported 175,441 more head of cattle than in the same period last year, a 19% increase, reaching 1.12 million animals (Fig. 1). Over the same span, imported Fresh/Chilled and Frozen beef rose 11% and 29%, totaling 331,550 and 365,067 metric tons (MT), respectively (Fig. 1). Tight lean supplies along with high domestic beef prices help explain the growth in foreign acquisitions. 

As the U.S. cattle herd declines, live animal imports have increased, mostly from Mexico (Fig. 2). Drought in Mexico and high U.S. cattle prices helped fueled more U.S. feeder cattle imports. In 2023, Mexican sales to the U.S. jumped 43%.  That is 375,879 more head of cattle than in 2022. The Mexican herd has been stable recently, with FAS-PSD/USDA forecasting 0.4% growth in 2024.

Imported fresh or chilled beef has been growing over the past decade (Fig. 3). In 2023, the U.S. imported more than double the quantity it did in 2013 (Fig. 3). During this period, Canada provided, on average, half of the U.S. imported fresh/chilled meat while Mexico had, on average, 34% of market share. FAS-PSS/USDA predicts Canada stocks will drop 2% in 2024, down to 11.06 million head. 

The amount of foreign frozen beef increased by 20% from 2022 to 2023, totaling 0.57 MMT last year (Fig. 3). In 2013, Australia and New Zealand each held 41% of the frozen imported beef market. However, their market shares declined to 28% and 29% over the last decade. A two-year drought (2019-20) affected Australia’s supply. Since 2020, shipments from Brazil expanded, reaching 90,303 MT in 2023, representing 16% of the market share. When China temporarily banned Brazilian beef imports in 2021, Brazil diverted its products to other countries, including the U.S. According to FAS-PSD/USDA, Brazil’s (-0.92%) and New Zealand’s (-1.66%) cattle herds are expected to decrease in 2024, while Australia’s stock is projected to increase by 4.93%.

U.S. beef imports are likely to continue ahead of last year as fewer cows are culled, and lean beef supplies continue to shrink.  Drought in Mexico will be a major factor in feeder cattle imports in coming months.

Figure 1. The U.S. Total Imported of Live Animals, Fresh/Chilled and Frozen Beef, Quantity: Jan – Jun 2023 vs. Jan – Jun 2024. 

Figure 2. U.S. Live Cattle Imports from Canada and Mexico, 2013-2023. 

Figure 3. The U.S. Total Imported Fresh/Chilled and Frozen Beef, Quantity: 2013-2023 

References

FAS-PSD/USDA (2024). PSD Reports. Livestock and Poultry. Retrieved from:   https://apps.fas.usda.gov/psdonline/app/index.html#/app/downloads

FAS-USDA (2024). Standard Query. Retrieved from: https://apps.fas.usda.gov/gats/ExpressQuery1.aspx

---

Calil, Yuri. “U.S. Beef Imports: A Quick Look at Recent Trends.” Southern Ag Today 4(35.2). August 27, 2024. Permalink

In August 2021, the USDA announced a new market news report that would contain the distribution of weekly US fed cattle prices using price “bins” (LM_CT215). What makes this report unique is the way that price data are reported. Prices are reported in $2 increments, or bins, for negotiated cash, net formula, net forward contract, and negotiated grid nets. Figure 1 shows an example of how these weekly data are reported. The weekly weighted average live fed cattle price is highlighted in Figure 1.  The number of fed cattle selling at each $2 per cwt premium or discount to the average is reported in the grid.  

Figure 1. Snapshot of Data Reported in USDA National Weekly Direct Beef Type Price Distribution (LM_CT215)

The new distributional data allow market participants to understand fed cattle prices in more detail and go beyond minimum, maximum, and average prices for each marketing type. With this new distributional dataset for formula and negotiated fed cattle prices, we^[1] analyzed how weekly prices between these two markets interact with each other. One objective of our study centered around the impacts of negotiated prices on cattle markets. Specifically, as concerns have risen in relation to a possible thin cash market, we wanted to understand whether or not negotiated prices impact formula prices, or if it’s the other way around, as some market participants have suggested. Figure 2 displays a visual representation of the results from our study and shows how prices interact with each other (from August 10, 2021, to May 14, 2024). Current negotiated (orange) and formula (blue) prices for a given week are in the middle. We found that, depending on the market, current prices are impacted by the preceding three weeks of prices (the two columns on the right and left).

Figure 2. Negotiated Cash and Formula Fed Cattle Price Relationship Flow Chart. Data is weekly for the time range, August 10, 2021, to May 14, 2024 (n = 145).

Our study found that the current negotiated cash price for a given week (top middle orange box) is positively impacted by the week prior negotiated cash price (green dotted line), and negatively impacted by the negotiated price 3-weeks prior (solid red line). Current formula prices were found to be positively impacted (green dotted line) by the formula price from the prior week and the prior two weeks of negotiated fed cattle prices. However, formula prices were negatively impacted (solid red line) by formula price from two weeks prior. 

Despite concerns that the negotiated cash market is too thin and does not provide marketing information to the formula market, we find that the negotiated price does influence the formula fed cattle price. We find evidence supporting the conclusion that negotiated cash price information is being transmitted to formula price variability, which is expected because formula prices are designed to be based on the negotiated trade. Our results also indicate that formula prices do not impact on the negotiated price. 

---

^[1] Boyer, C.N., E. Park, A. F. Ramsey, and C. Martinez. 2024. “Formula and Cash Negotiated Fed Cattle Price Relationships”. Journal of Agricultural and Resource Economics, forthcoming.

---

Martinez, Charley, Christopher Boyer, Eunchun Park, and A. Ford Ramsey. “The Relationship Between Formula and Negotiated Cash Fed Cattle Prices.” Southern Ag Today 4(34.2). August 20, 2024. Permalink

In 2024 a GOAT is what they call the “Greatest Of All Time.” Despite all of the discussions of Olympians who may or may not be the greatest athletes of all time in their sport, it is also important to discuss the actual goat market. Goat production is big business in the Southern United States.

Figure 1 contains 35-50 pound and 51-65 pound selection 1 goats in Tennessee from January 2020 through July 2024. The variability in prices throughout a year is evident in that prices have typically had a $150 to $200 per hundredweight price range in a given year. Most of this is simply due to seasonality of prices, which is driven by basic supply and demand. The bigger storyline is what appears to be a softening of goat prices from the high prices seen in early 2022. 

The question at hand, what is causing the negative trendline in goat prices the past few years? It is difficult to blame lower goat prices on supply, because the January 1 inventory report for 2024 indicates there are 100,000 fewer goats than the same time in 2022. More specifically, all meat and other goats account for 90,000 head of that decline with the meat and other goat breeding herd down 68,600 head from 2022. This leaves the other side of the coin, which would be the demand side for goats and goat meat. There does not appear to be people leaving the domestic market that previously demanded goat meat. One logical explanation could be the softening economy and higher price of goat meat has rationed the product. It appears goat prices may continue to decline in the near term.

Figure 1. Tennessee Goat Prices from January 2020 through July 2024.

---

Griffith, Andrew P. “Finding the GOAT.” Southern Ag Today 4(33.2). August 13, 2024. Permalink

Dairy cow slaughter rebounded sharply in the two weeks after the holiday shortened fourth of July week.  It’s pretty normal for dairy cow slaughter to climb seasonally after early July but, the magnitude of this weekly increase is larger than usual.  Even with the rebound in culling, weekly slaughter remained smaller than last year and the average of the last 5 years.  The trend of smaller dairy cow culling is likely to continue the rest of the year, even though culling may increase seasonally.  

Over the last 8 weeks dairy cow culling is 18 percent smaller compared to the same time period last year.  Dairy cow slaughter is reported by region.  Region 4 (Southeastern states), region 6 (Texas, Arkansas, and Louisiana), and region 3 (Virginia and Pennsylvania) include Southern states.  Dairy cow slaughter in regions 3 and 4 are down 10 percent and 8 percent, respectively.  Slaughter in region 6 is down 32 percent.  Regional differences in slaughter rates continue to indicate shifts in regional milk production with faster than average culling rates in the South but slower culling in the Southern Plains.  On an interesting note, region 8, which includes Colorado and the Dakotas, has reported larger dairy cow slaughter this year than last year and is the only region to do so.  Dairy cow culling is likely to remain relatively low in coming months due to fewer dairy cows in total, relatively few replacement heifers, and rising milk prices.

The overall decline in dairy cow slaughter is further supporting cull cow prices across the South and the country.  Dairy cow slaughter has made up, on average, about 48.6 percent of all cow slaughter over the last decade.  This year dairy cow slaughter represents 48.3 percent of all cow slaughter.  Reduced dairy cow culling coinciding with reduced beef cow slaughter is further cutting supplies of lean beef.  Wholesale boneless 90 percent lean beef hit a new high of $3.76 per pound last week.  The cow-beef cutout is in record territory at over $290 per cwt.  Lean slaughter cows at auction continue to hover around $125 per cwt.  The lack of dairy replacements and need for replacements by some has bred dairy cow and heifer prices up from $300 to $600 per head in Kentucky dairy auctions.  

Overall, reduced dairy cow culling is supporting cull cow prices.  Reduced total cow culling is putting additional strain on cow packing plants across the region.   

Anderson, David. “Dairy Cow Slaughter Posts Strong Rebound.” Southern Ag Today 4(32.2). August 6, 2024. Permalink