Page 12 - MWC 2-3-2022s

Across Ohio cow numbers The Midwest Cattleman · February 3, 2022 · P12
are slightly up from 2020 at
QUESTIONS A PLENTY 302,000 head, up 4,000 cows THREE QUESTIONS ing decisions are the starting
continued from page 3 from a year ago. However, continued from page 3 point for estimating the size
Ohio cattle on feed num- remain bullish on the 2022 of the next crop. In addition
talk about demand first. bers are quite a bit lower, market and think we will see to the typical weather / yield
What we often do not down 20,000 head from one our best spring calf market impact on price, it will be very
know, especially with regards year ago. In 2020, Ohio had since 2016, but unknowns interesting to see if export lev-
to fed cattle, is the balance 170,000 head on feed, com- always exist. So, I wanted to els continue at the brisk pace
between supply and demand pared to 150,000 in 2021. A focus this discussion on three that has been seen recently.
of a given packer on a given similar story can be said with key questions that I think will How much more culling
harvest day. For a plant to calf inventory down 35,000 drive this year’s calf market. will we see of the cowherd?
operate efficiently, it needs to head from one year ago. Keep There is no question that
operate at capacity to cover in mind that these are Janu- How high will fed cattle this beef cow herd is small-
fixed costs associated with ary 1, inventory numbers. prices go? er now than it was one year
daily operations. As I visit with some of our Fed cattle prices typical- ago. The only question is, how
From the supply side of colleagues in neighboring ly make their highs in the much smaller is it? The West
things, most packers fill a states, similar trends can be spring of the year and move and the Northern Plains were
day’s harvest with a combi- found with reduced brood downward through summer dealing with drought most all
nation of cattle that are for- cow numbers this year in and fall. Last year, slaugh- of last year, while conditions
ward contracted, negotiated Kentucky, as one example. ter cattle prices improved by in the Southern Plains turned
or formula priced, and cattle High demand for beef, both about $17 per cwt from early drier in the fourth quarter.
purchased on the cash mar- domestic and for exports October to early December Dry conditions were definite-
ket. Depending on where, and during the pandemic, led but did pull back a bit as we ly a factor behind the cow
who the packer is, the ratios to higher-than-average cull moved through December. As slaughter levels of 2021, but
between the three purchas- prices throughout 2021. It is I write this on the morning of disappointing calf markets
ing avenues will vary greatly. likely that cow numbers will January 10th, April CME© were also at play. It’s difficult
Without getting too into be lower this coming Janu- Live Cattle futures are on to track cow numbers by re-
the weeds on how cattle are ary 1, and thus the coming the board above $140 and the gion throughout the year, but
scheduled for harvest, one 2022 calf crop will be smaller break to the June contract cows appeared to be moving
can deduce that if the supply yet. Year-to-date (December is relatively small. Expecta- in regions that were not deal-
of contracted or negotiated 2021), beef cow slaughter na- tions of fed cattle prices drove ing with drought. I expect
price cattle is limited, there tionwide has been up 10 per- heavy feeder values last fall another decrease in beef cow
is a need to purchase fed cat- cent according to Rabobank. and the prices levels that are numbers during 2022, and if
tle on the cash or spot mar- Into 2022 actually reached this spring dry conditions persist, that
ket. This increased cow slaugh- will set the tone for much of decrease will get even larger.
When more than one pack- 2022. The first of the year is a good
er at an auction is caught ter total will lead US beef What can we expect from time to consider risk manage-
production to be down an es-
short handed on supply, the timated 2.5 percent in 2022 feed prices? ment strategies. There is no
need to fill shackle spaces in- (Rabobank). Focus in the grain markets way to know with certainty
creases demand for cash cat- So, what will 2022 look like has already turned to likely what feeder cattle price lev-
tle and thus creates higher with regards to cattle prices? 2022 production levels. The els will be this summer and
prices at the sale barn. This Barring any setbacks or the size of the South American fall. But as I write this article,
is what happened the first unknown, many industry ex- crop is being discussed as we August through November
week of December when sev- perts have projected cattle speak, and the next couple feeder cattle futures are all
eral cattle sold at Ohio auc- prices to be higher across the months will be crucial as US trading above $180 per cwt. It
tions brought $150-160 cwt, board in 2022. farmers make planting de- has been some time since the
with market report highs Regionally, the demand for cisions for the current year. market has offered that type
topping out at $169 cwt. There has been a lot of talk of pricing opportunity.
As packers got caught back high quality fed cattle from lately about fertilizer prices,
up with committed cattle, we major packing plants clos- but new crop corn is on the
followed that one week with est to us (the two JBS beef board in the mid-$5’s. Plant-
plants in Pennsylvania and
steady, yet softer prices in
mid-December. Michigan, Cargill in PA, and
the Tyson plant in Joslin, Illi-
Inventory nois) looks to remain strong,
On the national level, cow as does the demand for local-
inventory was down 1% in ly produced beef as the over-
July compared to last year. all regional supply of cattle
Cattle on feed in feedlots decreases.
with at least 1,000 head were Agriculture is always a
reported to be down also 1% numbers game, and given the
in October compared to 2020. numbers we have currently
Historically, cattle invento- available, there is cause for
ry is still rather large, with optimism in the beef cattle
various plants running at re- business for 2022.
duced capacity due to health
and labor implications of the
COVID pandemic.
On a state level, according
to the January 2021, USDA
NASS report Agriculture