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  • February Cattle on Feed 

    February Cattle on Feed 

    The February Cattle on Feed report was released this past Friday afternoon and reported 11.7 million head of cattle in feedlots on February 1st. This was a 0.7 percent decrease from February 1, 2024. Marketings were up 1.4 percent year-over-year. There were no big surprises in the report relative to pre-report expectations, but there were some interesting points in the report. 

    Placements of cattle into feedlots during January were up 1.7 percent above January 2024. Weather and winter storms delayed January 2024 placements, so the increase shown for 2025 is partially driven by a lower 2024 number. In 2024, placements were higher in February than they were in January which was the first time that had occurred since 1996. We have not seen those same challenges so far in 2025, but February placements are likely to be impacted by the lingering impacts of the Mexico cattle import ban. 

    A regional look at the data implies an impact of the Mexico import ban on January placements. January 2025 placements of cattle into feedlots in Texas were 50,000 head lower than a year ago which is a 14.5 percent decrease. This was offset by a 60,000 head (15.4 percent) increase in Kansas and a 30,000 head (5.9 percent) increase in Nebraska during January.  

    The largest increase in placements was in the 700-799 pound weight range which were up 30,000 head (6.3 percent) from a year ago. Placements were up across all weight classes in Nebraska and Kansas and lower across all weight classes in Texas. Placements of cattle into Texas feedlots weighing less than 699 pounds were down 35,000 head during January compared to a year ago. 

    The data mentioned above comes from feedlots with at least 1,000 head capacity. However, another interesting part of the February report is the detail about the distribution of cattle across feedlot sizes. There are 2,105 feedlots with at least 1,000 head feeding capacity. These feedlots housed 83 percent of cattle on feed as of January 1, 2025. The remaining 17 percent of cattle on feed were located across the 24,000 feedlots with a capacity of less than 1,000 head. Of the 1,000+ capacity feedlots, there were 80 that have a capacity of 50,000 head or more, and these were home to 35 percent of the total U.S. cattle on feed on January 1.

    Maples, Josh. “February Cattle on Feed.” Southern Ag Today 5(9.2). February 25, 2025. Permalink

  • Wheat Alternatives: Maximizing Profitability in a Tough Market

    Wheat Alternatives: Maximizing Profitability in a Tough Market

    With cash wheat prices falling, farmers in many regions of the South are once again facing difficult decisions in their efforts to maximize returns on their crops. As prices dip below the breakeven threshold, alternative uses for wheat, such as grazing or baling, may offer improved profitability.

    What follows is an example of a Wheat and Small Grains Decision Aid tool designed to help farmers analyze whether it is more beneficial to use wheat for grain, grazing, or hay. Evaluating the available alternatives is always prudent based on the relative prices of grazing, wheat hay, and grain, as well as the expected yields, production costs, and the availability and cost of harvesting or baling equipment. For this analysis, we assume that harvesting and baling equipment is custom-hired. However, from a cash cost perspective, owning your harvesting or baling equipment will influence the comparison of these two alternatives.

    In contrast to last year, the hay alternative demonstrates higher profitability under similar production conditions in the Rolling Plains region of Texas. To estimate potential hay production, we assume grain yield corresponds to 40% of total biomass production. Thus, a wheat yield of 45 bushels per acre would produce a total biomass of approximately 3.1 tons per acre. Further, we assume that harvest and baling will yield 76% of this total biomass or about 2.3 tons per acre[1]. Estimating both grain and hay yield potential is essential when comparing these options.

    The grazing option also appears more favorable, provided there is sufficient water, forage production, and livestock to maximize beef production. 

    Another way to approach this information is to determine at what price we must sell our hay (or grazing) to achieve a profit margin similar to that of wheat grain. The Decision Aid tool will use your data and costs to calculate hay and grazing breakeven prices (Graphs 1 and 2).

    [1] (according to “Wheat Hay vs. Grain: A Comparison of Economic Opportunity” by Reagan Noland, Bill Thompson, and Clark Neely).

    Graph 1. Break-Even Hay Prices

    You might consider baling wheat if you can sell the hay above the breakeven price for hay given an expected grain price and yield. For example, with an estimated yield of 45 bushels per acre and a price of $5 per bushel, baling wheat would be more profitable if the net price per ton of hay exceeds $121 (assuming production of 76% of the total estimated biomass 2.3 tons per acre can be achieved). 

    Graph 2. Break-Even Grazing Prices 

    Similarly, for an estimated yield of 45 bushels per acre and a price of $5 per bushel, you would consider grazing out wheat if the grazing price exceeds $0.73 per pound of gain. 

    With weak wheat prices, exploring alternatives like grazing or hay may lead to improved financial outcomes in many areas of the South. The Wheat and Small Grain Decision Aids (Link) serves as an economic and financial tool to assist every farmer in making informed decisions. Using your own data, yields, prices, and costs is essential for effectively analyzing these alternatives. These examples reflect the current wheat conditions and expectations in the Texas Rolling Plains. Please let us know if you need assistance in using this decision aid to help you make better choices for your farm.

    Abello, Pancho. “Wheat Alternatives: Maximizing Profitability in a Tough Market.” Southern Ag Today 5(9.1). February 24, 2025. Permalink

  • Drones Flying over my Property: What can I do?

    Drones Flying over my Property: What can I do?

    Unmanned Aerial Vehicles (UAVs), often referred to as drones, create cheaper and more efficient ways to gather agronomic data and to apply pesticides to crops.  This new technology shows a great deal of promise for agriculture, but it also creates privacy concerns for neighboring landowners.  What are the legal aspects of privacy, and what can a worried landowner do about strange UAVs flying over their property?

    Privacy

    Privacy concerns from aerial surveillance are nothing new.  We have case law about aerial surveillance from law enforcement going back more than fifty years (click here for one example). A simplified explanation of this concept can be illustrated through examples using traditional aircraft. In the case referenced above, law enforcement was tipped off that an individual was growing marijuana on their property, so they flew a helicopter twenty feet off of the ground to capture images of the plants.  In this case, the court held that law enforcement violated the “serenity and privacy of the backyard[,]” and this constituted a search without a valid warrant. In another example, you have an individual flying over your property in an aircraft at an altitude of 500 feet and taking pictures of your property with a powerful camera. This example likely does not constitute a violation of someone’s right to privacy. What is the takeaway from these examples? Someone can violate your right to privacy, and potentially even commit trespass, by flying too low over your property, but your rights are greatly diminished when the aerial surveillance is conducted at higher altitudes.

    What about UAVs? Recreational UAVs typically operate in Class G airspace which is 400 feet and below.  There are other restrictions such as flying around airports, military installations and prisons, but we will use 400 feet for the sake of simplicity. This puts UAVs in a gray area.  One question that we are struggling with legally is how low is too low? This question may end up being moot because of rapidly advancing technology.  The laws surrounding aerial privacy have changed in recent years (to see a compilation of state UAV laws click here), but technology is evolving even quicker.  UAVs have not changed the laws surrounding privacy, but they have made it much cheaper and easier to conduct aerial surveillance.  For the price of operating a helicopter for one day, an individual can buy a UAV equipped with an excellent camera and use it for weeks on end. Many early cases about aerial surveillance were against law enforcement because only the government was able to afford it. Modern UAVs and mass production have placed this technology in the hands of the general public.

    Can I Shoot Down a UAV?

    A common question we have received with the proliferation of UAVs is whether a landowner can shoot down a UAV that is flying low over their property. The answer is an emphatic “No!” The Federal Aviation Administration (FAA) is in charge of regulating aircraft and the airspace where they operate. UAVs are classified as aircraft by the FAA (unmanned, but still aircraft), and under federal law, 18 U.S.C.A. § 32, it is a felony to “damage, destroy, disable, or wreck any aircraft,” and the potential punishment is up to twenty years in federal prison. What can a landowner legally do about a UAV flying over their property?  The answer is very little in most cases. You can report suspicious UAV activity to the FAA. UAVs are required to display their registration numbers on the outside of the aircraft (14 CFR Section 48.205(c)). For low flying UAVs it should be possible to capture an image of this registration number to go with your complaint.  Other actions, such as capturing images through windows of residences, may also open avenues for local law enforcement to become involved. Documenting and reporting remain the safest legal way to deal with problematic UAVs around your property.

    Rumley, Rusty. “Drones Flying over my Property: What can I do?” Southern Ag Today 5(8.5). February 21, 2025. Permalink

  • Do Major U.S. Ag Trading Partners Apply Tariff Reciprocity?

    Do Major U.S. Ag Trading Partners Apply Tariff Reciprocity?

    In a previous article, we wrote about How U.S. Tariff Rates Compare to Other WTO Countries using weighted average tariff rates. The tariff rates discussed in that article are the Most Favorable Nations (MFN), which are the tariff rates applied to WTO members. However, many WTO countries also have other bilateral or multilateral trade agreements such as USMCA, CAFTA-DR, and Mercosur, to name a few. Participating countries in those trade agreements negotiate lower or preferential tariff rates among themselves using the MFN tariff rates as the starting point. In this article, we will examine the tariff rate reciprocity between the U.S. and its top five agricultural trading partners. This issue is especially important given the recent announcement by the President to increase U.S. tariffs to “reciprocal” levels.

    Out of the top five agricultural trading partners, the United States has a trade agreement with Canada and Mexico—called the United States-Mexico-Canada Agreement—and with Japan—called the U.S.-Japan Trade Agreement. The United States had a two-year trade agreement with China in 2020 and 2021, and no trade agreement exists between the United States and the EU. The figure below shows the preferential weighted average tariff rate the United States charges for agricultural products imported from its top trading partners in green. On the other hand, the right side of the figure, in red, shows the preferential weighted average tariff that trading partners impose on U.S. agricultural exports. Finally, the table shows the value of U.S. agricultural imports and exports to and from each trading partner, the preferential weighted average tariff rate, and the differential, i.e. imports minus exports tariff rates. In other words, the difference between the U.S. tariffs on imported products minus the tariff the importing country imposes on U.S. exports. If the differential is negative, it means that the trading partner imposes a higher tariff rate than the United States. To illustrate, the United States imposes a 0.1% tariff on agricultural products from Canada while Canada imposes a 7.3% tariff on U.S. agricultural products, resulting in a tariff rate differential of -7.2 %. Similarly, the United States imposes a 3.3% tariff on Chinese agricultural products while China imposes a 16.1% tariff on U.S. agricultural products (tariff rate differential of -12.8%). Focusing solely on agricultural trade, the United States has a negative tariff rate differential with all trading partners ranging from -1.5% to -15.1%. Mexico is the only exception where U.S. tariffs are relatively larger (1.2% tariff rate differential).

    (Note: In this article, we are addressing applied tariffs and not Non-Tariff Measurements (NTMs), which can be a considerable trade barrier mechanism.)

    Ribera, Luis, and Landyn Young. “Do Major U.S. Ag Trading Partners Apply Tariff Reciprocity?” Southern Ag Today 5(8.4). February 20, 2025. Permalink

  • How Might Trade Disputes Affect the U.S. Peanut Industry?

    How Might Trade Disputes Affect the U.S. Peanut Industry?

    On January 31, 2025, the White House announced a 25% import tariff on products from Canada and Mexico that was set to take effect on February 1st but was soon after delayed for one month. Before the pause, Canada announced retaliatory tariffs on several agricultural products including peanut butter. Then on February 10th, the White House announced a 25% tariff on aluminum and steel imports, and the European Union responded with a list of products that could be targeted with retaliatory tariffs, also including peanut butter. The recent trade disputes raise the question of how U.S. peanuts could potentially be affected.

    While the U.S. only produces about 5% of the world’s peanuts, it exports 14% of the world’s peanuts. In the 2023/2024 marketing year, 22% of the 3.27 million tons of peanuts that the U.S. produced were exported to other countries. In contrast, 58% of U.S. peanuts went to domestic food production. The U.S. also exports significant amounts of processed peanuts, including peanut butter, which totaled over $256 million in the 2023/2024 marketing year. Thus, while export markets are not the largest destination for U.S. peanuts, they are still a significant portion, and the U.S. is a major peanut exporter. 

    Figure 1 shows the top destinations for U.S. exported peanuts and processed peanut products over the past five marketing years. Mexico has been the top export destination for raw U.S. peanuts each of the past three years, at an average of 147,000 tons of peanuts per year. Canada ranks second over the same period, at 112,000 tons, on average. In the 2023/2024 marketing year, the European Union had a 126% increase in peanut imports from the U.S., totaling 142,000 tons. Lastly, China was the largest peanut export destination from 2019-2021, but has decreased its peanut imports from the U.S. the past three years. Overall, Mexico, Canada, China, and the European Union account for 90% of raw U.S. peanut exports. In contrast, 57% of U.S. processed peanut exports have gone to Canada and Mexico over the past five marketing years. The European Union nearly quadrupled its imports of processed peanut products from the U.S. this past marketing year. In sum, any reduction of U.S. raw or processed peanut exports to Canada, Mexico, and the European Union could present challenges to the U.S. peanut industry.

    Figure 1: U.S. Peanut Exports by Destination, Form, and Marketing Year (thousand tons)

    Data Source: U.S. Census Bureau Trade Data; Compiled by USDA-FAS.
    Note: Marketing years shown are the ending year (Aug through July)

    Sawadgo, Wendiam. “How Might Trade Disputes Affect the U.S. Peanut Industry?” Southern Ag Today 5(8.3). February 19, 2025. Permalink