Record Beef Demand

CattleFax Forecasts Record Beef Demand; Prospects for Tighter Supplies

By Russell Nemetz with the Ag Information Network

The beef cattle industry is bouncing back from the pandemic, and continued progress is expected in 2022. Beef prices are near record high, and consumer and wholesale beef demand are both at 30-year highs as the U.S. and global economy recover. While drought remains a significant concern with weather threatening pasture conditions in the Northern Plains and West, strong demand, combined with higher cattle prices, signal an optimistic future for the beef industry, according to CattleFax. The popular CattleFax Outlook Seminar, held as part of the 2021 Cattle Industry Convention and NCBA Trade Show in Nashville, shared expert market and weather analysis today.

According to CattleFax CEO Randy Blach, the cattle market is still dealing with a burdensome supply of market-ready fed cattle. The influence of that supply will diminish as three years of herd liquidation will reduce feedyard placements. As this occurs, the value of calves, feeder cattle and fed cattle will increase several hundred dollars per head over the next few years.

Kevin Good, vice president of industry relations and analysis at CattleFax, reported that the most recent cattle cycle saw cattle inventories peak at 94.8 million head and that those numbers are still in the system due to the COVID-19 induced slowdown in harvest over the past year.

“As drought, market volatility and processing capacity challenges unnerved producers over the past 24 months, the industry is liquidating the beef cowherd which is expected to decline 400,000 head by Jan. 1 reaching 30.7 million head,” Good said.

The feeder cattle and calf supply will decline roughly 1 million head from its peak during this contraction phase. Fed cattle slaughter will remain larger through 2021 as carryover from pandemic disruptions works through a processing segment hindered by labor issues, he added.

“While fed cattle slaughter nearly equals 2019 highs at 26.5 million head this year, we expect a 500,000-head decline in 2022,” Good said. “This, combined with plans for new packing plants and expansions possibly adding near 25,000 head per week of slaughter capacity over the next few years, should restore leverage back to the producer.”

Good forecasted the average 2022 fed steer price at $135/cwt., up $14/cwt. from 2021, with a range of $120 to $150/cwt. throughout the year. All cattle classes are expected to trade higher, and prices are expected to improve over the next three years. The 800-lb. steer price is expected to average $165/cwt. with a range of $150 to $180/cwt., and the 550-lb. steer price is expected to average $200/cwt., with a range of $170 to $230/cwt. Finally, Good forecasted utility cows at an average of $70/cwt. with a range of $60 to $80/cwt., and bred cows at an average of $1,750/cwt. with a range of $1,600 to $1,900 for load lots of quality, running-age cows.

Consumer demand for beef at home and around the globe remained strong in 2021, a trend that will continue in 2022, especially as tight global protein supplies are expected to fuel U.S. export growth.

Aftershocks from the pandemic continue to keep domestic demand at elevated levels not seen since 1988. Government stimulus and unemployment benefits are fueling the economy with demand outpacing available supplies as restaurants and entertainment segments emerge from shutdowns.

According to Good, the boxed beef cutout peaked at $336/cwt. in June, while retail beef prices pushed to annual high at $7.11/lb. “Customer traffic remained strong at restaurants and retail – even as those segments pushed on the higher costs, proving consumers are willing to pay more for beef,” he said.

Wholesale demand will be softer in 2022, as a bigger decline in beef supplies will offset a smaller increase in beef prices with the cutout expected to increase $5 to $265/cwt. Retailers and restaurants continue to adjust prices higher to cover costs. Good added the retail beef prices are expected to average $6.80/lb. in 2021 and increase to $6.85/lb. in 2022.

Global protein demand has increased and U.S. beef exports have posted new record highs for two consecutive months, even with high wholesale prices. The increases were led by large, year-over-year gains into China, and Japan and South Korea remaining strong trade partners for protein. “The tightening of global protein supplies will support stronger U.S. red meat exports in 2022. U.S. beef exports are expected to grow 15 percent in 2021 and another 5 percent in 2022,” Good said.

Mike Murphy, CattleFax vice president of research and risk management services, expects summer weather patterns – and their affect on corn and soybean yields – to be the focus of market participants.

“As China rebuilds its pork industry following their battle with African Swine Fever, they are looking for higher quality feed ingredients, such as corn and soybeans” Murphy said “Exceptional demand from China is leading U.S. corn exports to a new record in the current market year, and strong demand for U.S. soybeans has elevated prices in the last 12 months.”

Spot prices for soybeans are expected to be $13 to $16 per bushel for the remainder of the next 18 months along with spot corn futures to trade between $4.75 to $6.25 per bushel in the same time frame.

Murphy noted that drier weather in the Northern Plains and West will pressure hay production and quality in the 2021 season – supporting prices into the next year. “May 1 on-farm hay stocks were down 12 percent from the previous year, at 18 million tons. The USDA estimates hay acres are down 700,000 from last year at 51.5 million acres. So, expect current year hay prices to average near $170/ton, and 2022 average prices should be steady to $10 higher due to tighter supplies and stronger demand,” he said.

All session panelists agreed that weather is a major factor impacting the beef industry, and agriculture as a whole in 2021 and going into 2022. A forecasted return of La Niña this fall would lead to intensifying drought for the West and Plains into early 2022, according to Dr. Art Douglas, professor emeritus at Creighton University. Douglas indicated that the precipitation outlook in the fall of 2021 going into the early part of 2022 could see drought push harder in the Pacific Northwest with above-normal precipitation across the inter-mountain West – leaving the Midwest drier, and less tropical storm activity to reduce Southeast rainfall into late fall. Also, the western half of the country will be drier into early spring with a returning La Nina.

Blach concluded the session with an overall positive outlook, expecting margins to improve as cattle supply tightens and producers gain leverage back from packers and retailers, beef demand to remain solid with expected export growth, and utilization and packing capacity to improve over the next few years. He also noted that the economy has made gains in 2021 and should stay stronger with low interest rates and government stimulus fueling consumer spending.

California Ag Today2021-08-17T18:56:15-07:00August 17th, 2021|

Lemon Economics in Ventura County

Lemons Became More Popular, But then COVID Hit

By Tim Hammerich, with the AgInformation Network

A recent study on the costs and returns of establishing and producing lemons in Ventura County was released by UC Cooperative Extension in Southern California and UC Agricultural Issues Center.

“We grow lemons along the coast because it doesn’t get hot, and we do a really good sour lemon. The trees flower year-round, and so there’s production year-round,” said Ben Faber, a Farm Advisor based in Ventura County.”

He says lemon prices had been stagnant for a long time but started to really rise in the past decade or two with the popularity of restaurant dining.

“And so the consumption just soared. Prices had been around five or six, eight dollars a box, and boy, they went up to $18 – $20 a box. So people saw a lot of money there.

“And so what do you do? You respond to it, and you plant. The market for strawberries had fallen, labor availability diminished. So along the coast here, a lot of people had said, ‘I don’t care. I’m going to risk it. I’m going to plant lemons’. And it doesn’t take a whole lot of labor to do, it takes less water. We’re stressed about water availability along the coast. And so, you know, the choice of lemons sounded really good until…boom…COVID.”

The pandemic has certainly taken its toll on lemon prices. Faber is hopeful they will recover but also concerned about the threat of citrus greening disease.

California Ag Today2021-01-14T18:10:18-08:00January 14th, 2021|

Big Exports Numbers Mean Big Responsibilities for California

California Exported $20 Billion in Food Products in 2016

By Mikenzi Meyers, Associate Editor

It’s no secret that California’s agricultural exports are a huge part of the state’s economy—but to put it in perspective, over $20 billion worth of food and agricultural products were exported in 2016 alone (the latest figures). With numbers like these, people like Glen Roberts of the U.S. Department of Commerce and International Trade Administration are kept busy.

Roberts, who is part of the Global Markets sector and based in Fresno, not only works with what he calls “easy” exports like Mexico and Canada, but other places across the globe, shipping anything and everything from food to machinery.

Glen Roberts

When it comes to his role in California, Roberts explained, “Our office covers from the top of the Grapevine, Kern County, all the way up to Stanislaus County from San Louis Obispo over to Nevada.”

His sector, which handles more of the commercial side of things, acts as a gateway to other government programs that help out with international trade.

Although Roberts’ main focus is commercial, he’s still one of the go-to guys in agriculture exports.

“What happened when the almond prices dropped? I got the calls because Foreign Ag Service doesn’t handle contractual disputes,” he said.

Roberts further added, “I had to help out our local almond growers because the buyers didn’t want to pay the higher contracted price. They wanted to buy the new lower market price.”

California Ag Today2019-03-19T16:41:17-07:00March 19th, 2019|

California Crop Values for 2017 Released by CDFA

Full Statistics Now Available For the Crop Year 2017

News Release

The California Agricultural Statistics Review for crop year 2017 has been released. It reports that California’s farms and ranches received more than $50 billion in cash receipts for their output. This represents an increase of almost 6 percent in crop values compared to 2016.

California’s agricultural abundance includes more than 400 commodities. Over a third of the country’s vegetables and two-thirds of the country’s fruits and nuts are grown in California. California is the leading U.S. state for cash farm receipts, accounting for over 13 percent of the nation’s total agricultural value. The top producing commodities for 2017 include:

Dairy Products, Milk — $6.56 billion

Grapes— $5.79 billion

Almonds— $5.60 billion

Strawberries— $3.10 billion

Cattle and Calves — $2.53 billion

Lettuce— $2.41 billion

Walnuts— $1.59 billion

Tomatoes— $1.05 billion

Pistachios— $1.01 billion

Broilers— $939 million

Complete Report at this Link:

https://www.cdfa.ca.gov/Statistics/PDFs/2017-18AgReport.pdf

California Ag Today2019-01-10T15:52:42-08:00January 10th, 2019|

Almond Alliance Helps Growers with Advocacy

Almond Alliance Lent a Hand on Tariff Relief

By Jessica Theisman, Associate Editor

Like many agricultural sectors, almond growers have also been affected by recent tariff wars. However, almond growers have a true friend in the Modesto-based Almond Alliance.

“We are definitely an advocacy organization, that is the core of what we do,” said Elaine Trevino, president of the Almond Alliance.

Elaine Trevino

“The Almond Alliance educates our legislators, their department officials and cabinet about issues that are important to the almond industry. It is very critical that our elected officials, specifically the urban [ones] that are not familiar with agriculture, understand agriculture. They need to understand … the inputs and the natural resources needed for agriculture, and also understand the best practices that we put into place to be good corporate and small businesses,” Trevino said.

“Obviously with almonds, you have hulls and shells and the biomass that comes with almonds, and so we focus on all aspects of that,” she explained.

Almond growers are being affected by tariffs increases into China. Beginning on April 2nd, the first 232 retaliatory tariffs was seen that affected China. Since then, our turkey has also been affected by the tariffs.

The almond industry exports 67 percent of its production to more than 100 countries.

“Looking at export markets and how they impact the industry is critical. Secretary Purdue came out with the mitigation package,” Trevino said.

The almond industry fought very hard to be included in direct payments. While many say it’s just three cents a pound, the allocation to almonds was $63.3 million.

“It’s our intention that the alliance fight for every penny of that goes back to the growers, and if they are not eligible for the direct payments, then we’ll make sure that they receive it through market promotion that will help move their product and hopefully get those prices back up if they haven’t been affected,” Trevino said.

California Ag Today2018-12-18T15:07:08-08:00December 18th, 2018|

2018 Raisin Price Still in Limbo

Discussions Continue Over Raisin Price

News Release Edited by Patrick Cavanaugh

The Board of Directors of the Fresno-based Raisin Bargaining Association have offered to sell the 2018 Natural Seedless Raisin Crop for $2,250.00 per ton. Also, the board has offered to sell both the 2018 & 2019 crops for $2,150.00 per ton. This 2-year Memorandum of Understanding (M.O.U.) at $2,150.00 per ton has safeguards in it for the second year in case there are changes that could force the raisin price to go higher or lower, with a lower bottom not to fall below $2,000.00 per ton.

Last year, they had 12 signatory packers agree to the M.O.U. negotiated at $1,800.00 per ton. This year, they have been instructed that Sun-Maid has rejected both the $2,250.00 one year contract and the $2,150.00 two year contract. They have also advised the RBA to try and move the 2,000 tons of RBA growers to other packers, which we are in the process of doing.

Of the remaining 11 packers, 6 have agreed to accept the $2,150.00 2-year plan. Those six packers are Central California Packing Company, Chooljian Brothers Packing Company, Inc., Del Rey Packing Company, National Raisin Company, River Ranch Raisins, LLC., and Sun Valley Raisins, Inc.

The 5 remaining packers who have rejected both the one year price at $2,250.00 per ton and the $2,150.00 per ton two-year M.O.U. include: Boghosian Raisin Packing Company, Inc., Caruthers Raisin Packing Company, Inc., Fresno Cooperative Raisin Growers, Inc., Lion Raisins, and Victor Packing Company.

In the discussion with the packers who have not agreed to M.O.U. terms, their arguments were that the $2,250.00 price was too high and the $2,150.00 price was acceptable but not for 2 years. Discussions will continue until Friday, October 12. For updates please go to our website at www.RaisinBargainingAssociation.com and click on the “From the Office” tab.

California Ag Today2018-10-12T16:49:55-07:00October 12th, 2018|

Federal Milk Marketing Order in California in Effect Nov. 1

Questions Arise Regarding Milk Quota

Edited by Patrick Cavanaugh

Dairymen and women throughout California are working hard to provide milk and other dairy products for consumers in California and the world. Because the industry has struggled over the past decade with price swings that have often landed dairies in red, many dairies have gone out of business. Still, other operations relocated to others states where regulations are a fraction of what they are in California.

In June 2018, California dairy producers voted to establish a new Federal Milk Marketing Order (FMMO) for the state. The vote was a paramount step in a long process that would culminate with the new order taking effect on November 1. The order will adopt the same dairy product classification and pricing provisions currently used throughout the FMMO system.

California accounts for more than 18 percent of U.S. milk production and is currently regulated by a state milk marketing order administered by the California Department of Agriculture (CDFA). Once this new FMMO takes effect, more than 80 percent of the U.S. milk supply will fall under the FMMO regulatory framework.

Western United Dairymen is a trade association based in Modesto. Annie AcMoody is the Director of Economic Analysis. She explained that there have been questions from the industry regarding the upcoming FMMO.

Among the often asked question revolves around when the state switches to FMMO in November, what will happen to their quota if a dairy ships milk out of state?

Annie AcMoody: When our California state system goes away to make way for the Federal Milk Marketing Order (FMMO) in November, the Quota Implementation Plan (QIP) will be the language in place to ensure the quota system’s smooth transition into the FMMO system.

When we enter that new world, all market milk received from California producers at a California plant will be assessed for quota. By “received”, the language defines “to convey milk physically into a milk plant where it is utilized within the plant, or stored within such milk plant and transferred to another plant for utilization.” This means that a milk truck driver cannot drive by a plant, wave hello to an operator, and keep on going out of state and still call this milk received in California. Basically, if your California milk leaves the state, you will not be assessed for quota.

But you also will not be paid for it. But, if your milk is 60% quota and only 40% of your milk goes out of state, you will be assessed on 60% of your milk and get paid quota on that same 60%. If your quota covers 100% of your milk and 40% of your milk goes out of state you will be assessed on 60% of your milk and get paid quota on that same 60%. In this instance, one could wonder if it makes much sense to keep your quota.

While it may not make much economic sense to hold on to quota you are not paid for, some reasons may validate that decision (perhaps it is expected milk will be shipped to a California plant in the near future). If you were to decide to hold on to that quota, it is important to keep in mind that “if quota is not made active by shipments of market milk to a California plant or cooperative association or is not transferred within the 60-day period, such quota shall revert to the Department”.

This excerpt from the QIP means that if your quota milk is not paid on for over 60 days, you will lose it, so you better sell it. This is likely going to be an issue if you ship to a proprietary plant and all your milk goes out of state. If you ship milk to a cooperative, there is more flexibility because that coop has the ability to combine quotas assigned to it by its members.

So as long as the quota total within the coop is not larger than the total amount of market milk produced and received in California, then there should be no issue for you as a quota holder.

What  is  defined  as  market  milk? 

Answer:  Grade A milk.

If your milk is Grade B, you cannot have quota now and will not be able to under the QIP. You will not be assessed for it either. Currently, only around 3% of the milk in California is Grade B. WUD will keep an eye out on this topic to ensure that percentage does not deviate significantly. As a reassurance, this is not something that could grow from 3% to 50% in a month since fluid milk is not allowed to take in Grade B milk and the three largest coops in the state (CDI, DFA and LOL) committed to not taking in any more Grade B milk after the transition to the FMMO.

California Ag Today2021-05-12T11:17:09-07:00September 23rd, 2018|

2017 Tulare County Crop Report Tops $7 Billion

Tulare Crop Report Shows 10 Percent Growth in Single Year

By Patrick Cavanaugh, Editor

Big numbers announced today from Tulare County Ag Commissioner Marilyn Wright on the 2017 crop year.

“Our value is 10.5 percent up from last year, at 7,039,929,000. So, that’s 669 million more than the previous year,” Wright said.

Marilyn Kinoshita, Tulare County Ag Commissioner

Marilyn Wright, Tulare County Ag Commissioner

And, of course, more water in the system probably helped, as it did in Fresno County, which announced $7.028 billion in its 2017 Crop Report, released earlier this month.

The dairy industry, which is prominent in Tulare County, came in number one again, representing 25 percent of the total value.

“Milk prices were stronger in early 2017, but they went down later in the year. And they continue to go down, but still it was a big part of the Tulare County ag receipts in 2017,” Wright said.

Following dairy were grape products—including juice grapes, raisins, and table grapes. Table grapes had a stellar year.

Navel and Valencia oranges were next. Cattle and calves ranked fourth, down from category number three in 2016, because cattle prices were off last year.

Tangerines, also known as mandarins, were number five, followed by almonds, cling peaches, and freestone peaches.

Lemons, were ninth on the crop list.

“We only have just over 10,000 acres of lemons in the County,” Wright said.

Wright said the value of this year’s crop report, $7.39 billion, is the third highest value Tulare County has ever reported.

California Ag Today2018-09-18T16:39:21-07:00September 18th, 2018|

Lessening Negative Feelings Over Trade War

Walnut Processors Maintain Optimism

By Patrick Cavanaugh, Editor

California Ag Today recently spoke with Paul Wenger, past president of the California Farm Bureau Federation. He farms 700 acres of almonds and walnuts in Stanislaus County. He said that California Farmers and other stakeholders of the industry need to be less negative about the current trade war with China.

Almond and Walnut Grower Paul Wenger

“The more we talk negatively, the more that negative things are going to happen,” he said. “As I talked to walnut processors. They’re optimistic. That’s good news. I’ve talked to some walnut processors and said, ‘Well, what’s going to happen this year?’ We shouldn’t expect much as far as prices.”

“Marketing is always a self-fulfilling prophecy and it’s more psychology than it is anything,” Wenger said. “We are one of the largest producers now. Certainly, China is the largest producer. But China had a terrible crop and so they need walnuts, and so strange things can happen and the Chinese are always one that can bend the rules when they need.”

“We know that’s why President Trump has been going after China supposedly over some of these intellectual properties. Certainly, those aren’t the things that hurt agriculture, but we in agriculture are paying the price as we look at these countervailing tariffs that are coming on,” Wenger said.

Wenger explained that the Chinese know that, throughout the Midwest, it was the farm vote that helped and the rural states that helped bring home a victory for the president, so they’re going to go after President Trump.

A large amount of product was sold last season at a low price.

“We just go through the Affordable Care Act and then the port slowdown on the 2015 crop, which went into the 2016 crop, which was a little better We got a little bit better than 2017 crop was a good year for us,” Wenger said. ‘So you’re looking at a pretty good ’18 and now this happens.”

California Ag Today2018-09-04T13:42:28-07:00September 4th, 2018|

Sharing Secrets to a Successful Bowl of Cherries

Weather and Pruning Make Life a Bowl of Cherries

By Laurie Greene, Founding Editor

Clark Goehring, a third generation Kern County farmer, produces cherries and almonds. He summarized his cherry harvested as “good compared to the other years when we have had rain. Some people in our area still had rain during harvest, but we were able to harvest and bring our cherries to market in good condition.”

“Of course, it rained a lot this winter and spring, but you do not want rain when cherries are maturing on the tree; they don’t like rain.”

Goehring explained that when it rains beyond the point when cherries start coloring, they split, making them unmarketable. “But while it may take some rained-on cherries off the market, the price of the marketable fruit goes up,” he said, benefiting those growers who had a quality crop, like him.

Goehring’s farm workers train the cherry trees to keep them low—approximately 8 feet tall. “We have tried to have them bush out instead of being more of a central leader. Actually, it’s called Spanish Bush style or, in modified form, KGB.”

Kym Green Bush designed the KGB training method in Australia to use multiple leaders and have them fruit on the leaders themselves. KGB simplifies pruning so less experienced farm workers can learn the skill more easily. The trees are replenished every five years.

Goehring said the method saves money on the farm, cuts labor and increases workers’ safety because it requires no ladders and the harvest is quicker. Harvesting without ladders also gives Goehring an advantage of attracting farm labor over other orchards that require ladders.

“In California, if farm workers have their choice of picking your cherries without using ladders, which is usually piecework, or someone else’s crop with ladders, they are going to want to come to you,” he explained.

California Ag Today2017-08-02T16:14:04-07:00August 2nd, 2017|