Livestock Markets

Understand the $6.50 Surge in Feeder Cattle Futures

Mon, 12 May 2025 20:34:15 GMT

The cattle market hit records numbers on May 12, with August feeder cattle futures reaching highs of $306.85.

Not to be attributed to just one thing, this $6.50 surge is likely due to tandem effects of both the lowering of tariffs with China, as well as the USDA’s decision to close the southern border again because of concerns with New World Screwworm.

“Markets are way up today if you looked at the futures, but it’s hard to sort out how much of that is due to Mexico,” says Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist. “Probably the bigger part of it is the stock market and all the tariff related stuff that’s going on.”

What’s ‘Normal’ For Animal Imports v. Today?
So far in 2025, a total of 197,844 head of feeder cattle have been imported since the border reopened, down 60% year over year for the year-to-date. In 2024, a total of 1.25 million head of feeder cattle were imported, with none in the last five weeks of the year, says Peel in his weekly market report.

“On an annual basis, the number of feeder cattle we bring in from Mexico is equivalent to 3.5% of our calf crop ,” Peel adds. “It’s not insignificant, but it’s not a huge, huge factor either.”

Peel says reducing the supply of cattle coming in has fairly big effects on cattle businesses who rely specifically on that source of cattle, much of which would be in the Southern Plains region.

“Folks who historically utilize those cattle, obviously are directly impacted, and they have to try to find other sources of cattle, but, again, the overall numbers are not big enough to be a major market mover,” he says.

Additionally, Peel says the majority of cattle coming into the U.S. from Mexico were spayed heifers due to drought liquidation.

John Hepton, Wilder Cattle Feeders in Idaho, says he has fed Mexican cattle in the past, but doesn’t have any in yards currently, so it’s not a supply issue for him, but he pays close attention to the futures.

“Feedlots aren’t getting those cattle from Mexico and they’re pulling feeder cattle farther away,” Hepton says. “It’s definitely having an impact on the price of feeders and the availability of feeders, which is going to have an impact on the amount of cattle that are placed on feed that end up at the processors. We’re already short as is.”

As a feedlot owner, risk management has always been a part of his business model, which helps as the markets climb.

“It looked like we were kind of hitting close to a high when the feeder futures got to three bucks,” he says. “We added some hedges and risk protection at that level then you wake up Monday morning and the market’s up four bucks, and you’re making margin calls because of an outside influence in the market. It’s just the way it is.”

Markets Shape Herd Size Dynamics
Hepton says he has heard from people in the industry that herd expansion is starting in places, but he’s not sure to what degree, which would put less heifers on feed.

“If you’re a cow-calf producer, it helps you price wise,” Hepton says. “We were already the highest prices in the history of the world and now it’s higher again. Producers will continue to get more for their calf crop coming up. Whether that changes their decision to save more heifers or not has always been more about forage availability than anything.”

He says time will tell if producers keep saving heifers as they will be giving up a big check.

“I think that’s part of the reason why there hasn’t been a lot of expansion yet; they are worth so much that it’s hard to hard to not sell them.”

Hepton points out other factors work together to determine what the industry does. He says there will be signals to continue to produce cattle.

“If we don’t get in a drought, the cow herd will eventually increase,” he says. “Also, if you get to a price point where demand backs off, first it’ll back off on the meat sales, then the fed cattle price, then feeder cattle price, and finally at the cow-calf level. In time, capitalism always works. If people can’t afford beef, that’s going to be the real driver of a change in this market, I think.”

Border Closure Aims to Limit Exposure To Pest
While the change in markets has gained industry attention, Peels says the USDA decision to close the southern border is very much a veterinary issue to make sure the New World Screwworm stays out of the U.S.

“The pest moves with cattle, potentially, if they have it,” he says. “And of course, flies can just move, and they’re going to move in conjunction with cattle. Stopping the movement of the cattle is the first step in containing it. Then you use the sterile fly program to eradicate it and start hopefully pushing it back farther south.”

Your next read: U.S. Suspends Mexican Cattle, Horse and Bison Imports Over Screwworm Pest

Ag Economist Talks Trends To Watch In The Livestock Industry

Wed, 24 Jul 2024 20:48:09 GMT

After a tough couple of years in the livestock industry, Scott Brown, an ag economics professor at the University of Missouri, says there may be a light at the end of the tunnel. He recently joined the Top Producer podcast to share what he believes is on the horizon for beef, dairy and pork producers.

Rebuilding In Beef
Brown shares the current state of the beef industry began forming in 2020. And after three years of drought in cattle country, as well as significant liquidation, there’s a supply shortage.

“I think it’s taken us longer than maybe we typically would have thought to get some rebuilding to happen,” Brown says. “You add on top of that costs have just continued to go higher, so the prices we need for cattle to generate the interest to grow herds are very different today than just a few years ago. A lot of that’s at play.”

He expects to hit 2026 before there is significant growth in the country’s beef cattle herd.

“At some point, there will be enough profitability to get more beef cows back in the herd,” Brown says. “I think the operations will also continue to get bigger on the cow/calf side.”

Improvement In Pork
Coming off of a year Brown likens to 1998 for pork producers, he says the financial side is showing signs of improvement.

“By April, we were starting to see hogs that might have been in the black again for the first time in several months,” Brown says. “There’s still a lot of them that have probably a reasonably deep financial hole to climb back out of given how tough 2023 was, but it’s good to see some positive news on the pork side.”

He adds productivity has been phenomenal and anticipates international demand to play a large role in the future.

“Even though we’ve been losing sow inventories in the country, productivity has more than offset some of that and suppliers continue to run fairly high,” Brown says. “The pork industry generally has been really good about getting international demand to grow in some new places. Central America, Mexico and now some smaller Central American countries are now taking some pork from us. That’s a great longer term move for the pork industry.”

Expanding Demand In Dairy
Like the pork industry, Brown says dairy experienced a tough 2023 due to low prices.

“Dairy markets are the most demand inelastic markets we have in agriculture. But when supplies out strip that demand just a little bit, we can get some fairly low prices. I think that happened in 2023,” he says. “Cheese has been one of the most important demand-side factors. How do we continue to expand that side?”

Looking ahead, Brown says prices have improved in dairy and at the same time, lower prices for corn and soybeans are helping producers as well.

Hear more on the Top Producer podcast .

Grain and Livestock Market Recap

Tue, 23 Jul 2024 20:53:48 GMT

Grains

Grain markets were higher in the early morning trade but finished the session mixed. Corn squeaked out gains of about 2 cents, which was a nickel off the high of the day. Soybeans finished mixed with front month futures lower and new crop futures higher, both were about a dime off the highs. Wheat struggled even when corn and beans were at the highs, a bit of a caution flag for the Bull camp.

https://youtu.be/9BUAQxwS48E

Livestock

Livestock futures were uniformly higher with live cattle, feeder cattle, and lean hogs all settling on higher ground. Live cattle futures continue to narrow the gap with the cash market as August futures approach first notice day. Lean hogs marked their 8th day of gains in the last 9 sessions.

https://youtu.be/-rF0klddDwI

Check out the full article: Grain and Livestock Market Recap - Blue Line Futures

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AgDay Markets Now: Rich Nelson Says Funds Sink Soybeans Pricing in Trendline Yields

Wed, 10 Jul 2024 03:54:08 GMT

Soybeans made new lows for the move Tuesday and hit levels not seen for three years.

Rich Nelson with Allendale, Inc. says funds sold hard again pricing in trendline yields based on the idea that forecasted rains for the dry areas of the Eastern Corn Belt will help that crop make up for the deficiencies in the Western Corn Belt.

The implosion in the soybean oil market also weighed on the soybean complex.

However, he thinks November soybeans are getting close to fair market value at around the $10.60 to $10.80 area on the charts.

Beyond supply he says demand is also a problem for soybeans with export pace running behind a year ago for both old crop and new crop and that will likely be reflected in the WASDE Report on Friday.

Corn and wheat staged early rallies on corrective buying but could not hold those gains into the close with the double digit losses in soybeans.

Nelson thinks corn and wheat are closer to finding a low than soybeans because the demand picture is better with exports on both commodities running well ahead of year ago pace.

He expects $4 to be good support for December corn on the charts.

Corn and Wheat Try to Recover Tuesday, With New Near Term Lows in Soybeans

Tue, 09 Jul 2024 14:45:38 GMT

Corn and wheat are higher early seeing a short covering bounce and corrective buying after the bloodbath Monday.

Kent Beadle with Paradigm Futures says the break in corn was overdone as a record crop is not made yet, but economically it puts most farmers in a position of negative profits.

He says soybeans are mostly lower with a correction in soybean oil dragging down the complex.

The forward spreads are working, an indication of old crop demand.

Meanwhile, November new crop soybeans make new lows for the move and three year lows at that.

Weather has been bearish with rains falling in dry areas of the Eastern Corn Belt as a result of Hurricane Beryl.

Plus crop ratings improved by 1% for both corn and soybeans nationally and 3% for spring wheat, which were all above expectations.

Another factor is the USDA report expectations are bearish with early estimates raising old crop and new crop ending stocks on all of the grains.

As a result funds have been massive sellers in the grain markets and have pushed to a record short position in the corn market and are also short in soybeans and wheat.

After some hedge pressure on Monday cattle are recovering with record cash trade last week for the fourth week in a row.

Funds added to their long positions in both live and feeder cattle as of last Tuesday.

Lean hogs continue to see bull spreading which Beadle says may also be some underlying demand.

AgDay Markets Now: Brian Grete Explains the Melt Down in Grain and Livestock Futures

Mon, 08 Jul 2024 23:09:55 GMT

A risk off day and broad based selling in grain and livestock futures to start the week.

Brian Grete, Pro Farmer Editor, says grains saw massive fund and technical selling and new crop corn and soybeans made new lows for the move and November soybeans closed under $11.

Grains saw double digit losses across the complex and corn and soybeans gave back Friday’s gains with favorable rains and chances for more in the Eastern Corn Belt tied to Hurricane Beryl.

Plus, traders are gearing up for USDA reports as higher quarterly stocks and higher corn acreage are reconciled on the balance sheets and could push both old crop and new crop supplies higher on Friday.

Wheat futures fell with corn and soybeans but are still seeing some harvest pressure with better than expected yields in Kansas and increasing crop estimates and lower wheat prices from Russia.

Funds continue to push to a record short position in the grain complex for this time of year.

Grete says, “Traders have no reason to buy at this point,”

Cattle futures also got caught up in the risk off session and saw profit taking despite record cash at $2.00 in the North.

The five area weighted average also came in at $197.09 which was the fourth consecutive week the cash price hit a record.

Grain and Livestock Markets Plunge on Risk Off Selling

Mon, 08 Jul 2024 19:52:56 GMT

A risk off day and broad based selling in grain and livestock futures to start the week.

Brian Grete, Pro Farmer Editor, says grains saw massive fund and technical selling and new crop corn and soybeans made new lows for the move and November soybeans closed under $11.

Grains saw double digit losses across the complex and corn and soybeans gave back Friday’s gains with favorable rains and chances for more in the Eastern Corn Belt tied to Hurricane Beryl.

Plus, traders are gearing up for USDA reports as higher quarterly stocks and higher corn acreage are reconciled on the balance sheets and could push both old crop and new crop supplies higher on Friday.

Wheat futures fell with corn and soybeans but are still seeing some harvest pressure with better than expected yields in Kansas and increasing crop estimates from Russia.

Funds continue to push to a record short position in the grain complex for this time of year. Grete says,

“Traders have no reason to buy at this point,” he says.

Cattle futures failed as well on profit taking as the market got caught up in the commodity wide selling, reversing early stength.

The market also disregarded the record high cash trade as the North saw $200 live sale prices and the Five Area Weighted Average was a record for a fourth week at $197.09.

Feeders also failed to rally in the face of sharply lower corn futures.

Lean hog futures ended mostly lower and have continued to struggle to find a bottom with the lower Lean Hog Index and softer cash.

Cattle Mixed Fading Record Cash: Grains Slide on ECB Rains

Mon, 08 Jul 2024 14:20:33 GMT

Cattle are mixed to higher after some record cash trade in the North again hitting $200.

News that Tyson in Dakota City, Nebraska has stopped slaughter due to a gas leak may be capping the rally and causing some selling.

Brad Kooima of Kooima Kooima Varilek says, "$200 was paid here first by a regional and then by one of the major and they are going today, This is the time of the year when we’d be in the heart of our calf crop and we’ve got showlists in the North that are half or less than what they normally are and the cattle on the showlists aren’t very fat. Sounds like 2014 again right? Selling every thing with a tail head and a brisket,” he says.

He adds that cattle producers have leverage due to the tight supplies. “I’ve contented for a while that the cattle aren’t there,” he adds.

Futures continue to lag the cash trade like they did in 2014 says Kooima, as the market waits for the cash to top or falter but so far that hasn’t happened.

He thinks it is just a matter of time before the live cattle futures retest the record highs set back in September of 2023.

“I think it could be fairly soon,” he projects.

Packers have been trying to compensate through heavier carcass weights but some heat moving into feedlot areas may finally stall that.

Lean hog futures are mixed, still trying to bottom. “You have a chart that is showing some hope,” he says.

Kooima says they think the numbers are starting to tighten.

Grains are under pressure on profit taking after higher weekly closes.

However, the big factor is rains forecasted for the dry areas of the Eastern Corn Belt tied to the hurricane.

There may additionally be some USDA report positioning with higher quarterly stocks likely to be reconciled in the report.

Weather and Supplies Hold Back Corn and Wheat, Soybeans Rally Following Bean Oil

Wed, 03 Jul 2024 19:14:16 GMT

Grains closed mixed Wednesday, with livestock mostly higher.

Soybeans rallied for a third day on light short covering heading into the holiday and corrective buying as the market is oversold.

Vince Boddicker, Farmers Trading Company, says soybeans also saw spillover strength from soybean oil, which has rallied over 600 points in the August contract since bottoming June 25. “Bean oil has been moving higher with Indonesia announcing import tariffs that would hit palm oil, including supplies from China,” he says.

Corn ends lower and has been down eight out of the last nine sessions. Boddicker says corn followed wheat but has also been weighed on by favorable weather for the Central and Eastern Corn Belt.

Plus, he says the market continues to digest the bearish acreage and stocks numbers from last Friday’s USDA Reports.

Wheat is struggling to confirm a low. The market had a nice rally on Monday but failed to see any follow through Tuesday and Wednesday despite U.S. harvest moving past the 50% mark.

Boddicker says the market has priced in a the global production concerns and Russia is also harvesting their crop so that is providing some pressure. He says it will likely take a supply shock like Russia banning wheat to see a rally.

Cattle futures end higher on Wednesday, despite a lack of cash trade. “I would imagine cash trade will wait until after the holiday and break on Friday,” he says.

Boddicker points out that while numbers are tight that is being offset by weight trending well over a year ago.

Lean hog futures see more forward spreading and Boddicker think the market is trying to establish a bottom.

However, the market also struggles to rally with more up front supplies as indicated in the USDA Hogs and Pigs Report.

Boddicker says demand has also stalled out especially for bellies and that has limited the market.

Row Crops Bounce But Grain Market Rallies Will be Tough to Sustain

Tue, 02 Jul 2024 20:26:36 GMT

Corn and soybeans end slightly higher Tuesday on short covering, while wheat gives back some of Monday’s gains.

Tomm Pfitzenmaier, Summit Commodity Brokerage, says, “Yeah, I think it was primarily short covering. Funds hold a pretty substantial short position, so maybe a little positioning ahead of this quasi long weekend where we’re closed Thursday and open Friday. A lot of traders are absent and making a long weekend of it.”

The markets are oversold so the bounce isn’t a big surprise to Pfitzenmaier.

However, funds are an estimated 316,000 contracts short in corn.

“The record is around 341,000 but they may be near record short for this time of year,” he says.

Yet, corn and beans ended off highs as soybeans went up and tested chart resistance and fell away from that area and he says corn gave up early strength with the weakness in wheat and crude oil capping the rally.

Pfitzenmaier says he’s not sure if the grain markets have bottomed or if they are just pausing.

However, he thinks rallies in the grain markets will be tough to sustain with the funds comfortable with their positions and no real weather risk to the crops.

“If we come out of the Fourth of July holiday without any threatening weather and some of these wet areas can dry out a bit to stablize ratings, it’s going to be really hard to maintain higher prices,” he states.

Also capping rallies according to Pfitzenmaier, is the fact that farmers are holding about a third of last year’s corn crop in storage yet and it will need to be marketed before the new crop comes in.

“And everybody knows it. So there’s all kind of basis risk,” he adds.

Weather problems would have to be severe to cut into the huge new crop production coming and the large quarterly stocks and that will also show up in the next WASDE.

Wheat was lower Tuesday giving back some of the gains to start the week. However, he thinks the market is starting to find some chart support with harvest past the 50% mark and after such a huge correction.

Cattle futures rebounded with record cash trade for a third week, reported at $195.81, up 97 cents.

Pfitzenmaier thinks cash will continue to hold up the futures, especially as they are trading at a discount and cattle numbers continue to be tight.

Lean hog futures saw bull spreading with the nearby contracts gaining on the deferreds. He says the market may have bottomed and will likely trade sideways until the cash or cutouts can show some upside leadership.

Corn and Soybeans Bounce, Wheat Fails

Tue, 02 Jul 2024 15:03:31 GMT

Soybeans are seeing continued short covering and corn is following as the markets are oversold.

A 2% drop in crop ratings may be helping the corn but Allison Thompson with the Money Farm is not sure this is bottoming action yet.

The weather has been a focal point but frustrating for producers with the favorable Eastern Corn Belt forecast trumping the flooding in the Northwestern Corn Belt.

Areas of Iowa and Minnesota got additional rain Monday night which will only add to flooding damage in those areas.

Thompson thinks with the funds increasing their short positions last week in the grains they may be taking some profits heading into the holiday.

Corn and soybeans are running into chart resistance, which is around $11.25 to $11.35 on November soybeans and $4.25 to $4.30 on December corn.

Yet, if the market is able to get through those levels she thinks its a good selling opportunity.

Wheat fails to see follow through after the rally Monday but she is more confident that market is trying to forge a low.

“Typically we see the winter wheat market bottom when the harvest gets past 50% and we got confirmation of that yesterday from USDA with harvest pace at 54%,” she says.

Plus, there are still lingering weather issues with the crop globally in the Black Sea.

Spring wheat is starting to also run into chart resistance around $6.50.

Cattle futures rebound on the heels of record cash trade.

Have the Grain Markets Priced in All the Bearish News?

Mon, 01 Jul 2024 20:04:18 GMT

Wheat and soybeans rally Monday, with corn just fractionally lower. Cattle fail.

Ted Seifried, Zaner Ag Hedge, says corn ended well off the retest of the three year lows the market scored on Friday.

He thinks the corn market is over sold but has digested and priced in most of the bearish news tied to weather and the USDA reports and is due for a corrective bounce.

“So you get the feeling, yeah, we’ve gotten past the shock of the USDA reports, the higher acreage, the higher quarterly grain stocks,” he says.

Funds are also the shortest they’ve been in the corn market for this time of year and so Seifried thinks this might be a good time for them to come in and take some profits on their short positions and provide a technical bounce, especially with a holiday coming up and weather still uncertain.

The caveats to corn finding a bottom include the fact that USDA will have to reconcile the higher stocks and acreage in the next WASDE report, which could push up both the old crop and new crop balance sheets.

Plus, there is the large amount of corn farmers have stored on farm and that selling has yet to hit the market.

“On farm storage on corn is up 37% year over year and we have a little over three billion bushels of corn just setting on farm. The scary part is a lot of that is going to have to move before this new crop comes in and if the crop looks good that could start to happen at the end of this month in a big way,” he says.

Soybeans were higher on short covering and corrective buying but did get some spillover support from the higher soybean oil market.

Seifried says the forward spreads or inverse also indicates there are end users, including crushers, who are trying to pry soybeans out of farmers hands.

“There is this continued tightest in the old crop market. Farmers are just not selling. On farm storage is up 44% from last year and farmers have 430 million bushels of beans in storage. Everybody’s waiting for $13 soybeans,” he says.

Wheat was higher on short covering as the market has gotten very oversold and with harvest pressure easing.

“Technically we were due for a bounce in wheat, but the fundamentals haven’t changed to provide a bullish story for wheat,” he says.

Cattle futures see profit taking with the market disappointed in the steady cash trade in the South at $190 live. However, Seifried isn’t calling a top there yet.

Is the Cattle Market Topping and When Will Corn Bottom?

Mon, 01 Jul 2024 14:47:22 GMT

Cattle lower early with hogs and grains mixed.

Scott Varilek of Kooima Kooima Varilek says cattle futures are setting back on disappointing cash in the South which came in at mostly $190, which is steady money. The North traded higher with the dressed volume at $312, up $1 from the previous week’s weighted average and $198 live.

Varilek says cattle futures are also seeing some profit taking and there have been reports of the Dodge City, Kansas plant being offline today due to flooding damage. There have also been slow downs in other areas like Dakota City, Nebraska.

The live cattle futures have been signaling the fed cash cattle market is close to topping with the discount it is holding to recent cash. So is the top close?

Varilek says its too early to call a high in the market yet.

Hogs see bull spreading despite big up front supplies in the USDA Hogs and Pigs Report.

Corn and soybeans are mostly lower, hitting 3 year lows, still digesting the USDA reports which showed higher acreage for corn and higher quarterly stocks for all the grains.

Plus the market is trading favorable weather with rains and cooler temperatures forecasted for the Eastern Corn Belt.

Varilek says the market is disregarding the flooding issues and lost acres in the Western Corn Belt and may not have a real handle on losses until much later in the season.

These 4 Cattle Data Sets Speak for Themselves

Thu, 20 Jul 2023 18:48:40 GMT

By Greg Henderson and Paige Carlson

Meteorologists believe the atmosphere is beginning to trend away from La Niña. That’s good news for cattle producers who began 2023 with high-level drought designations still firmly in place. But even with average or above rainfall, the effects of drought will linger.

“Even if we see normal precipitation across the country this year, the damage to ranchers has already been significant,” says John Nalivka, Sterling Marketing president.

Here are the headwinds ahead for the cattle industry.

The 2022 culling rate reached 13%. Expect a rate of 12% for 2023, according to Rabobank. A culling rate near 10% is needed to stabilize numbers. Lance Zimmerman, senior analyst in animal protein for Rabobank, believes cattle producers are at least two years away from turning toward an expansion mindset.

As of Jan. 1, total beef cow inventory numbers were down 4% year over year. Total beef cows reached the lowest point since 1962. “If we are looking for signs the beef herd is being rebuilt, we need to keep looking,” says Chip Flory, host of “AgriTalk.”

Spring forecasts do not call for major improvement in precipitation through the Central and Southern Plains, though the summer forecast is more favorable. That’s significant because eight Plains states (Colorado, Kansas, Missouri, Nebraska, North Dakota, Oklahoma, South Dakota and Texas) account for 48%, of the U.S. beef cowherd.

The drought’s silver lining is tighter supplies and higher prices. “I’m forecasting 450-lb. to 500-lb. calves to average $205 per cwt this year,” Nalivka says. “That’s 18% higher than 2022. For yearlings weighing 750 lb. to 800 lb., I’m projecting an annual average of $193 per cwt.” If realized, calf prices would equal cow-calf returns of $314 per cow.

Profit Tracker: Modest Profit Holding Pattern

Fri, 07 Jul 2023 19:15:54 GMT

Cattle and hog finishing margins are both positive for the sixth consecutive week.

Cattle feeding margins posted average profits of $47 per head last week, $27 per head more than the previous week. Cash prices for fed cattle improved nearly $2 per cwt. on average to $106 per cwt., according to the Sterling Beef Profit Tracker .

Cattle marketed last week were purchased last spring at prices diminished significantly by the onset of the coronavirus pandemic. Feeder steer prices factored into last week’s Profit Tracker were $130.83 per cwt., which is $7 per cwt. lower than last year. Those lower feeder cattle prices produced an average breakeven of $102.69 for cattle marketed last week. The previous week’s breakeven price was $102.33 per cwt., and a year ago the breakeven was $112.56 per cwt. A year ago cattle feeding profits were $28 averaged $25 per head.

Packer margins improved $32 per head last week, with total profits at $306 per head. Last week’s beef cutout price averaged $209 per cwt., a gain of $4 per cwt.

Feedyard margins reported by the Sterling Profit Tracker, Sterling Marketing, Vale, Ore., are calculated on a cash basis only with no adjustment for risk management practices.

(Note: The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs.)

Sterling Marketing projects 2020 feedyard margins to average $10 profit per head, while annual packer profits are projected at $314 per head. Cash cow-calf margins for 2020 are projected at $57 per calf.

Farrow-to-finish pork producers have seen their margins improve this fall with rising lean carcass prices. Last week saw average closeouts post $12 per head profits, down $5 from the previous week and about $12 per head less than a month ago.

Lean hog carcass prices traded at $64.52 per cwt., $0.91 per cwt. less than the previous week. Lean carcass prices are $16.07 per cwt. higher than the same week a year ago. A year ago pork producers lost an average of $35 per head.

Pork packers saw average profits of $37 per head last week, down about $5 per head from the previous week.

Sterling Marketing projects 2020 annual per head losses for pork producers at $18 per head, while projected packer profits are $59 per head.

(Editor’s note: Sterling Marketing is a private, independent beef and pork consulting firm not associated with any packing company or livestock feeding enterprise.)

Profit Tracker: Beef Packer Margins Decline 33%

Fri, 07 Jul 2023 19:15:50 GMT

Last week saw a significant decline in beef packer margins – 33%. It’s all relative, of course, since beef packers continued to find profits of $332 per head, according to the Sterling Beef Profit Tracker . Still, it was $158 less than the stunning $490 per head margins from the previous week.

On a percentage basis, cattle feeding margins dropped about 90%, from $108 per head two weeks ago to just $10 per head last week. Flirting with breakeven is not where cattle feeders believe this market should be given the fundamentals, but here we are.

Cash cattle prices declined about $3.50 per cwt. last week to an average of $106. Coupled with feed costs that are $15 per head higher and feeder steer prices averaging $30 per head higher, profit margins quickly eroded. Packers saw their margins shrink due to a $20 per cwt. decline in the beef cutout, which averaged $217.90. The cost of finishing a steer last week was calculated at $1,431 which is $49 higher than the previous week, but $121 lower than a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

Cash cattle prices were about $13 per cwt. lower than the same week a year ago. The beef cutout price was about $1 higher than the same week a year ago.

A year ago cattle feeders were earning $68 per head. Feeder cattle represent 69% of the cost of finishing a steer compared with 73% a year ago.

Farrow-to-finish pork producers saw their margins fall $2.50 per head to $3. Lean carcass prices traded at $55.79 per cwt., a decline of $2.77 per cwt. from the previous week, and $6.07 lower than a month ago. A year ago pork producers lost an average of $26 per head. Pork packer margins averaged a profit of $43 per head last week, a $6 per head increase from the previous week.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2020 will average $51 per cow. For feedyards, Nalivka projects an average profit of $0 per head in 2020, and packer margins are projected to average $300 per head.

For farrow-to-finish pork producers, Nalivka projects 2020 will produces losses of $18 per head. Pork packers are projected to earn $48 per head in 2020.

Profit Tracker: Growing Packer/Feeder Margin Spread

Fri, 07 Jul 2023 19:15:50 GMT

The widening spread between feedlot and packer margins underscores the leverage the large packing companies wield. Beef packer margins jumped $83 per head (20%) last week to $387. The gains were mainly due to rapidly increasing wholesale beef prices, little of which translated into higher fed cattle prices.

Average prices for fed steers was $112.28 per cwt. the week ended Jan. 29, which produced average feeding margins of $47 per head. That resulted in a $340 spread between packer and feedlot profits, according to the Sterling Beef Profit Tracker.

The beef cutout average was $229 per cwt, or $11 per cwt. higher than the previous week. The cutout was also $16 per cwt. higher than the same week a year ago, while fed cattle prices were $10 per cwt. lower than a year ago. A year ago packers saw profits of $73 per head, some $314 less than this year.

The total cost for finishing a steer marketed last week was $1,479, about $5 more than the same week a year ago. Last year cattle feeders saw profits of about $185 per head the final week of January. This year feeder cattle represent 65% of the cost of finishing a steer compared with 72% a year ago. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

Farrow-to-finish pork producers saw their margins improve from a $2 per head loss to breakeven last week. Lean carcass prices traded at $58.76 per cwt., $1.63 higher than the previous week, and $2.27 higher than a month ago. A year ago pork producers lost an average of $5 per head. Pork packer margins averaged a profit of $42 per head last week, about $3 per head higher than the previous week.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2021 will average $123 per cow. For feedyards, Nalivka projects an average profit of $43 per head in 2021, and packer margins are projected to average $251 per head.

For farrow-to-finish pork producers, Nalivka projects 2021 will produces losses of $13 per head. Pork packers are projected to earn $37 per head in 2021.

Profit Tracker: Cattle Margins Slip, Hogs In The Black

Fri, 07 Jul 2023 19:15:50 GMT

Cattle traded more than $1 higher but rising feed costs erased some of the modest profits found on average feedyard closeouts last week. Cattle feeding margins declined $23 per head to an average of $25 the week ending Feb. 5, according to the Sterling Beef Profit Tracker .

Total costs for finishing a steer have climbed above year-ago for the first time since January 2020 at $1,519, about $14 higher than last year.

Despite higher bids for cash cattle, beef packers saw their margins increase $3 to $392 per head. The beef cutout price increased $4 per cwt. to $233.71. The result was a packer/feeder margin spread of $367 per head.

Beef packer capacity utilization was estimated at 89.6% with an estimated 653,000 head slaughtered. A year ago packer capacity was estimated at 86.9% with a weekly kill of 631,261 head. Carcass weights this year are running 19 pounds heavier at 846 pounds.

Beef packer leverage in the current market is evident in the fact cash cattle prices are $7 per cwt. lower than the same week a year ago, yet the beef cutout price was $23 per cwt. higher. A year ago packers saw profits of $77 per head while feeding margins were $143 per head. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

Farrow-to-finish pork producers saw their margins climb out of the red for the first time in weeks, with profits of $7.37 per head. Lean carcass prices traded at $64.49 per cwt., an increase of $5.73 per cwt. from the previous week, and $10 per cwt. higher than a month ago. A year ago pork producers lost an average of $15 per head.

Pork packer margins averaged a profit of $30 per head, down $12 per head from the previous week, but $13 per head higher than last year. Pork packer capacity utilization was estimated at 95.7%, compared to 95% a year ago.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2021 will average $123 per cow. For feedyards, Nalivka projects an average profit of $43 per head in 2021, and packer margins are projected to average $251 per head.

For farrow-to-finish pork producers, Nalivka projects 2021 will produces losses of $13 per head. Pork packers are projected to earn $37 per head in 2021.

What Does the Prop 12 Decision Mean for the Hog Markets?

Fri, 12 May 2023 15:37:36 GMT

The U.S. Supreme Court sided with the state of California and Proposition 12 that prohibits the sale of pork in the state not produced according to California’s production standards. In a 5-4 ruling, the court dismissed a lawsuit filed by agriculture interests against the law.

Pork producers have fought Prop 12 from the beginning because they believe it’s a violation of the Commerce Clause and that the ruling will set a dangerous precedent for the livestock industry and negatively impact the hog market.

Prop 12 will force pork producers that want to sell into the California market to comply with their strict production standards, which require more square footage and ban the use of gestation crates. Steve Meyer, Lead Economist with Partners in Production Agriculture looked at how that will lower the productivity in the operations that produce for that market. “And tried to take a look at building costs and a reduction in farrowing rates because of breeding crates and all those kinds of things. And I came up with that it was going to cost anywhere from $8 to $12 a head, okay, to produce the pigs for them.”

And he says California is a significant market for pork as they must import nearly all of their product. Meyer says, “California is about 14% of our consumption and about 10% of our production. So, if you’re going to look at what the market impacts are here you’ve got to look at the production number.” He estimates that could have from a 10% to 12% negative effect on the entire wholesale pork market.

This ruling could also open the door for production restrictions from other states and branch out to other species. Plus, it will drive up the price of pork for consumers in California.

Cattle Market Takes a Break: But It's Too Early to Get Bearish

Tue, 25 Apr 2023 19:32:51 GMT

The cattle market has taken a break from the record highs after lower cash last week and a slightly negative Cattle on Feed Report. However, it may be too early to get bearish.

USDA put the on feed number 4.4% below a year ago, with placements down .6% and marketings down 1.2%. While the on feed number was slightly above estimates, it puts total inventory in feedlots at 11.6 million head. This is the lowest number on feed since 2017 for this time period. It’s also coming off a record for the series in April of 2022 at 12.1 million head. Market analysts say this isn’t unexpected with the drought conditions that continue to persist in the Central and Southern Plains. And those numbers are likely to tighten even more going forward.

Scott Varilek, Kooima Kooima Varilek says, “We’re still going to well below year ago levels. well below, you know some of these historical levels. We know that the numbers are tight and they’re going to be that way for a substantial period of time. Maybe it’s a couple of years and says we’re still looking to see okay is the heifer or the heifers coming into the feed yard yet or not? And, and regardless, we’ve got a smaller cow herd we’ve got tighter numbers so these on feed numbers are going to stay tight.”

He also points out that while the placements number was above estimates, most of the increase came in the South and was tied to the lingering drought and the grazing situation. Texas saw the biggest increase at 105%, with range and pasture conditions at 58% poor to very poor and 52% of the winter wheat crop also receiving that rating. Varilek says, “We’ve heard about for wheat conditions in the south and looking for a home for those cattle. It was time for them to be placed. They had to be moved. We were hearing about different sale barns calling to the northern cattle buyers and saying hey, you better get down here. We’re going to have some big runs here in a short amount. of time. So, most cattle had to be moved pretty quickly and find a home so there’s a there’s a reason for your bigger placements in the south is basically going to be tied to the weather, dry conditions.”

Varilek says the higher placements may also mean a shift in the normal seasonal pattern of when cattle are ready for market with more ready in the late summer verses this fall. He stresses that there is no evidence of heifer retention yet indicated in this Cattle on Feed Report. He doesn’t think we’ll see the rapid expansion we did in 2015 because of higher interest rates, higher input cost and the persisting drought in cattle production areas.

Fed Cattle Prices Set Record, Taking Out 2014 Levels and The Tightest Numbers Are Yet to Come

Mon, 24 Apr 2023 16:47:20 GMT

Fed cash cattle prices hit record levels in mid-April, with the national weighted average steer hitting $180.29, exceeding the high set back in 2014. That was followed by April live cattle futures making all-time highs on the continuation chart. However, market analysts say this cycle is different than the last one in several ways, with some even calling it the bull market of their careers.

Record cattle prices were expected with historically tight numbers after prolonged drought in the heart of cattle country forced liquidation of the nation’s herd. However, it came earlier than many market experts predicted, forced by a tough winter in the northern cattle production areas. Brad Kooima, co-owner of Kooima Kooima Varilek in Sioux Center, Iowa, says, “We were pulled ahead on our yearling crop and because of the severe weather our calves aren’t anywhere near ready that you typically might have in April, and still aren’t by the way. This tightness of supply, I think, is finally trumping the packer who needs inventory. We’re going into the best demand period of the whole year. The weights indicate how current we are.”

This marketing hole may interrupt the normal seasonal pattern for cash prices, which usually peak in the spring and drop off into the summer according to Derrell Peel, livestock markets specialist with Oklahoma State University. “I actually think because of the underlying trend in these markets, as they’ve been going up for several months, that we may not see a lot of slump into the summer. Maybe it kind of plateaus here for a few months? But certainly we will continue to move higher and there are more record prices coming ahead in fed cattle markets.”

Kooima says this bull market is much stronger than in 2014 and he believes it could have a longer tail. “2014 around here is known as the bull market of my career until this one, which I think is going to exceed that one because when we get even more extreme numbers and you’ve got a lot bigger demand than we did in ’14. As long as something doesn’t happen to mess up the demand thing, you know, I’m talking about an international event.”

So just how high could fat cattle prices go since the cattle inventory isn’t even into the tightest numbers in the cycle yet? Kooima says, “If we could take the cash market to the mid-$180s on this run, which I think it looks like we’re going to. I do appreciate your point about the tightest supply is not even here yet. The way I would read the tea leaves here, the supply of cattle the first quarter of next year is much tighter than now making the assumption that there’ll be enough moisture that will have heifer retention. So yeah, it could get pretty crazy.”

The key will be how fast the cattle herd rebounds, which will be indicated by heifer retention. In 2014, the cycle was cut short as producers quickly expanded. Lee Schulz, livestock economist, Iowa State University Extension says, “But really a question I think is, does it look like more historical cattle cycles, where we see periods of declines in the inventory and relatively strong prices hold for several years? Or the last cattle cycle, where we bid away those profits and higher prices rather quickly, as we expanded very dramatically?”

However, expansion will be difficult in areas of the Central and Southern Plains where the drought has yet to break, limiting regrowth of pasture or hay ground. Brad Rippy, USDA Meteorologist, says, “Certainly the numbers we come see coming in from the Central and Southern Great Plains are rivaling some of our worst drought years. If you look at the numbers this week, April 16, pasture conditions coming in from southern plains, we see 58% rated very poor to poor in Oklahoma, closely followed by Texas at 57%. You have to remember that’s a statewide value.”

In fact, in Oklahoma, some drought-stricken counties in the north and west had their driest August to March period on record and drought has deepened so far in April. Peel says, “And so these guys are still faced with some additional cow liquidation. I’ve talked to several producers recently that now recognize that they’re going to have to do some additional culling and liquidation in those areas.”

That will keep feeder supplies tight and prices well supported. While feeder cattle futures have hit contract highs, they haven’t taken out the 2014 levels and neither has the cash market. Peel explains, “Feeder cattle markets are not in record high levels yet, they’re moving higher. We’re at the highest levels for say Oklahoma cash feeder cattle markets were at the highest level since sometime in 2015. Those markets also peaked previously in late 2014. And we will certainly exceed those highs at some point in time. It may be a few months down the road, but we’re going to get there in the coming months.”

The other key to regrowth will be profitability. Cow-calf producers may finally be seeing some black ink, but it’s only been the last couple of weeks many fed cattle operations made any money with the headwind of high feed and replacement costs. Scott Varilek, Co-owner, Kooima Kooima Varilek says, “There was negative closeouts at the $165 levels. I’m kind of thinking these last two weeks, this rally from $177 to $185 for the northern guys, might actually put some green ink on unless you know there’s a few of those horror stories of cost of gains that really got out of line, but there’s not a lot of meat on the bone here.”

Sustaining this bull market will also rely on demand. However, the difference between 2023 verses 2014 is that year demand for beef was poor overall with the average choice cutout prices more than 40-dollars below current levels. Hopefully that will keep the market well supported.

Grains Firmer Ahead of Report, Soybeans Trade SA Weather: Cattle Seeing More Profit Taking, Hogs Following

Wed, 08 Feb 2023 14:56:12 GMT

Grains are firmer ahead of the report. Soybeans and meal are the strongest on SA weather. Cattle seeing more profit taking, while hogs are lower. Michelle Rook has an update.

Cattle Industry Embraces New Cattle Contract Library Pilot Program: Say it Will Improve Market Transparency

Sun, 18 Dec 2022 21:21:36 GMT

USDA has announced the details of the Cattle Contract Library Pilot Program to help cattle producers get better information about the cattle market. The cattle industry advocated for this program as just one of the many tools needed to help provide transparency and improve price discovery in the cattle markets. This comes after cattle producers charged USDA and Congress to help fix what they consider a broken system as evidenced after the Holcomb, Kansas plant fire and during the height of the COVID-19 pandemic.

Under the pilot program, the Agricultural Marketing Service will collect, and report aggregated information on contracts between packers and cattle producers for the purchase of fed cattle. It will include data on different types of contracts and contract terms, plus premiums or discounts, even financing. AMS will also report on the number of head of cattle purchased under these agreements. Groups like the National Cattlemen’s Beef Association and its state affiliates worked closely with USDA in the testing phase and support the program to help add value to their cattle.

Cory Eich, with the South Dakota Cattlemen’s Association says, “I can’t see where it would do anything but help because you don’t really know what’s out there and now when you can see what’s out there. I think its going to go a long way. It should solve a lot of problems and quell a lot of fears and put out a lot of fires that are burning constantly.”

Eich says understanding the types of contracts available and prices received is valuable and yet the program won’t dictate the types of selling arrangements cattle producers can be part of. “We’re always against mandatory restrictions on producers or anybody that’s in the business and this is all about transparency. From what we understand, myself anyway, the hog industry has had this before so they’re not inventing anything new so we shouldn’t have to be afraid of it,” he says.

AMS will protect proprietary business information by collecting contract terms without any personally identifiable information and not entire contracts. NCBA officials hope that will strike a balance between offering cattle producers insight into the markets to make informed business decisions, while protecting confidentiality.

USDA Only Adjusts U.S. Corn Ending Stock in WASDE, Punts on South American Corn and Beans

Fri, 09 Dec 2022 19:11:02 GMT

Grains mixed after WASDE. The only change USDA made to U.S. ending stocks was in corn by lowering exports. They also left South American corn and soybean production unchanged. Brian Splitt of AgMarket.Net has analysis.

Senate Panel to Vote on Cattle Market Bills

Tue, 21 Jun 2022 16:52:46 GMT

The Senate Ag Committee is scheduled to vote on the Cattle Price Discovery and Transparency Act this week. The cattle industry has been working with lawmakers for more than two years on a legislative reform for the cattle market. It was introduced by farm state Senators including Chuck Grassley of Iowa and Deb Fischer of Nebraska, Jon Tester of Montana and Ron Wyden of Oregon. It’s designed to improve competition and ensure more fairness through robust price discovery and transparency. However, farm country is divided over the bill.

Independent cattle producers like Craig Moss of Hull, Iowa, believe the cattle market is broken. He says its controlled by the big four packers. And that was never more evident than during the height of the COVID-19 pandemic. He says, “It really displayed what happens in this part of the world. They’ll keep their contracts flowing and the cash like I said is a residual supply. They’ll use it when they’ll use us when they need us and its difficult to even get stuff done in a timely manner.”

He says the increased competition and transparency in the Cattle Price Discovery and Transparency Act would help level the playing field. The bill creates a cattle contract library and mandates regional negotiated cash minimums packers would have to buy on a weekly basis. “I think the minimums is really to, I think the biggest benefit will to prevent further erosion of you know the cash trade percentage because it’s the last form of price discovery.”

Cattle producer Brad Kooima of Rock Valley, Iowa, worked with Iowa Senator Chuck Grassley on the market fix that is supported by many feeders in the north. It is the southern feedlots that are pushing back on the mandate. “I think the transparency side of it has a lot of traction. You know the next day weights, the formula library, that sort of thing. The whole hangup gets to be when you get to this mandate right? Where I mean you know nobody is going to tell us how many we’ve got to do that sort of mentality.”

And those mandates are the reason Farm Bureau and the National Cattlemen’s Beef Association oppose the bill. Ethan Lane, NCBA Vice President of Government Affairs says, “The majority of cattle producers around the country don’t support mandates. You know these AMAs, the Alternative Marketing Agreements, are tools that the vast majority of cattle producers are using now to make more money on their cattle, they receive premiums on those cattle to be rewarded for investments in genetics and improvements in quality.”

He says even cow calf producers use the AMA’s to provide signals that they are raising the right kind of cattle for the market and the for the consumer. But Kooima says AMAs aren’t for everyone. “I’m not saying there shouldn’t be an AMA there’s plenty of room for both of us. Just make sure that you make some integrity that there’s enough price discovery that you actually have a market.”

Lane also argues that the market provides adequate price discovery without a mandate. “You know we’ve seen a remarkable increase in the use of cash trade over the last two years thanks to voluntary efforts from the industry and we’ve seen those packer margins that were really the source of so much concern drop by as much as 700% from the peak during COVID. So we’ve seen the market take the moves it needs to take in order to correct.”

So, the question is what are the bill’s chances of passage? Kooima says, “Senator Grassley himself still acts confident that its at least going to be good enough to get a chance at a vote. I guess we’ll see what happens from there.” However, Lane says, “There’s very little support in the House for the Fischer Grassley Bill. This is really a Senate side conversation and more specifically it’s a Senate Ag Committee conversation. Support for this bill drops off dramatically once you leave the Senate Agriculture Committee.”

Despite the headwinds, cattle producers that support the legislation say they’re fighting to protect their livelihoods.

Kooima 5:46 My view is that if we don’t do something we’re going to continue to see this further deterioration of the negotiated trade. Along with that the further liquidation of more of the small, medium sized people like my customers and like the way I feed cattle and my family feeds cattle.

NCBA also opposes companion legislation, the Meat and Poultry Special Investigator Act that would create a new USDA office dedicated to enforcing competition rules under the Packers and Stockyards Act. That is also scheduled to be voted on by the Senate Ag Committee this week.

Pork Prices See Slight Strength Tuesday; Is the U.S. Dollar at Play?

Tue, 30 Mar 2021 22:02:00 GMT

Lean hog futures finished slightly higher Tuesday, with the April contract finishing the day up 55 cents at $100.92. With the impressive hog market price run lately, the strengthening U.S. dollar may start to be a factor, but there are also other fundamentals playing into the market.

Here's Why 2021 Could be the Year of Better Cash Cattle Prices

Thu, 10 Dec 2020 16:51:57 GMT

2020 may produce a disappointing end to cash cattle prices. DuWayne Bosse of Bolt Marketing says he’s disappointed in the cattle market lately considering the market hasn’t been able to generate much excitement.

“Packers are doing a decent job kind of suppressing the cash market down,” says Bosse. “Meanwhile, the boxes have climbed up quite nicely. Packers have really nice profit margins. I think they’re trying to keep the boxes in check this week, just a little bit, so they can get more holiday volume out there. The second they get that locked in, I look for boxes to increase in price value, and I think the cash market — and the futures – eventually will have to follow.”

Sue Martin of AG and Investment Services thinks the market is preparing for a little correction in the cash cattle market, but she expects that story to change in the New Year.

“I think the box beef is about to top out here this week, but if you step back, that sets the stage for a very good market in 2021,” she says. “I think the last half of 2021, especially the last quarter, is going to be phenomenal. I think if you look at our prices on October cattle futures, I think the cash market will be way higher than where we are today.”

Bosse also thinks the cattle price story in 2021 is a positive one, especially considering the renewed demand for beef.

“I look for a very good cattle market in 2021,” adds Bosse. “Demand is good. I think we came out of COVID-19 learning how to cook at home, and I think that’s a good thing for cattle long term.”