Heavier Feeder Cattle Placements Amid Meat Processing Plant Issues
Elliott Dennis, Nebraska Extension Livestock Marketing Economist
Current Market Situation
Domestic red meat demand and corn prices are two current drivers of the fed cattle market. The historical corn purchases from China, reduced planted corn acreage in the U.S., and poor weather conditions in Brazil have continued to fuel low corn stocks-to-use ratio in the U.S. This has raised the December ’21 pre-planting corn price of $4.52 per bu. to $5.33 per bu. Comparing this with the five previous December corn contracts shows that prices are about 70 cents per bu. higher. Ultimately, higher corn prices create higher feed costs for feedlots. Kansas State’s Focus on Feedlot report shows that, for steers, the cost of feed is approximately $105 per cwt. this year, compared to $80 in 2020 and the $79 per cwt. between 2015-2019. Placing heavier cattle that require less corn while on feed is one way to control costs while continuing to supply market-ready live cattle to meet consumer demand.
Domestic meat demand has created incentives to continue to place cattle even with concerns over packing plant capacity. Over the last two years, domestic meat demand has been strong, and consumers have continually shown that they were willing to spend money on beef even at high retail prices. Some of this is likely due to government transfers and income saved by not eating at foodservice over the last 18 months. However, since quarantine restrictions have eased from the pandemic, consumers continue to buy large quantities of beef at retail. Ultimately, demand for retail and foodservice beef is passed down from consumers to feedlots via the live cattle price. Current CME live cattle prices suggest there is a lot of forward carry in the market – October ’21 LC was trading at $122 while the April ’21 LC was trading at $136. There continue to be incentives to place cattle even at higher corn prices.
Cattle on Feed Report
Each month, the USDA releases The Cattle on Feed report. This report surveys feedlots with 1000 + capacity (~85% of all fed cattle) and provides an estimate of the number of cattle being fed for slaughter. The report includes data on inventory, placements, marketings and other disappearance. The September USDA-NASS Cattle on Feed report had Sept. 1 feedlot inventories at 11.234 million head, 98.6% of last year. August marketings were 1.885 million head, 99.6% of one year ago and August placements were 2.104 million head, 102.3% of one year earlier. August placements and marketings were both slightly higher than average pre-report estimates but within the range of analyst forecasts.
Increase in Heavy Placements
So how did feedlots take the current supply and demand conditions and translate them into placement decisions by weight class? For states with large amounts of fed cattle (CO, KS, NE, TX), the report breaks down the number of feeder cattle placed on feed by weight class. The August placements were the largest placement total for that month since 2011. Placements in the 900-999 pound category were up 19.6% over August 2020 (see panel (a), Table 1). About 43% of placements weighed more than 800 pounds, continuing the general trend of heavier placements. Nebraska continues to place heavier cattle relative to lighter cattle. This is distinctly different than Texas, which favors lighter feeder cattle. Kansas is more moderated, primarily placing middleweight cattle. It shows the market preference and specialization in the feeder to fed cattle market (See panel (b), Table 1). Overall, the large increase in heavier placed cattle in August will frontload future production depending upon ending harvest weights and average daily gain performance. Slower average daily gain or higher ending harvest waits would push total beef production further into 2022. Further, more of this product will likely be of Choice or Prime quality grade product. While there's been a lot of talk about feedlot currentness and whether they have been able to work through capacity issues, current placement patterns suggest that there continues to remain substantial optimism for higher live cattle prices among feedlots.
Part of a Larger Trend
These placement patterns highlight a larger trend that has been underway for some time in the different markets. Nebraska has continually started to place heavier cattle in the market relative to Texas for the last 10 years. Feeder cattle weighing 800 lbs. plus have steadily increased while cattle weighing less than 800 lbs. have all decreased. For example, placements of feeder cattle weighing between 600 – 699 lbs. decreased from 100,000 hd./month in 2000 to 75,000 hd./month in 2019. Similar broad decreasing trends are observed in feeder cattle less than 600 lbs. and 700-799 lbs. The months that heavier feeder cattle are placed likewise reveal how feedlots are managing the inflow of feeder cattle. Figure 1 displays the percent of 800 lb. plus feeder cattle placed in each month between 1996 and 2021. The black line within each month is monthly cattle placements. The blue line is the average across all years within a given month. There is significant and steady upward growth across all placement months – especially in the second half of the year. In some months, 800 lb. plus cattle represent more than 40% of all cattle placed on feed.
The most recent cattle on feed report revealed that most additional placements were heavier cattle. This is in line with the current market situation of higher feed prices yet continued strong domestic demand for beef products. Nebraska was the largest placer of heavier cattle in this month. However, this is part of a larger trend within Nebraska that has moved away from feeding middle-weight feeder cattle (600-800 lbs.) and more towards heavier cattle (800 lbs. plus). These placement patterns will likely result in more beef production in early 2022 that is of Choice or better.
LECTURE TO EXPLORE MISCONCEPTIONS ABOUT SUSTAINABILITY OF BEEF PRODUCTION
American consumers often hear about the environmental impact of livestock production — particularly beef. What’s often left out of the discussion is that American beef production ranks among the most sustainable in the world, and advances in livestock production over the past 50 years have led to production techniques that are far more sustainable than ever before.
The fall 2021 Heuermann Lecture will focus on beef’s path to climate neutrality. The lecture will feature Frank Mitloehner, professor and cooperative extension air quality specialist, and director of the Leadership for Environmental Awareness and Research Center in the Department of Animal Science at the University of California, Davis. His talk will shed light on new research and lingering misconceptions about the sustainability of beef production and promote a greater understanding of how beef can be part of the climate solution. The lecture will take place at 2:30 p.m. Oct. 25 in the Great Plains Room of the Nebraska East Union, 1705 Arbor Drive.
A panel discussion, “Myth Busting: Cattle and Climate, a Discussion on Nebraska’s Livestock Environmental Footprint,” will follow Mitloehner’s talk. Panelists are Colin Woodall, chief executive officer at the National Cattlemen’s Beef Association; Larry Quint, research fellow at Conagra Foods; and Galen Erickson, Cattle Industry Professor of Animal Science at the University of Nebraska–Lincoln. Barb Cooksley, a prominent rancher from Anselmo, will moderate the discussion.
“Consumers are interested in how their decisions impact the environment, and methane has received a lot of attention in recent years,” Erickson said. “In the United States, less than 4% of our greenhouse gas emissions are from cattle, and UNL research suggests the percentage is even lower than that. In an agricultural state like ours, that is a very important story to tell.”
The Heuermann Lecture Series is presented by the Institute of Agriculture and Natural Resources at Nebraska. A reception will take place prior to the event at 2 p.m. For more information, visit https://heuermannlectures.unl.edu.
PRUSSIC ACID AND FROST
– Ben Beckman, NE Extension Educator
With a warmer than usual fall so far, we’ve been able to graze later in the year with few concerns. However, cold temperatures are not far off and with our first freezes of the year comes the risk of prussic acid in sorghum species.
When temperatures drop, freeze damaged members of the sorghum family, including sudangrass, sorghum-sudan hybrids, forage sorghum, or grain sorghum (milo) releases a toxic cyanide compound we know as prussic acid. Plants like pearl and foxtail millet that are not of the sorghum family don’t carry this risk. If digested, prussic acid interferes with the blood’s ability to transport oxygen, often resulting in death.
While deadly, prussic acid doesn’t stick around for long. After 5-7 days, the toxin has dissipated enough that forages are once again safe to graze. However, this doesn’t mean the danger is over. Every time a new part of the plant receives damage from a frost, our timer must again be reset. This continues until the entire plant has been killed by frost.
So how do we stay safe? Pull animals from sorghum before a frost and keep them off for the 5-7 days. Prussic acid also accumulates in new growth, so keep an eye out for new shoots and consider pulling animals until they reach 15-18 inches in height, or the plant dies.
Since prussic acid dissipates from dead tissues, haying sorghums won’t be a concern, as long as moisture content is low enough. If harvesting for silage is an option, the proper ensiling will reduce prussic acid to safe levels.
Prussic acid is a real risk, but one easily dealt with by proper management. Don’t graze sorghums 5-7 days after each frost until the entire plant is killed, and keep an eye out for equally dangerous new shoots. If this prevents grazing from being an option, consider haying or silage as safe solutions.
2ND ANNUAL NEBRASKA CRAFT BREWERS GUILD DRINK LOCAL MONTH HIGHLIGHTS CRAFT BREWING INDUSTRY
The Nebraska Craft Brewers Guild (NCBG), in conjunction with the Nebraska Craft Brewery Board and ABE Beverage Equipment are sponsoring the second annual “Drink Local Month'' in October to bring awareness of the craft brewing industry in Nebraska. The craft brewing industry provides over six million dollars in economic impact in communities across the state, employs the equivalent of over 4,100 full time-employees, and offers Nebraskans the opportunity to gather together in the communities they serve.
The NCBG is challenging Nebraskans to consume nothing but Nebraska produced beers, hard ciders, and seltzers throughout the month of October – supporting breweries, cideries, retail establishments, bars, and restaurants in communities across the state. Drink Local Month is celebrating local brews through unique collaboration brews, beers and ciders made with local to Nebraska ingredients this month, a multimedia campaign including billboards, social media, and a website redesign, a brand new merchandise shop, and events across the state at our member breweries and retailers.
Nebraskans can join the Drink Local pledge here: https://www.change.org/p/nebraskans-drink-local-support-nebraska-craft-breweries-in-october
For more information on Drink Local month, including up-to-date information about events, visit the NCBG’s Facebook page: https://www.facebook.com/NebraskaCraftBrewers
Merchandise for Drink Local month can be purchased through Soul & Swag through October 15, with orders being shipped in November: https://soulxswag.commonsku.com/shop/64c04f3a-6301-4525-99a8-88aaa289a22a
Questions about the Nebraska Craft Brewers Guild or Drink Local Month may be directed to Brianne Schuler, Executive Director of the Nebraska Craft Brewers Guild at (402) 706-6470 or by email at email@example.com.
New Resources Examine Economics of Mortality in Swine Operations
Profitable pig production depends on getting finished pigs to market, with costs below market price.
Lowering mortality rates can improve potential profitability. However, experienced pig producers know that mortality is a cost — by its very nature and by efforts to reduce it.
In a recent article in Ag Decision Maker, Russ Euken, swine specialist with Iowa State University Extension and Outreach, and Lee Schulz, extension livestock economist, take a look at some of the different factors that can affect the cost of mortality.
The article, titled “Assessing Economic Opportunity of Improving Mortality Rate in Wean-to-Finish Swine Production,” is based on a budget and gives examples of how mortality rate, market pig prices, feed prices and other factors impact the cost of mortality. Fixed costs are included in the budget but do not change with mortality rate. It is true that when a pig dies, an operation’s fixed costs are spread over fewer pigs, but total fixed costs have not changed.
Using the price assumptions and production inputs from the example outlined in the article, a 1% decrease in mortality would increase net profits by about $1 per head sold. Changing various assumptions, however, impacts results.
The cost of mortality depends on when mortality occurs. When a pig dies it stops consuming feed and other non-feed variable costs that accrue on a per-pig basis. This is cost savings. The cost savings when a pig dies also depends on feed costs. When feed prices are high, any cost savings is higher, especially if the pig dies early, compared to when feed prices are low. When a pig dies late in the finishing phase, the cost savings is comparatively minor relative to the lost opportunity cost of marketing a finished pig. Also evident is the decreasing marginal returns to cost savings as mortality rate decreases.
Producers are encouraged to use this information and the accompanying decision tool spreadsheet, which allows users to plug in their own numbers, so they can analyze what might happen if they improve mortality rates within their own operation.
“We want to help producers get a better handle on the economic opportunity of reducing swine mortalities,” said Euken. “Costs to reduce mortality may vary depending on cause of mortality, and so will the economic opportunity of prevention, but these new resources provide a starting point allowing producers to weigh the projected benefits of mortality-reducing strategies against their anticipated costs.”
This article and decision tool can be found on the Ag Decision Maker website, https://www.extension.iastate.edu/agdm/livestock/html/b1-78.html.
This effort was part of a larger Pig Survivability project.
More information about the project is available at the Improving Pig Survivability Project website https://piglivability.org/. Those with an interest in this topic can also attend the International Conference on Pig Survivability https://www.regcytes.extension.iastate.edu/survivability/, set for Oct. 27-28 in Omaha.
USDA to Host Educational Webinar Series for Pork Industry on Livestock Mandatory Reporting
The U.S. Department of Agriculture (USDA) will host a series of educational webinars for the pork industry about USDA’s Livestock Mandatory Reporting (LMR) Program. In this series – to be held on October 12, October 19 and October 26, 2021, from 11:00 a.m. to 12:30 p.m. Central Time each day – USDA Market News staff and a panel of industry representatives will provide an overview of LMR live hog and wholesale pork reporting, and how this information can inform real-world marketing decisions at the farm and other points in the supply chain. While anyone can attend the free webinars, they are targeted to pork producers, feeders and other stakeholders who want a better understanding of LMR.
The first webinar will provide an overview of LMR and includes speakers from USDA Market News, the National Pork Producers Council, the USDA Packers and Stockyards Division and the USDA National Agricultural Statistics Service. The second webinar will provide an overview of LMR live hog reporting and includes speakers from USDA Market News, CME Group, a hog producer and an economist from Iowa State University. The last webinar will provide an overview of LMR wholesale pork reporting and includes speakers from USDA Market News, CME Group, an economist from Partners for Production Agriculture and a representative from Sterling Marketing, Inc.
Information about how to pre-register, and the dates, times, speakers and topics of each webinar are on the USDA Agricultural Marketing Service website at https://www.ams.usda.gov/event/pork-LMR-webinars.
USDA is focused on building new, more, fairer, and more resilient markets for our farmers, ranchers and producers. In the last five years, stresses and disruptions caused by concentration in livestock markets have impacted not only producers, but consumers as well. These educational webinars will help pork producers better understand LMR data so they can make marketing and production decisions based on the best-available market information.
Dairy’s 2020 Gains Were Steady in a Year That Was Anything But
National Milk Producers Federation
We’ll spare you the long story of how 2020 was difficult for everyone – assuming you aren’t a time-traveler or a visitor from outer space, you already know it. And if you follow this column, you’ll know that consumers turned to dairy in difficult times, from baking at home to stocking up on fluid milk in the COVID-19 pandemic’s earliest days.
But the final consumption data for 2020 is now in, and the spreadsheet confirms what we already knew in our hearts: For the third consecutive year, U.S. per-capita dairy consumption increased, to 655 pounds per person from 653 pounds in 2019, showing a resilience in dairy that reflects that of those who relied on it.
No eye-poppers in this year’s report. A small uptick in yogurt, a gain in butter as it marches back to 1960’s-level consumption, increased buying of both full-fat and lower-fat ice cream – because what’s a lockdown without ice cream? And fluid milk consumption held steady, belying the haters who always use receding prominence as fake evidence of the “death of dairy” even as gains among other dairy products more than outpace any fluid losses.
In the end, “steady” is what dairy’s been all about. At a time when everything from public health to supply chains have been in upheaval, consumers can count on dairy – for quality, for nutrition, for affordability, and for care in its creation.
2020 is over, and 2021 hasn’t been a picnic either. But we do know – and the data does show – what consumers have counted on throughout. Dairy farmers are proud to provide products that keep the country nourished. They will continue to meet that steadily growing need until current challenges have passed – and far, far beyond.
Don’t Overlook Field Fertility Following Harvest
As grain bins fill and harvest comes to an end, farmers’ thoughts should shift to assessing field fertility needs. Outside of nitrogen, phosphorus (P) and potassium (k) are two of the most important nutrients in crop fertility. P and K are often applied in the fall after other operations are complete and when weather and soil conditions make compaction less of a concern. When assessing K and P needs, growers should consider soil sampling to determine nutrient loss through crop removal, better manage input needs and maximize net returns.
Regular soil testing is the foundation of sound P and K fertility. Compared to the cost of fertilizers, soil testing is inexpensive and offers a good return on investment. To provide the best diagnostic information, soil samples should be collected from a given field every two to four years.
“When assessing crop removal, the things I consider are how was the crop in this particular field and how much potassium and phosphorus did we lose,” said Josh Shofner, Pioneer Field Agronomist. “We always want to be putting back into the soil what we took out throughout the growing season and harvest. This sets us up for the next growing season.”
Fertility programs that focus on crop removal are not necessarily intended to maximize economic returns in any given year. Rather, they are designed to provide flexibility and consistent economic returns over the long-term by removing P and K as yield-liming factors. Applying fertilizer while accounting for crop removal will generally maximize yield by reducing yield loss due to insufficient fertility.
AFBF Forms Partnership with MANRRS
The American Farm Bureau Federation and the National Society for Minorities in Agriculture, Natural Resources, and Related Sciences (MANRRS) announced they have entered into an agreement with the goal of increasing minority involvement in agriculture. A memorandum of understanding (MOU) signed today is expected to strengthen membership value for both organizations through collaboration on projects, including written content for each organization’s publications, providing leadership training and expertise, and cross promoting programs and events.
“We are excited to join with MANRRS and share Farm Bureau’s resources and programs with potential new farmers and the next generation of leaders in agriculture,” said AFBF President Zippy Duvall. “Farmers and ranchers represent less than 2% of America’s population but are responsible for feeding the entire country and beyond. We will need the brightest minds and new perspectives to continue meeting the growing demand for healthy, affordable food. We believe the partnership we’re forming today will benefit both of our organizations and all of agriculture.”
“The new partnership between MANRRS and the American Farm Bureau Federation will ensure that ALL of the voices of the agricultural community are heard as we work together to develop a well-trained workforce that not only identifies agricultural issues, but one that also addresses these challenges today and tomorrow, domestically and globally,” said Dr. Olga Bolden-Tiller, President of the National Society of MANRRS.
The signing of the MOU is a continuation of AFBF’s goal to expand coalitions and partnerships to increase the effectiveness of its grassroots organization. Other partnerships include FFA and 4-H, which foster the growth of young people interested in pursuing careers in agriculture.
Make Plans to Attend Cattle Industry Education Experience in Houston
The 29th annual Cattlemen’s College, sponsored by Zoetis, will be held Jan. 31-Feb. 1, 2022, and will kick off the 2022 Cattle Industry Convention & NCBA Trade Show in Houston. This premier education experience draws more than 1,000 people every year, and includes two days of learning, idea sharing and networking.
In addition to Monday’s “producer’s choice” sessions which provide a preview of Tuesday’s educational experience, hot topics such as global cattle industry trends and sustainability research will be featured. The Zoetis Demonstration Arena includes a live animal demonstration focusing on analyzing the physical and genetic traits of cattle. Monday concludes with an evening reception offering an opportunity for everyone to gather with friends and reconnect.
There will be 15 sessions and five educational tracks to choose from on Tuesday including business, herd health, nutrition, new tools and sustainability. The business-focused track will include several risk management sessions, and the new tools sessions will focus on the latest technology trends for genetics and grazing management. This year’s event includes cutting-edge topics and top industry leaders including a keynote speaker to wrap up Tuesday’s agenda.
Each year, the Cattlemen’s College agenda is developed based on feedback from producers, and their comments drive the program. Past attendees have indicated that “The biggest take away I found from attending Cattlemen’s College is that there is always a newer or better way of doing things,” while others learned that “The generation effect of the decisions we make today not only impact this year’s calf crop but the herd as whole for years to come."
With so much information presented, it is nearly impossible to experience all Cattlemen’s College has to offer in person. To make it easier to access content, all sessions will be recorded and available for registered attendees to watch at any time in the future. Registration begins Nov. 1, 2021. Look for the Education Package, which offers the best value. For more information, visit https://convention.ncba.org/.
Alltech Crop Science appoints CEO to lead global growth
Following an extensive search, Alltech Crop Science has filled its newly created CEO position. Andrew Thomas has been appointed to lead the global team and further cultivate the strategic growth of Alltech Crop Science.
“We believe there is tremendous potential within global crop production to cultivate a more promising future,” said Dr. Mark Lyons, president and CEO of Alltech. “We felt it was essential to appoint a CEO to lead the charge, and we specifically sought someone with international experience, proven commercial success and a shared commitment to Working Together for a Planet of Plenty™. Andrew’s experience and passion reflect these qualities, and we are excited to welcome him to the team.”
Thomas brings to Alltech more than 30 years of global management experience in the agri-food and seed industries. Throughout his career, he has led innovation initiatives and launched various new products and businesses. Most recently, Thomas served as CEO of WISErg Corporation, a circular economy business based in Seattle, Washington, USA, that diverts waste streams to sustainable agricultural inputs.
Previously, Thomas served in executive management roles for the plant breeding and seed company Nuseed as the business successfully expanded both its geographic footprint — from its Australian base throughout the Americas, Oceania and Europe — and its pipeline of technologies and products across multiple crops.
“Alltech has a long history of providing sustainable solutions to the agriculture industry through scientific excellence and visionary innovation,” said Thomas. “I am thrilled to join the Alltech Crop Science team as we continue our commitment to helping producers optimize crop health and performance while protecting the environment.”
Supporting Thomas will be Steve Borst, vice president of Alltech Crop Science. Borst played a central role in the launch of a new partnership between Alltech Crop Science and HELM Agro in the U.S. and will continue collaborating with the HELM team to activate the commercial potential of the partnership. Borst and Thomas will work closely together with the Alltech Crop Science global team to advance a new era of sustainable growth.
Thomas currently resides in Chicago, Illinois, USA, but will transition to Alltech’s corporate headquarters in Nicholasville, Kentucky.
Case IH Announces Senior Management Changes
Case IH announces Scott Harris, current vice president of North America, will lead the brand as Case IH global president. Harris replaces Brad Crews, who will serve as president of North America for CNH Industrial. Kurt Coffey, current global brand marketing manager and marketing communications leader for North America, will lead the brand as Case IH vice president of North America, effective immediately.
Harris has been with the company since 2006, first with CNH Industrial Capital and later as Northeast region sales manager for both agricultural and construction equipment. In 2007, he became senior director of sales and marketing for that division. His last role with CNH Industrial Capital was vice president of U.S. Financial Services and Operations. Harris then joined CNH Industrial Parts and Service in 2011, first as vice president of sales and marketing for North America and later the entire division in 2013. He became vice president of CASE Construction in 2016 and then vice president of Case IH North America in 2018.
“Scott Harris’ strong leadership in North America has made a significant impact on the Case IH brand,” said Derek Neilson, CNH Industrial president of agriculture. “As we look to the future, at both Case IH and the agriculture industry as a whole, we are excited for him to make his mark across the globe.”
As Case IH global president, Harris will lead the overall strategy for the brand with a strict focus on customer-centric brand building, brand marketing and communications, overall digital customer experience, and the Case IH solutions portfolio. He will coordinate activities with Case IH and CNH Industrial leadership across all regions.
In his new role, Coffey is responsible for the strategy and execution of all Case IH North America commercial functions, overseeing the execution of a customer centric go-to-market approach in North America.
“With a rich background rooted in agriculture, Kurt Coffey is committed to supporting North American producers through a strong brand approach along with the right iron and technology solutions,” Harris said. “His experiences in the industry have made him an exceptional leader, and we look forward to Coffey’s continued future with Case IH.”
Coffey holds a bachelor’s degree in agricultural business from Illinois State University. He remains actively involved in his family’s grain-farming operation in central Illinois, bringing a customer-centric collection of agriculture industry experiences to his new role.
Tuesday, October 12, 2021
Monday October 11 Ag News
Heavier Feeder Cattle Placements Amid Meat Processing Plant Issues
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