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|

Cattleman U: Virtual Education for Cattle Producers

New Platform Brings Education and Community to Young Producers

What started as a desire for more community with peers in the agriculture industry as a young rancher, quickly grew into a passion to take action for Karoline Rose, owner of KRose Company. Amidst conference and training cancellations due to the COVID-19 outbreak, the KRose team began plans for a new way to connect with other professionals in agriculture, access educational content, and compare notes on ranch and farm topics.

“Cattleman U is an educational platform and community for the next generation of producers or people who want to raise livestock or crops in the near future. So many of this generation are working their operation full time and aren’t able to get away for conferences. There is a need for education that is easily accessible on an as-you-get-to-it basis,” says Rose.

Cattleman U became the newest online platform designed specifically for the next generation in agriculture. The online membership allows members to access expert advice and pre-recorded trainings presented by well-known speakers from respected organizations. It also has a free classifieds page where members can post items for sale or advertise their business. Members receive access to industry discounts for bulls, semen, ear tags, vaccines, and more. One of the biggest advantages Cattleman U offers is a community where members can network and access resources.

“There are a lot of questions that go unasked because a next-generation producer might be embarrassed to ask or not know who to turn to for an honest and straightforward answer. We need to be in community with other producers and growers to build a network while we learn and discuss alternative solutions and ways of doing things that might not be just like grandpa did them,” says Rose.

Cattleman U consists of 6-week sessions on topics such as agriculture marketing strategies, adding value to your calves, certified branded beef programs, and the futures market. Each session is packed with information, real-life examples, and expert advice from cattlemen who have been there before, and tried many different techniques. The first six-week session will focus on marketing cattle.

There are plenty of flexible options for everyone wanting to sign up for Cattleman U, with monthly, yearly, and 6-week only membership options. The waitlist for the second segment, Futures and Hedging Basics, is now open. On October 5th, the second segment will start. Learn more at cattlemanu.com.

For more information:

Markie Hageman

markie@krosecompany.com

559-901-7806

Additional assets such as audio clips, graphics and images to support this release may be downloaded here

KRose Company strives to be the best agriculture marketer in the United States, whether that be by helping ranchers increase their bull sale average with digital marketing, or by providing services such as design, social media marketing, and advertising to agriculture businesses. KRose Company also works to market the highest quality of calves and offer a country contract for classifieds. Learn more at www.krosecompany.com.

California Ag Today2020-09-17T09:01:28-07:00September 17th, 2020|

Federal Guidelines Call for More Beef

Beef Producers Asked To Submit Public Comments

By Rick Worthington with AgInfo.net

The National Cattlemen’s Beef Association (NCBA) announced the launch of a nationwide campaign on July 22 to encourage cattle producers to submit public comments supporting beef’s role in updated federal dietary guidelines.

Americans have until Aug. 13 to submit official comments as the USDA and the US Department of Health and Human Services (HHS) work to finalize the 2020-2025 guidelines.

“Study after study shows that beef plays an important role in a balanced, healthy diet across the lifespan,” said Marty Smith, president of NCBA. “NCBA has made it a priority to protect the scientific credibility of Dietary Guidelines and promote accurate information about the nutritional advantages of beef as part of a balanced diet.”

Along with making comments, NCBA plans to reach out to cattle producers via e-mail, text messages, social media and traditional media outlets between now and the deadline. It will also start the Twitter campaign of #BenefitsofBeef.

California Ag Today2021-05-12T11:17:06-07:00August 6th, 2020|

USDA: Cattle Price and Box Beef Inquiry

USDA to Expand Cattle Price Inquiry

By Russell Nemetz with AgInfo Network

The USDA is expanding its investigation of the cattle market to include a recent disparity between boxed-beef prices and cattle futures prices, a United States senator from Nebraska announced in a tweet Wednesday afternoon.

A few weeks ago, boxed-beef prices spiked $45 during a four-day span. At the same time, cash cattle trade was sparse and traded sideways, while the board traded limit lower four out of the five trading days of the week.

USDA has been investigating price movements following an August 2019 fire at the Tyson Foods packing plant in Holcomb, Kansas, that caused cattle prices to fall and boxed-beef prices to climb.

Sen. Deb Fischer, R-Neb., said in a tweet Wednesday USDA is expanding the investigation.

“I spoke with the @USDA who confirmed that the agency will be expanding its Holcomb fire plant investigation to include COVID-19 market disruption,” she tweeted. “This is what I called for in my letter to USDA yesterday. This is a good decision to address potentially unfair practices.”

In a letter to Trump on Wednesday, Marty Smith, National Cattlemen’s Beef Association president and a Florida rancher, asked President Trump to take immediate action to investigate the market.

“After weeks of striking disparity between boxed-beef price increases and declines in both the cattle futures and cash price, we fear this trend could have devastating long-term impacts on cattle producers,” the letter said.

Smith’s letter pointed out the discrepancy between boxed-beef and cattle prices is not limited to COVID-19.

DTN Livestock Analyst ShayLe Stewart said cash prices were “all over the place” during the week of March 20 as ranchers became anxious.

“Fat cattle usually sell toward the latter part of the week, but that week, cash cattle trade developed as early as Monday for sharply lower prices,” she said.

“In the Northern Plains, cattle sold for $168 to $180, and in the Southern Plains, cattle sold for $105 to $113.”

The April and June live cattle contracts have each fallen roughly 15% in the past month of trade as well.

Fischer, a member of the Senate Agriculture Committee, on Tuesday called on USDA to expand its ongoing investigation.

In addition, Fischer asked the Senate Judiciary Committee to hold a hearing on the issue.

“I’ve heard concerns from Nebraskans across the state about the impact COVID-19 is having on their cattle operations and on the industry as a whole,” Fischer said in a statement.

“Americans are purchasing more beef products at grocery stores, which is resulting in another round of windfall profits for meatpackers,” Fischer said. “Meanwhile, producers are taking price losses that threaten the viability of their businesses. Something must be done now.”

In its letter, the NCBA asked the administration to address a variety of issues. That includes asking Trump to make sure packing plants keep operating during the COVID-19 crisis.

The coronavirus has been putting increasing strain on the meatpacking industry.

Earlier this week, Tyson Foods announced it was suspending operations at a pork processing plant in eastern Iowa after the plant reported 24 positive cases were tied to its workforce. National Beef announced it was accelerating a cleaning process at the Iowa Premium Beef plant in Tama, Iowa, after a worker tested positive. At least 13 workers at a JBS SA beef packing plant in Grand Island, Nebraska, have tested positive.

The meatpacking industry is deemed as essential by the federal government to keep food processing going.

“We ask that USDA work closely with the Department of Justice throughout this process, conclude this investigation quickly, and release the findings to the industry as soon as possible,” NCBA said in its letter.

“We also ask the Commodity Futures Trading Commission to study the influence of speculators on the CME Group’s Live and Feeder Cattle futures contracts to determine whether the contracts remain a useful risk-management tool for cattle producers,” NCBA said in its letter. “The market woes for cattle producers will only grow if packing plants shut down or slow down for an extended period. As cattle producers, we are the beginning of the beef supply chain, and we need continued vigilance and oversight of all cattle market participants — for the benefit of America’s cattle producers and all Americans.”

California Ag Today2020-04-16T07:26:15-07:00April 16th, 2020|

Kern County Ag Ranks Second in State, Fresno Drops to Third

Ruben J. Arroyo, Kern County Agricultural Commissioner reported the 2013 gross value of all agricultural commodities produced in the county was $6,769,855,590, according to the 2013 Kern County Agricultural Crop Report, representing an increase (6%) from the revised 2012 crop value ($6,352,061,100). Thus, Kern County ag ranks second in state, with Tulare ahead, and Fresno behind.

Kern County’s top five commodities for 2013 were Grapes, Almonds, Milk, Citrus and Cattle & Calves, which make up more than $4.6 Billion (68%) of the Total Value; with the top twenty commodities making up more than 94% of the Total Value. The 2013 Kern County Crop Report can be found on the Department of Agriculture and Measurement Standards website: www.kernag.com

Tulare County reported gross annual production in 2013 at $7.8 Billion, Fresno County, $6.4 Billion, and Monterey County, $4.38 Billion.

As predicted by many, including CaliforniaAgToday on July 15, 2014, Fresno County, long-time top ag county in the state—and in the nation—now ranks third in the state and has regressed in ag growth since 2011.

Les Wright, Fresno County Ag Commissioner, attributes much of the decrease to the water shortage, particularly exacerbated by a large part of the West Side being dependent on both state and federal surface water deliveries that have been curtailed by pumping restrictions due to the Endangered Species Act.

Patrick Cavanaugh2016-05-31T19:33:30-07:00August 19th, 2014|

Drought Could Affect Current and Future Food Prices

California Farm Bureau Federation reported today that with hundreds of thousands of acres of farmland expected to be left unplanted this year due to water shortages, market analysts and economists say shoppers will likely begin to see higher prices on some food items later this year.

Sean Villa, president of Great West Produce, a produce broker in Los Angeles County, said he expects a number of products to be affected later this year, including broccoli, sweet corn and melons from growing regions in Fresno, Mendota and Huron, where farmers will likely cut acreage due to water shortages.

Gary Tanimura, a vegetable grower based in the Salinas Valley, said he will have to reduce his summer melon production in the San Joaquin Valley by about 20 percent due to lack of water.

Tanimura said spring and fall lettuce production in the San Joaquin Valley also could drop by 25 percent to 30 percent this year.

Cindy Jewell, director of marketing for California Giant Berry Farms in Watsonville, said farms in the Oxnard growing region—which typically plant a second crop in the summer for fall production—may not be able to do that this year.

“If the water situation continues to be this severe, there may not be as many of those acres replanted for fall production,” she said, adding that if the drought continues into fall and winter, when most strawberries are planted, it could affect what’s planted for next year’s harvest.

Because California supplies nearly 90 percent of the nation’s strawberries, Jewell said it is not likely that there will be much of a production shift to other regions.

“It’s not like someone else could step in and do that,” she said. “It’s all about climate and location.”

On the beef market, the California drought may have the most impact on niche products such as grassfed, organic or natural beef, said Lance Zimmerman, a market analyst for Colorado-based Cattlefax. Those programs typically rely more on local or semi-regional supplies, he said.

Retail beef prices have risen nationwide, Zimmerman said, because of improved demand and continued declines in supply caused by several years of drought in other major beef-producing regions in the Southern Plains and the Southeast.

In states where drought conditions have improved, ranchers are now trying to build back their herds, so they’re not sending as many animals to market, particularly mature cows, and that has driven up prices on meat cuts such as chuck roast and ground beef, he added.

On the produce market, fair weather accompanying the drought has, for now, caused vegetable crops to come to market ahead of schedule, creating an overlap of products from the desert region and the San Joaquin Valley.

That, combined with reduced demand from East Coast markets due to severe winter weather, has led to temporary oversupplies of some vegetables, Tanimura said, while Jewell reported that berry production has also been stimulated by warm winter weather.

Patrick Cavanaugh2016-05-31T19:38:09-07:00March 18th, 2014|