Cattle feed costs impacting profits in 2021

https://www.feedstuffs.com/markets/cattle-feed-costs-impacting-profits-2021

• Corn prices have been increasing since early August, and there is no doubt this increase has affected feeder cattle values.
• Since mid-2014, corn prices have been fairly stable, only breaking above $4/bu. less than 10 percent of the time in terms of weekly average nearby futures. However, corn prices have recently shot by that $4-per-bushel mark.
• The expected duration of the current corn price rally is reliant on a few factors:
  • China has played a huge role in recent corn price movements as the country significantly increased their imports of U.S. meat products to counteract a reduced hog and meat supply because of African swine fever.
    • However, with China now ramping up hog supplies, which has caused U.S. meat exports to China to decline, it has also led to strong demand for U.S. feed commodities.
  • Other factors contributing to the corn price rally include estimates of the size of this year’s corn crop decreasing and existing stocks of corn being revised lower.
• With that being said, there are some factors that may cause corn prices to fall.
  • Recent projections have Brazil and Argentina producing a corn harvest more than 43 percent the size of the U.S. crop; back in 2015, these two nations only amounted to 28 percent of the U.S. total corn crop.
  • New lockdowns or travel restrictions due to the pandemic could negatively impact gasoline and ethanol demand, pulling corn prices down.
  • Increases to South American corn projections also have the ability to moderate corn prices.
• Regardless of which way corn prices move, now is the time for producers to take a look at their operations and consider how they might weather the storm if feed prices continue to climb.

Feed price inflation will challenge U.S. protein recovery according to a new report from CoBank’s Knowledge Exchange Division

https://www.meatingplace.com/Industry/News/Details/96197

• A new report from CoBank’s Knowledge Exchange division has reported that the U.S. animal protein sector is expected to face a 12 percent rise in feed costs in 2021; the largest annual jump in inflation since 2011.
• Cattle feeders and hog and chicken producers are facing corn futures above $4/bu. and soybean meal futures around $350/ton, prices that haven’t been seen in many years.
• According to Will Sawyer, lead animal protein economist with CoBank, increased feed costs heading into the coming year will offer minimal windows of opportunity for the livestock and poultry sectors to profit in 2021.
• In 2021, hog producers are expected to face the highest level of feed cost inflation at 14 percent, followed by cattle feeders at 13 percent, and chicken producers at 11 percent.
• Even though feed costs are expected to be more of a burden for producers next year, meat and poultry supply growth is expected to slow.
  • The USDA expects 0.8 percent overall growth for U.S. beef, pork and chicken production in 2021, the slowest rate of supply growth since 2014.
    • This data leaves hope that that higher feed costs may be able to be offset by higher prices.

Biden chooses Vilsack to return as agriculture secretary

https://www.feedstuffs.com/news/biden-chooses-vilsack-return-ag-secretary

• As of last Thursday morning, President-elect Joe Biden has appointed Tom Vilsack to serve as his agriculture secretary.
  • Vilsack served as the governor of Iowa from 1999 to 2007.
  • He currently serves as the president and CEO of the U.S. Dairy Export Council.
• Vilsack served as agriculture secretary all eight years of the Obama administration.
  • During that time he was known for being an effective listener and working across traditional divides within the agriculture industry. He also recognized that small and large farmers play an important role in America’s agriculture success.
• Both the American Farm Bureau Federation and National Farmers Union feel he is a great pick for the position.
• Going forward, Vilsack is expected to bring his knowledge of production agriculture to the table and also defend the need to make farmers part of the solution for the changing climate.
• Vilsack will most likely receive confirmation from the Senate but will face opposition from the more progressive wing of his party.
  • He is expected to focus on the progressive’s main concerns; climate change, broadband access, renewable energy and hunger.

Boxed beef prices

www.nationalbeefwire.com

• Choice boxed beef: $213.88 (-0.71)
• Select boxed beef: $195.71 (-2.76)