publication archive: livestock
June 3, 2013
Hog Profits Return but Delayed Planting Keeps Producers WaryListen to MP3 podcast
Hog production has returned to profitability as hog prices rallied from the mid-$50s per live hundredweight in March to the low $70s today. Moderation in feed prices after the USDA's March Grain Stocks report was released in late March also helped reduce costs of production with second quarter costs averaging about $67 per live hundredweight compared to an estimated $70 in the first quarter. Delayed planting that is raising concerns about fewer planted acres and reduced yields has most recently sent corn and meal prices trending to the upside, raising concerns that hog production costs will not drop as much as some had anticipated.
April 22, 2013
Will Weak Cattle Prices Continue?Listen to MP3 podcast
I thought finished cattle prices were going to have a very bullish year with prices well into the $130s by now. Live cattle futures started the year with the same enthusiasm, but have deflated since. What went wrong?
April 8, 2013
Hog Profits May Still Return With Lower Feed PricesListen to MP3 podcast
As a new college graduate, my first job was with one of the major grain companies who took many market positions. The executives had a phrase that said a lot. "It's amazing how often we are right about the market, but for entirely wrong reasons." My previous statements that hog production could get back to profitability this spring was based on an expected spring hog price rally. The prospects for that rally, however, dimmed in February and March with the reality that pork exports were headed down. Now the prospects for a return to profitability have brightened once again, but due to an entirely different reason: much lower feed prices.
March 21, 2013
What's Next for the Cattle Market?Cattle feeders have witnessed record fed cattle prices over the past few years. But they also have experienced record prices for feed and feeder cattle, resulting in record feeding losses that at times exceeded $200 per head for Corn Belt cattle feeders. This has occurred despite the fact that cattle supplies have been declining for several years. The USDA cattle inventory in January reported the lowest beef cow numbers since 1962 and the smallest calf crop since 1949.
March 4, 2013
Spring Pork Price Recovery ThreatenedListen to MP3 podcast
Hog prices have dropped sharply in the past month, falling from about $67 per live hundredweight in early February to $58 recently. Futures prices have followed suit, with April lean hog futures dropping about $7.50 since the beginning of February. These declining prices raise concerns over the spring price recovery and whether that recovery will be strong enough to push hog prices up to breakeven levels as had been expected.
February 4, 2013
Where Have All the Beef Cows Gone?Listen to MP3 podcast
Cattle numbers are down again, to their lowest level since 1952, according to USDA's recent inventory count. Beef cow numbers are at their lowest level since 1962 as the devastating impacts of the 2012 drought continues the longer-term decline. Beef cow numbers were down three percent in 2012 and 11 percent since 2007. The drivers have been high feed and forage prices, persistent drought in the Southern Plains, and of course the widespread Midwestern drought of 2012.
January 7, 2013
Pork Profits on the HorizonListen to MP3 podcast
Pork producers have begun the chant "four more months" as they can now see the light of profits as they are set to emerge from a tunnel of losses. That tunnel of darkness stretched from the spring of 2012 through the winter of 2013, with average estimated losses of $18 per head, primarily due to high feed prices.
December 27, 2012
IFES 2012: Crop and Livestock Price Prospects for 2013Listen to MP3 podcast
The crop price environment will likely remain very volatile in 2013, reflecting production uncertainty and unsettled economic issues. However, a transition to lower prices is anticipated as production rebounds. The extent of the price decline will depend heavily on the outcome of the 2013 crops.
October 22, 2012
Cattle Prices Will Continue to RiseThe impacts of the 2012 drought continue to play out in a beef industry discouraged by high feed prices and large cattle feeding losses. In the latest Cattle On Feed report, the USDA confirmed that placements into feed lots dropped sharply in September following substantial declines in July and August. As a result, on-feed numbers are now down nearly three percent as the beef industry is doing its part to reduce corn and other feed usage.
October 1, 2012
Large Losses Still Loom for Pork IndustryPork producers are expected to continue to suffer very large losses in the next six months after already operating in the red for the last six months. These large losses have been brought on by the extreme feed prices due to the drought. There is little producers can do to change the overall situation for the industry since the pigs that will represent these large losses are already on-feed. The pigs that are here today represent producers' plans earlier this year when they were hopeful for $5 corn prices.
June 1, 2012
Beef Supplies and Cattle Industry Expansion PlansWith the cookout season in full swing, it's a good time to take a close look at beef supplies and cattle numbers. Steaks, roasts and other retail cuts come almost exclusively from steers and heifers. Beef from steers and heifers - often called "fed beef" - accounts for about 85% of total beef production. The remaining 15% consists of cuts from cows and bulls (used primarily in further-processed products) and calves (for veal and other specialty items).
April 30, 2012
Is The Cattle Market Too Cautious?Listen to MP3 podcast
The beef industry was stung by two negative events in the past two months that have left market traders uncertain about their longer term impacts. For now, market participants are taking a cautious approach until consumers more clearly define if they will reduce beef consumption.
February 27, 2012
Will Consumers Come Back to Pork? Yes!Listen to MP3 podcast
Per capita pork consumption in the U.S. has declined sharply in the past several years due primarily to strong pork export growth. Per capita pork consumption in the U.S. averaged 50.1 pounds in 2006 and 2007 when $2 per bushel corn was still the rule. That dropped to a low of 45.8 pounds by 2011, a nine percent decrease.
January 30, 2012
Cattle Producers Show Surprise Interest in ExpansionListen to MP3 podcast
While beef supplies will be very short for several more years, the USDA's Cattle report indicated that the very early stages of beef cattle expansion has begun as beef heifer retention has increased a modest one percent. However, the big picture is that beef cow numbers dropped 3 percent last year and this will mean a smaller calf crop in 2012 that will keep cattle slaughter small for 2013 and 2014. If producers follow through with more heifer retention in 2012 and 2013, slaughter supplies will decline over the next two years and increase finished cattle prices even more.
July 25, 2011
Beef Shortage Means Hold On To The CowsListen to MP3 podcast
The quantity of beef available to consumers in the U.S. has declined a startling amount in recent years and that trend is going to continue. The declining supplies are related to continuing liquidation of the cow herd in the past few years due to high feed prices, a weak U.S. dollar that is spurring beef exports, and of course drought in the southwest and southeast. Declining supplies will support prices across the cattle complex at new record highs in 2011 and again in 2012. Unfortunately, even higher retail beef prices can be expected for consumers.
April 5, 2011
A New Era in Livestock Prices?Our post on March 29 provided updated evidence that nominal crop prices entered a new era beginning about January 2007. The increases in price levels that have occurred in this new era are generally consistent with the increases that occurred in the previous era that extended from January 1973 through September 2006. We have not previously examined livestock prices to determine if a shift in those prices has also occurred recently. Here we examine the average monthly farm prices of hogs; steers and heifers; and milk in Illinois in the accompanying three figures to identify the timing and magnitude of any previous or recent shift in nominal price levels.
March 28, 2011
Hog Price Peak Coming Soon?Listen to MP3 podcast
The highest hog prices on record will soon be arriving. These may be the highest hog prices for the next several years as well, especially if corn and soybean shortages can be reduced somewhat this summer with favorable growing conditions. On the other hand, if 2011 turns out to be a short crop production year, then the previous statement will be invalid as surging feed prices will force added liquidation of the hog herd this fall. But, you already knew how much was riding on upcoming crops.
February 28, 2011
Pork Industry Walking Tight RopeListen to MP3
The pork industry in 2011 will be walking a tight rope between high hog prices and high feed prices. Consumers will be paying record high prices for pork. Producers will be receiving record high prices for their hogs, but also paying record high prices for feed. The outlook is in balance right now as hog prices are expected to be high enough to cover feed prices. However, the consequence of losing that balance could have extreme financial consequences on producers if consumers balk at high pork prices or weather threatens 2011 crops.