Encouraging outlook: current market projections bring good news to beef producers
- Commercial Cattle Manager and Livestock Market Analyst for DV Auction, Corbitt Wall, was recently featured during The Business of Beef: Health and Management Summit presented by Boehringer Inglehim on February 11 where he explained that the cattle industry is going into a supply trend that producers will like.
- The USDA revised 2019 cattle numbers down 620,000 head and the calf crop down 468,000 head to start 2020. So now, the cattle industry is working with a total inventory of 93.6 million head, which is significantly smaller than the 94.4 million head that was predicted.
- Due to this reduction, the industry is now facing tighter numbers of market-ready fed cattle moving into the second quarter of 2021.
- Producers should be able to gain some ground in the market and see increased demand for yearling cattle and calves.
- Increased input costs, such as corn trading well over $5/bu. is a situation that producers have not had to deal with in years, stated Wall.
- China’s increased interest in grain has more than overshadowed the lack of demand from ethanol plants, something that Wall describes as “unbelievable.”
- Another contributor to increased input costs is cattle carcass weights reaching 1,700 lbs.
- These increased weights have been good for grading, but the cost of gain is a large contributor to higher input costs, said Wall.
- As of today, the industry is looking at a finished fed cattle market right around $1.14/lb., which can be expected to move into the mid $1.20s as we head into the second quarter.
- Feeder steers weighing 800 lbs. are bringing right around $1.40/lb.; this price is expected to increase going forward.
- Late summer and fall contracts for feeder cattle coming off grass are expected to be in the mid $1.50s. This is a pretty good market, so producers who like this price should consider hedging or protecting this price, explained Wall.
- Currently, a 500 lb. calf is bringing anywhere from $1.60 to $1.70/lb. As the demand grows for grazing cattle, these lighter calves have the potential to touch $2/lb.
- According to Wall, the industry needs to have a healthy, competitive finished fed cattle market, and that has not been the case lately. A large part of the industry is in corporate feedyards, and even smaller feedlots have contracts with the packers.
- Wall said that the Cattle Market Transparency Act is still in the works and this legislation would make it easier for smaller feedlots to get animals into the packer and help formulated feeders because it would increase the base price of cattle.
- Overall, Wall thinks that producers have things to look forward to because the beef industry has competition in the market and the supply of cattle is building demand.
- Due to this reduction, the industry is now facing tighter numbers of market-ready fed cattle moving into the second quarter of 2021.
Hawaii bill takes aim at beef processing consolidation
https://www.meatingplace.com/Industry/News/Details/97435
- According to a report from the Honolulu Civil Beat, the Hawaii Senate Agriculture Committee is considering a bill that would challenge consolidation in the state’s beef processing industry.
- The bill would impose restrictions on Hawaii Meats on Oahu and Hawaii Beef Processors at Pauiilo.
- Frank VanderSloot, an Idaho-based billionaire, leases both processing facilities from the state and controls 70 percent of the state’s beef processing.
- Even though VanderSloot has promised to increase processing capacity at the plants, the Hawaii government is pondering legislation that would limit how much of that capacity could to towards VanderSloot’s brands.
- If the legislation passes, VanderSloot’s share of processing capacity would be capped at 50 percent. Additionally, VanderSloot would be required to submit an annual report to the Department of Agriculture on his efforts to meet state goals on food security, sustainability and safety.
- The remaining capacity would go towards other brands such as Paniolo Cattle Company and Kuahiwi Ranch.
- The bill would impose restrictions on Hawaii Meats on Oahu and Hawaii Beef Processors at Pauiilo.
Olymel outbreak cases continue to rise despite plant shut down
- Despite the Olymel pork plant in Red Deer, Canada being temporarily shut down, coronavirus cases continue to rise.
- On Friday, an Alberta Health Services official reported that 426 cases had been tied to the outbreak, up 83 from the last report on Tuesday.
- Due to pressure from the workers’ union, Olymel decided to shut the plant down last Monday.
Olymel’s message to Alberta pork producers
https://www.newswire.ca/news-releases/olymel-s-message-to-alberta-pork-producers-893647627.html
- Due to Olymel’s pork plant in Red Deer being idled because of coronavirus, the company expects the backlog of hogs to be approximately 80,000-90,000.
- To address this backlog, the company is moving a significant amount of company owned hogs to the U.S. to create enough plant capacity for all independent hog producers affected by the plant’s closure.
- This transition is already occurring and Olymel expects the backlog of market ready hogs to be cleared up within 4-5 weeks after the plant is able to resume activities.
- Olymel has yet to report how long the plant will be shut down.
- To address this backlog, the company is moving a significant amount of company owned hogs to the U.S. to create enough plant capacity for all independent hog producers affected by the plant’s closure.