MARKETING...
Stocker Market
Wheat pasture demand and limited feeder supplies support stocker prices.
Calf prices in Oklahoma jumped as much as $10 per hundredweight (cwt.) the second week of October, with stronger stocker demand and limited supplies both serving as contributing factors. Feeder-cattle auction volumes in Oklahoma are down 26% over the last six weeks compared to last year. A year ago, fall stocker-calf prices increased counter-seasonally into early December. Conditions are right for similar support to stocker-calf prices this fall. However, given that calf prices are already at high levels and the corn price is sharply higher this year, stocker prices may move up only a bit more or hold mostly steady near current levels.
In the Cattle Markets
Feedlot Returns: assessing the current and upcoming situation.
Discussion of values of gain available to stocker operators, prospects (or lack thereof) of herd expansion signals that may appear in the closely watched January Cattle Inventory Report, and similar issues dominate many industry conversations. It is important, however, to step back and assess the situation for feedlot operators — the focus of this commentary.
A couple months ago I worked with Kevin Dhuyvetter to update and expand the process used at Kansas State University (K-State) to track historical and project future returns for finishing cattle. While no approach is flawless, we believe this provides a reasonable barometer of profitability trends in the industry. Consistent with other approaches to assessing finishing returns, our approach suggests returns from closeouts in recent months have been historically low (-$265.35 per steer and -$253.16 per steer sold in July and August, respectively). Read more.
Demand Indexes and Consumer Spending
Demand for beef and turkey remains strong, while demand for pork and chicken sags compared to a year ago.
Last week's release of monthly export data for August provided the last needed piece to compute demand indexes, and the results continue to be mixed for the four major animal protein species. Annual indexes with 1985 being the base year (index = 100) appear in Fig. 1. The last observation represents the 12-month period ended in August vs. the same 12-month period one year earlier.
Pork and chicken demand remain lower than one year ago, while beef and turkey demand remain stronger through August. Read more.
Meat Processor to Audit Animal Welfare
Provided by Suppliers
Tyson Foods announces new audit program to help ensure responsible on-farm treatment of animals, promises research into new, improved ways to raise farm animals.
Tyson Foods Inc., the nation's leading producer of meat and poultry, Oct. 12 announced it is launching a program to personally audit the treatment of animals at the livestock and poultry farms that supply the company. The effort is in line with the company's core value to serve as a steward of the animals entrusted to it.
"Our company is made up of ethical, responsible and compassionate people, and we believe the family farmers who supply us share our values," said Donnie Smith, president and CEO of Tyson Foods. "We know more consumers want assurance their food is being produced responsibly, and we think two important ways to do that are by conducting on-farm audits while also continuing to research ways to improve how farm animals are raised." Read more.
CAB Mythbusters
What they thought they knew that just ain't true.
Last year at the annual Cattle Industry Convention and NCBA Trade Show, we jumped into a new arena. What were uncharted waters for us then seem a lot more natural now, but we still hear this myth sometimes.
Myth: CAB has no business being in the DNA business. Read more.
Fewer Cattle, More Pressure
Mike Sands shares his outlook for the future of the cattle industry.
Getting cattle bought right is normally a feeder's first challenge. Today, however, the challenge is just plain getting cattle.
"The total size of the cattle industry has been shrinking, and shrinking rather abruptly for the last couple of years," said Mike Sands, Informa Economics vice president. The nation's cow herd was at 90.8 million head to start 2012 (see Fig. 1), but as summer turned to fall, drought had hit three-fourths of that herd.
Speaking at the Feeding Quality Forum in Grand Island, Neb., and Amarillo, Texas, in late summer, Sands said he expects that to shrink another million head or more by January 2013.
"We've seen some extremely tight packer operator margins over the last year. That's unsustainable. We're looking at sizable cattle-feeding losses at the present time. Those are unsustainable," he said. "It probably boils down to some change of the structural capacity in the industry." Read more.
August Beef, Pork Exports Lower than a Year Ago
Despite a continued slump in U.S. red meat export volume and a further dip in August sales, the value of beef and pork exports for the first eight months of the year remained slightly ahead of 2011's record-setting pace, according to statistics released by USDA and compiled by the U.S. Meat Export Federation (USMEF).
U.S. beef exports in August were the second-largest of the year at 100,468 metric tons, but this was still 14% below the August 2011 volume. In value, August exports totaled $486.2 million. While 5% lower than a year ago, it was also the second-highest monthly total of 2012.
For January through August, beef exports were 11% lower than a year ago in volume (759,901 metric tons) but still 2% above last year's record value pace at $3.66 billion. Read more.
The Source
Brand loyalty pays.
We all have our favorite brands. Name a product — trucks, tractors, jeans, boots. You're bound to have a particular brand you prefer more than others.
I recently drove by a Ford dealership to check out a used truck I saw advertised. It had already sold, so the salesman did his best to interest me in another brand. Poor guy, I had to make it clear that my mind was made up, and I wasn't looking for anything else. I knew what I wanted, and it was not there.
Cattle buyers don't have it so easy. In 2012, it's estimated that nearly 75% of U.S. cattle will be black-hided. If you are looking for Angus, how can you be sure? There isn't an Angus logo branded on a calf's forehead to guarantee genetics. Some breed characteristics stand out; however, determining just how much Angus influence there is in a group of black-hided calves can be difficult.
One solution: AngusSource®. Read more.
Angus Calendar
To view the Angus Calendar, a complete list of Angus sales, click here.