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Market Potential

China, India key to cattle market prospects.

The one thing certain in commodity markets is ambiguity. Ag Resource Co. President Dan Basse, however, provided a bit of clarity and foresight at the Certified Angus Beef® (CAB®) brand’s Feeding Quality Forum in late August in Sioux City, Iowa.

In a chaotic political climate that leaves much up in the air for trade policy, Basse offered comfort.

“We believe the markets are going to endure heightened financial risk and volatility, even our cattle markets,” he said. “When you think about demand for agricultural products globally, the world economic situation looks relatively good.”

The coming months hold concerns, though, because unlike the stock market, commodities have seen little or no upswing. Basse suggested what to monitor. Read more.

In The Cattle Markets

Current market and trade implications.

Seasonal beef production increases are expected in the latter half of the year. Although the supply increases may be lower due to recently lower-than-expected slaughter weights, there will still be year-over-year beef production increases of 3.3% (down from expectations of 3.7%). This supply pressure will continue to put long-term downward pressure on prices.

This increase in beef production will be occurring simultaneously with the increase in pork production. Export markets have until recently absorbed large amounts of our increased animal protein production. Higher tariffs and weaker demand are putting pressure on those exports.

USDA’s Economic Research Service released its quarterly Situation and Outlook report in late August. The report forecasts exports of beef, pork, dairy, poultry and other livestock products to be down $300 million in fiscal year 2019. Beef exports are projected down $100 million due to lower prices, while pork is forecast down $300 million due to weaker demand and retaliatory tariffs. Read more.

Cattle Buyers to Require BQA Certification

Coming soon — fewer buyers for your cattle if you are not BQA-certified.

Marketing beef direct to processors or through many Michigan auction markets for full value will now require Beef Quality Assurance (BQA) certification. BQA conveys commonsense husbandry techniques and scientific knowledge that demonstrate commitment to animal welfare, food safety and quality, safeguard the public image of the beef and dairy industries, and uphold consumer confidence in beef.

Recently, Wendy’s, the third-largest hamburger chain in the United States, requested that its beef supply be responsibly produced under BQA guidelines. This has prompted Cargill Protein and Tyson Foods (as of Jan. 1, 2019) to require that purchased cattle come from operations that are BQA-feedyard-certified. Other processors may soon follow suit. Read more.

CAB Grid Premiums

CAB grids pay well in face of larger supply.

Record Certified Angus Beef® (CAB®) brand carcass counts are impressive from a quality supply standpoint, but immediately call to mind the potential economic antagonism of lower premiums for qualified carcasses. Carcass weights this year have ridden slightly ahead of 2017, and CAB carcass counts are far and away higher than a year ago.

Even so, the CAB cutout premium to Choice has worked either side of the 2017 trend line thus far in 2018, most recently trading $2 per hundredweight (cwt.) below the 2017 line for most of July and all of August, averaging $9.15 per cwt. for the period. Read more.


Ginette Gottswiller

The Source

Manage growth spurts.

School is in full swing, and each year there are subtle changes that take place. Sometimes the change is more dramatic than others. Maybe your son grew 7 inches over the summer, or your daughter’s clothes went from tomboy duds to dresses. Change brings adjustments and a new normal.

This year AngusSource® grew. The American Angus Association changed the USDA Process Verified Program (PVP) to make room for its new program addition, Angus LinkSM. The feeder-cattle program was released at the end of August. The program will enable producers to effectively communicate the genetic merit of their calves to potential buyers.

AngusSource dropped the genetic component from the USDA PVP, but added the following programs to its age and source verification. Read more.

Justin Sexten

Better than average.

Few producers strive for average. From cow productivity to cost reduction, we all want to be better than that. Yet half of every herd is below its own average, so the bar we compare against is important for context.

As the summer video sale reports come in, we hear lots of comments wondering how some cattle trade at such exceptional prices. They’re sure the next owner has assured themselves a loss because they paid on the wrong side of average.

Let’s take a closer look at strategies. With above-average inputs that yield merely average output, the math is certain to result in parentheses. For those who have never seen accounting math, that means a loss. On the other hand, a high-input, high-output model may very well generate the same or more dollars than a “value buyer” who cuts costs to the quick. Neither scenario assures the operator a profit, but each has identified where the opportunity lies within their system. Read more.

Keep Eyes on Export Markets

Export markets help drive cattle prices, but it is important to understand what foreign consumers want.

The effect of U.S. beef exports on calf prices continues to increase as experts advise ranchers to stay abreast of trade developments globally.

Randy Blach, CEO of CattleFax in Denver, Colo., told attendees at the Texas A&M Beef Cattle Short Course in College Station that exports have become an integral part of calf prices and, following the latest trade discussions, are imperative when formulating marketing plans.

“Just look at how fast our export markets have grown since Christmas 2003, when we had BSE (bovine spongiform encephalopathy),” Blach said. “We have the opportunity for that value to go as high $500.” Read more.

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