September 2017 Cattle Projections
Form-A-Feed provides monthly cattle feeding projections for various weights and types of cattle. These projections provide a good estimate of the current cattle feeding climate. Contact a Form-A-Feed representative for projections specifically tailored to your operation.
With the first half of 2017 behind us, it’s time for a review of the U.S. beef market compared to the year prior:
- 5-market average steer price: -8.8% Q1, +4.0% Q2
- Peaked first week of May at $144.60
- Beef Production
- Commercial cattle slaughter: +7.3% Q1, +5.8% Q2
- Average cattle dressed weight -1.1% Q1, -2.2% Q2
- Beef production +6.1% Q1, +3.4% Q2
- 12.7 billion pounds of beef produced is largest for the first 6 months of the year since 2012
- Second half 2017 production forecasted at a 2-3% increase
- Exports have been very strong (+3.8%) driven in large by increases to Japan, Hong Kong, Taiwan, and Mexico
- Strong exports combined with limited imports has tempered the increase in per capita disappearance (+3.3% Q1, +0.7% Q2) despite the much larger increase in U.S. production
- Exports expected to remain strong
- Packer margins
- The live to cutout spread (packer margin) has been running strong all year and reached an all-time high in June
- Packers continue to buy aggressively due to this substantial spread and have kept fed cattle supplies very current
- Trade barriers
- Ractopamine continues to be a possible trade barrier, the possibility of a pre-harvest withdrawal has been discussed due to the threat of residue detection
- A case of atypical BSE was just discovered in Alabama this week. The last atypical case (April 2012) had minimal impacts, so hopefully business continues as usual. This serves as a reminder of the ever-present threat of a foreign animal disease outbreak and its possible impact on the U.S. beef market.
Changes month over month on our feeding projections:
- Expected fed beef cattle prices have experienced a moderate improvement (+$2.00-4.00/cwt).
- Mixed changes in feeder calf prices: Holsteins +$5-6/cwt, beef steers +1/cwt, beef heifers -$2-7/cwt.
- Modest increase in cost of gain (+$1.40-1.70/cwt): corn stalks +$5/ton, grass hay +$5/ton, DDGS +$8.50/ton, MDGS +$4/ton, pelleted soy hulls +$10/ton; corn and corn silage unchanged.
- Feeding Holsteins profitably will largely depend on marketing month and efficiency. Those marketed in April 2018 have to opportunity for solid returns (+$100/head) while those marketing in late summer are solidly in the red (-$100/head).
- Profitability has improved significantly for beef steers and heifers (+$25-60/head). Heifers offer more upside due to a lower relative purchase price.
As always, please note the difference in cost of gain ($6-11/cwt) and potential profits ($50-100+/head) between the high and low efficiency projections. Ensuring proper management and animal husbandry can make the world of difference in this regard. Summer heat and the risk of heat stress and impaired performance is here to stay for the next couple months. It is imperative to be proactive and work with your Form-A-Feed representative to devise a management and feeding plan which best mitigates the effects of heat stress.