From The Editor
Jan. 27, 2011
Hello Pro Farmer Members!
USDA released the twice-yearly Cattle Inventory Report this afternoon and it held a big surprise -- beef cow-calf producers are starting to rebuild the herd. Beef replacement heifers were saved back at a pace 1% quicker than year-ago. I'm surprised by this because the last time the herd cycle bottomed out, beef replacement heifer retention was steady with year-earlier for two or three years before numbers started to climb (a rounded bottom). This time, the rebuilding would make it look more like a "V" bottom in heifer retention.
Short-term, taking females out of the slaughter mix and putting them on pasture is bullish the fat cattle market. It tightens feeder cattle supplies and reduces beef supplies through 2012 and into early 2013 before total supplies start to very slowly creep higher into late 2013.
Also, the herd is moving. Expansion is in the Northern and Central Plains (Colorado, Nebraska, Wyoming, Montana), in the middle of the Corn Belt (Iowa, Missouri) and in the Southeast (Georgia, Florida, Alabama.)
Not surprisingly, beef replacement heifers numbers are down (and down big) in drought areas of Oklahoma and Texas, steady in Kansas.
An update to the Argentine shipping situation: We're hearing this afternoon that a second vessel has run aground in the Parana River as it made its way to the Port of Rosario in Argentina. Shipping problems will only make it more difficult for Argentina to stay in the export game. The country needs plenty of rain to help the bean crop and the latest-planted corn build yield... and to raise the draft in the river to get those boats to port. Until that happens, anything booked out of Rosario just increases the odds that Argentine export sales will be switched to U.S. origin.
That's it for this week... Pro Farmer Sr. Market Analyst Brian Grete will be at Tomorrow's Top Producer Seminar in Chicago next week; I'll be at the Top Producer Seminar to talk about China and to moderate a panel discussion about market volatility created by USDA reports. Should be fun!!!