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Cattle and Beef Prices Jump Higher From Early May Lows- Derrell Peel Considers Possible Whys

On a weekly basis, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Dr. Glenn Selk. This week, Dr. Peel looks at the uptick in cattle prices in recent days.


"Beef and cattle prices bounced back sharply in the past ten days. Choice boxed beef ended last week at $218.56/cwt., up $14.82cwt. from the recent low on May 6. Wholesale prices were generally higher last week for end meats (round and chuck) as well as middle meats (rib and loin). Five-market fed cattle prices ended the week of May 13 at $132.64/cwt., up $14.61/cwt. from the May 4 low. Auction prices for feeder cattle in Oklahoma were mostly up four to six percent in the past one to two weeks.


"Price improvement has occurred despite continuing year over year increases in beef production. For the week ending May 14, estimated beef production was up 6.1 percent year over year, contributing to a ten week average increase of 5.3 percent compared to the same period last year.   Cattle slaughter was estimated at 601 thousand head last week, up 5.8 percent year over year. Average cattle slaughter has been 4.1 percent higher than last year for the last ten weeks. Carcass weights are still up year over year but have decreased dramatically in recent weeks. Average steer carcass weights were 868 pounds last week, down 26 pounds from early March and just 3 pounds heavier than the same period last year."


Click here to read Dr. Peel's full cattle market analysis.

And- related to Derrell's take on the markets is the Monday afternoon report from Ed Czerwein of the Amarillo USDA Market News office on the strength in the Boxed Beef Trade. The spot Cutout Choice Value jumped over $14 per hundredweight- but the comprehensive Boxed Beef Trade- which includes formula sales- barely moved- up just fourteen cents per hundred.  Czerwein explains the significant difference in his weekly update- which is available here.

Spring Planting Stays Mostly Ahead of Five Year Average- and Wheat Crop in Southern Plains Nears Harvest  

 
The USDA Crop Progress report from Monday afternoon showed 11 and 13 percentage points worth of planting of the corn and soybean crops nationally- as farmers continued to run the planters in and around rain- and in the northern states- after a couple of frosty mornings- very unusual for mid May.

Three fourths of the US Corn Crop is now planted- 36% of the Soybeans are in the ground, 40% of the cotton is planted and one third of the grain sorghum crop is now in.

Click here for the complete Crop Progress Report from Uncle Sam- which also shows the national Pasture and Range conditions improving another two percentage points in the latest week- now at 63% good to excellent. About the only problems this spring with pasture ratings is in New England- states like Vermont and Maine. 

For Oklahoma- the latest Crop Weather Report shows a lot more moisture in the subsoil profile compared to a year ago- last May we had received a lot of rain- but still had forty five percent of the subsoil rated short to very short of moisture- this week- it's 21% short to very short.

The Oklahoma report shows the winter wheat and canola crops continuing in really good shape- 65% and 68% respectively in good to excellent condition- and nearing harvest. 

For the spring planted crops- corn, sorghum, cotton, peanuts and watermelons are behind a year ago in planting progress- while soybeans are slightly ahead of the 2015 pace.

As for our neighbors- click on the name of the state to check their latest Crop Weather or Crop Progress Updates- as of early this morning- Kansas was still not up in cyberspace- but the link should work once they get it in place:

Texas

Kansas

Missouri

When it Comes to Nitrogen, OSU's Brian Arnall Says "Get it in the Ground"

Dr. Brian Arnall, Nutrients for Life Foundation Professorship of Soil & Food Crop Nutrition at OSU, says rethinking nitrogen management could mean a big difference in results for wheat farmers. During the Lahoma Wheat Field Day last week, Arnall discussed the need to drill nitrogen into the ground to avoid loss.


Whether it's urea, UAN or other dry sources, Arnall says getting that nitrogen into the ground will make it more efficient. 


"When urea sits on the surface, it's acted upon by the enzyme urease and the first step in that process is to go to ammonia," he says. "And then if there's any water present, it goes to ammonium, which is a good soild form. If it dries with that ammonium attaching to soil, it can be lost through the air."


Arnall says Oklahoma fall and spring days are the perfect storms for this process.


"The warmer it is, the more humid it is, the more of that urea prill is going to melt in the morning with the dew, dry off and the wind is going to drive off the ammonia," he says. "We can see in spring applications and in late fall applications when it's warm and we have good moisture that those losses can be higher."

I caught up with Dr. Arnall during the Lahoma Wheat Field Day this past Friday. Click here to listen to our full interview - including information about the N-Rich strips.

Agriculture Remains Better Positioned for Future - Commentary by the Noble Foundation's Dan Childs

There are a few agricultural producers still active who remember the 1980s and the difficult times that persisted throughout much of the decade. For those unfamiliar with the stress many producers experienced during that time, a reflection back provides a comparison and may provide insight into what to expect for the next few years.


Although the 1970s provided wheat farmers and cattle producers with some very high prices, they were hardly noticed because inflation spiraled into double digits. In 1973, the gasoline price doubled from 25 cents per gallon to 50 cents per gallon. Lines formed at gas stations with drivers only being able to purchase fuel based on even or odd days corresponding with the last number of their vehicle tag. Farm inputs rapidly increased with tractors and machinery leading the way. The recipe for success was to buy as much as one could today because it would be worth more tomorrow and could be paid back with cheaper dollars. Many producers started leveraging their balance sheets in an effort to control as many assets as possible. For much of the 1970s, the inflation rate was higher than the interest rate. Inflation finally peaked in 1980 at 14.5 percent; interest rates peaked in 1981 at 17.5 percent. When the 1980s began, the average debt-to-asset ratio of all producers was estimated by the United States Department of Agriculture (USDA) to be above 40 percent. Banks had obligated themselves with interest rates on certificates of deposit above 15 percent. As interest rates stayed elevated and the inflation rate declined to 3.5 percent by the late 1980s, the perfect storm resulted in 357 bank failures in 1985 and more than 300,000 farm bankruptcies in 1989. Winding down double digit inflation was not a pretty sight.


Fast forward roughly 35 years to today when enterprise budgets and cash flow projections offer little to nonexistent profits. Is production agriculture destined for a repeat of the 1980s? Although the next few years will not be easy for many producers, especially compared to last few years of record profits enjoyed by all sectors of agriculture at various times, in general producers are in much better financial condition today."

Read more of Childs' reflection on the 1980s compared to today.

Zoetis, Angus Genetics Inc. Announce World's Largest Beef Cattle Genomic Calibration for GE-EPDs

Zoetis and Angus Genetics Inc. (AGI) are pleased to announce completion of the world's largest and most comprehensive genomic calibration for beef cattle and associated integration into genomic-enhanced expected progeny differences (GE-EPDs). With this new calibration, Angus breeders and commercial users of Angus genetics can now make even more dependable and informed decisions using DNA test results incorporated into weekly genetic evaluations. With genotypes for more than 100,000 animals and the updated training encompassing more than 15 maternal, growth, efficiency and carcass traits, this calibration supports every Angus dollar index. 


"The value of GE-EPDs powered by HD/i50K continues to grow," said Kent Andersen, Zoetis Director of Genetic Technical Services, U.S. Cattle-Equine. "With this latest calibration, we're able to offer a broader variation for traits related to maternal efficiency, including heifer pregnancy, calving ease and mature cow weight. This increased level of genetic variation will enable our customers to benefit from more accurate GE-EPDs for young Angus animals, while supporting more dependable selection, mating and marketing decisions."


This calibration supports all recognized genomic testing options for registered Angus seedstock. From Zoetis, this includes HD 50K and i50K. This is the fifth calibration executed by AGI and Zoetis. HD 50K and i50K tests include parentage verification and enable sire assignments for commercial Angus users of GeneMax Focus and GeneMax Advantage, as the markers used in those tests are also included in the HD 50K and i50K genotyping platforms.

Learn more about this latest genomic calibration for GE-EPDs.

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Cattle Marketing Made Easier with Online Decision Support Tools - Glynn Tonsor Explains

Cattle producers are gaining access to some great tools and mobile apps that help take the guesswork out of marketing livestock, and the backgrounder and stocker margin calculator found at BeefBasis.com is no exception.


Glynn Tonsor, associate professor of agricultural economics at K-State, helped develop the resource and says cow-calf operators considering backgrounding and commercial stockers looking to buy calves will especially benefit from the online tool.


"Let's say you're entertaining purchasing a 550 lb calf in the middle of September, and you're thinking about putting 200 lbs. on him between then and the middle of February - that's about a 1.3 lb average daily gain," he says. "The value of gain in that story right now is projected to be $61/cwt, so if your cost of gain is $60 or higher, that's probably not something that looks very favorable."


Tonsor says the key reason for the low value of gain projections is the notable pull down between the September feeder cattle contract and the deferred.


"If instead of making a September purchase, you wait until the middle of November and you buy a 600 lb calf and you only put 100 lb on, that value of gain would be $104," he says. "Simply given, it sounds like two extremes, but the market is actually encouraging people to plan to purchase later, maybe heavier and maybe put lighter weights on."


Because the markets are changing frequently, Tonsor says it's important for producers to check their personal numbers using the Value of Gain calculator on BeefBasis.com.


Listen to Tonsor talk more about the tools available at BeefBasis.com - and the drop in mama cow returns - during the latest Beef Buzz.

This N That- FedCattleExchange.Com Goes Live, More Rain and Feral Hog Control Bill Close to Being Fixed

 
Next Wednesday, a new way to buy and sell finished cattle out of the feedlots will be officially kicked off. FedCattleExchange.Com went live with their website yesterday at midday- and according to Danny Jones, President of Superior Livestock, this website will be the platform to discover a cash market for the segment of the beef industry that is looking for fresh ways to establish the value of cattle ready for the processing plant.

Danny will be our guest the next couple of days on Beef Buzz- and we will be featuring those comments tomorrow and Thursday here in the email- they are lining up the first sale now- and that first sale is set to happen next Wednesday, May 25th at 10:00 AM Central time.

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Rainfall over the last couple of days can be seen in real time from the Oklahoma mesonet by clicking here- Nowata is leading the pack as of this morning with 3.7 inches of rain- and the two day map shows over three inches of rain at multiple sites in the northeastern corner of the state- and two inches of rain or more from Alva eastward in top tier of counties.

More rain and cool temps are in the mix for a few more days- then back to the 80s by next week. Jed Castles with News9 provides us this handy dandy graphic:



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We have only this week and next for the Oklahoma State Legislature to figure out the tremendous budget challenges for our state- and in and around that and other end of session efforts- lawmakers and staffers were working to undelete the word "fish" from SB 1142- a measure that will okay 24/7 hunting of wild hogs by a landowner on his land. 

The Governor did agree to return the bill to be fixed- and here's the complete history of the bill that shows a flurry of activity yesterday to get the word "fish" back in the bill- and it appears it is almost ready to be RESENT to Governor Fallin- likely to be on her desk by tomorrow- there seems to be strong support for the measure- so those supportive of the bill- OCA and Farm Bureau two of the groups I have talked about it with- are hopeful that it will be signed by Governor Fallin.

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