Tuesday, March 31, 2015
April 4-H Flash
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April 2015 4-H Flash
Monday, March 30, 2015
Cow/Calf Corner
COW/CALF CORNER
The Newsletter
From the
Oklahoma Cooperative Extension Service
March 30, 2015
Beef herd
rebuilding: What’s next?
Derrell S. Peel,
Oklahoma State University Extension Livestock Marketing Specialist
The
long-awaited end to beef cow herd liquidation happened in 2014 as the industry
abruptly switched to expansion. The 2.1 percent increase in beef cow
numbers in 2014 was more than generally expected but not a big surprise as the
conditions were right for such a turnaround. Modest growth in heifer
inventories has occurred since 2012. It wasn’t until 2014 that beef cow
culling decreased enough to combine with heifer retention and result in herd
growth. This leads to a number of questions including how much additional
herd growth is needed; how fast can it happen; and where will it take
place. The answers to these questions are not completely apparent at this
time and will depend on a number of factors yet to be determined in the coming
years. However there are some indications already in place.
After
a brief attempt at expansion in 2004 and 2005, the industry has experienced
unplanned herd liquidation. I mean unplanned in the sense that it was not
typical cyclical factors that caused the liquidation. It was not, for the
most part, low cattle prices but rather cost shocks that caused low returns and
liquidation between 2006 and 2010. Widespread drought forced additional
liquidation between 2011 and 2013. The question of how much growth is needed
will depend on domestic and international market conditions over the next few
years as herd growth occurs. It will depend also on things such as carcass
weights that will determine total beef production relative to slaughter
rates. At this point I see little reason why the cow herd should not
rebuild to at least the level of the truncated expansion in 2007-2008…roughly
32.5 million head. That would suggest another 2.8 million head beyond the
January, 2015 level. This implies total herd growth of nearly 9.5 percent in
the next few years. Time and market conditions will, however, determine
exactly what the size potential is for the industry.
How
long will it take? At the 2014 rate of 2.1 percent per year, it would
take until 2019 to surpass the 32 million head level. In the last
complete cyclical expansion from 1990-1995, the average annual herd growth rate
was 1.4 percent. Leaving out the slow first year and tapering off the
last year, the principal four years of expansion during this period averaged 2
percent per year. In the current expansion, a single year of faster
growth is very possible but it is unlikely that an annual growth rate much
above 2 percent could be maintained for two or three years consecutively.
There are however, a number of regional factors that could slow down expansion.
An average herd growth rate of 1.5 percent would take until 2021 to exceed 32
million head of beef cows. The question of how long is related to the question
of where herd growth will take place.
In
five Midwestern states from Missouri to Ohio, the beef cow herd in 2015 was 8.4
percent smaller than in 2008. In the Appalachian states of Kentucky,
Tennessee and West Virginia, the 2015 beef cow inventory was down 15 percent
compared to 2008. In both of these regions, the decrease in beef cows is
largely the result of decreased forage acreage due to expanded crop
production. Lost pasture and hay production in these regions is not
likely to return quickly, if ever. The beef cow herd in these regions
will grow but is unlikely to rebuild to previous levels. The Northern
Plains states of Nebraska and the Dakotas experienced a modest 2.9 percent
decrease in the beef cow herd between 2008 and 2015. Similarly, the
2008-2015 beef cow herd decrease in the Northern Rocky Mountain region of
Montana and Wyoming was only 1.2 percent. These regions will likely
experience herd rebuilding but the two regions together are currently only 155 thousand
head below the 2008 level. The beef cow herd in other regions is
down as well including the South (down 3.8 percent; the Great lakes region
(down 4.7 percent); the Gulf region (down 8.1 percent); the Southern Rocky
Mountain region (down 2.8 percent) and the Southwest (down 9.4 percent).
These five regions combined are down just over 500 thousand head from 2008 and
will likely rebuild but drought will limit or slow the rate of growth in
Southwest and Southern Rocky mountain regions.
The
2015 beef cow inventory of the Southern Plains region (Kansas, Oklahoma and
Texas) was down 13.2 percent from 2008, a decrease of over 1.1 million
head. This represents 42 percent of the total beef cow herd decline
between 2008 and 2015. This region will clearly play a central role in
U.S. beef cow herd expansion in the coming years. Parts of the region are
still experiencing severe to exceptional drought conditions. The 6.2
percent herd expansion in 2014 in the Southern Plains may be difficult to maintain
if drought conditions do not improve significantly. Moreover, herd
expansion could be halted or reversed if drought conditions redevelop in the
region.
While
the final beef cow herd total for this expansion is unknown, it seems likely
that the industry will be rebuilding or trying to rebuild for the remainder of
the decade. Much of the herd growth will be in the Southern Plains with
proportionately more growth likely in the western half of the country compared
to the eastern half.
Thursday, March 26, 2015
Tuesday, March 24, 2015
Friday, March 20, 2015
Cattle Outlook
CATTLE OUTLOOK – Ron Plain and Scott Brown
Ag Economics, MU March 20, 2015
The March cattle on feed report was a bit bullish. It
said that
February placements were down 8.1% compared to a year
ago. February
marketings were down 2.1%. This left 0.5% fewer cattle
on feed at the
start of March than a year ago. The pre-release trade
forecasts were
for placements to be down 7.0%, marketings down 2.6% and the
number on
feed down 0.4% on March 1.
Domestic beef demand was up 16.3% in February, but foreign
demand for
U.S. beef was down 13.6%. U.S. beef demand has been
above the
year-ago level for each of the last 12 months. I would
say the strong
dollar and the labor problems at west coast docks were the
main causes
of the weak export demand during January. The growth in
domestic
demand more than outweighs the decline in export
demand. Through the
first ten full weeks of 2015, year-over-year beef production
was down
2.2%, but the choice beef cutout value was up 10.8% and fed
cattle
prices were up 31.3%.
This morning the choice boxed beef cutout value was
$244.38/cwt, up 31
cents from the previous Friday and up $3.55 from a year
ago. The
select carcass cutout was $244.56/cwt this morning, down 3
cents from
last week, but up 61 cents from a year ago. The
choice-select price
spread has been very tight in recent days.
Fed cattle prices were mixed this week on light sales
volume. Through
Thursday, the 5-area average price for slaughter steers sold
on a live
weight basis was $161.50/cwt, up 72 cents from last week’s
average and
up $11.40 from a year ago. The 5 area average dressed
price for
steers was $255.28/cwt, down $3.81 for the week, but up
$15.17
compared to a year ago.
Cattle slaughter this week totaled 518,000 head, down 1.1%
from the
week before and down 10.5% from the same week last year.
The average steer dressed weight for the week ending on
March 7 was
876 pounds, up 1 pound from the week before and up 18 pounds
compared
to the same week last year. Steer weights have been
above year-ago
each week since June 14, 2014.
Feeder cattle prices at Oklahoma City were as much as $7
higher on
calves, but $1 to $3 lower on heavy weight feeders. Prices
for medium
and large frame #1 steers by weight group were: 400-450#
$306-$313,
450-500# $285-$303, 500-550# $275-$295, 550-600# $266-$282,
600-650#
$246-$266, 650-700# $236-$250, 700-750# $207.50-$235,
750-800#
$202.25-$217.50, 800-900# $186-$204, 900-1000#,
$173-$191/cwt.
The April live cattle futures contract settled at
$158.35/cwt today,
up $4.08 for the week. June fed cattle settled at
$150.47/cwt, up
$5.20 from the previous Friday. August fed cattle
gained $4.48 this
week to settle at $148.10/cwt.
The March feeder cattle contract ended the week at $214.87/cwt,
up
$1.75 for the week. April feeders settled at
$216.20/cwt which is
$4.98 higher than the Friday before. The May contract
ended the week
at $215.40/cwt.
Wednesday, March 18, 2015
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