Cattle markets are wanting to go higher but packers will try and wait the week out. After a 674,000 kill and 100,000 head of fed cattle selling on the cash market, it signals a higher market. Corn prices are, however, keeping a lid on feeder cattle prices. Feeder cattle with known attributes are bringing premiums, while others are bringing average prices.
Texas cattle feeders started trading Thursday at mostly $150—a new high for that market. Northern feeders are pushing for $155 on their cattle and will more than likely get it. After the last Cattle on Feed report, it appears that we have fewer cattle on feed, lower placements and better marketing numbers. Demand for beef remains strong.
The folks at Hedgersedge.com feel that it’s time for the producer to be in control. “Both margins for packers and retailers are projected to decline, as is consistent with previous cycles for expected inventories and annual beef production changes. Producers will garner an increased share of wholesale and retail prices, as cattle inventories have now declined for four consecutive years. They have dropped from 94.8 million head in 2019 to an estimated 89.5 million head on January 1, 2023. Inventory levels should not be confused with annual beef production totals, which have scored record high levels annually since 2016.”
We’re coming into the holidays and the rib run is on; packers will need lots of high-quality prime rib for the holidays. Right now, it’s clear that quality sells, with the Select cutout trading $30 behind the Choice cutout, which is at $262, up $8 from the prior week. Also, carcass weights were reported at 924 lbs.
Feed prices are high, with corn trading at $6.35 in the Midwest Corn Belt and Texas feeders paying $8.35 for corn. The basis has been tough on corn distribution. The Mississippi River is running at historically low levels, hampering barge traffic. Railroads are still having labor issues with unions, and $5 diesel fuel is tough on truckers—the truck driver shortage isn’t helping, either. There was a story out recently that the U.S. has only a 25-day supply of diesel fuel, because refineries are doing seasonal maintenance. This is the lowest supply since 2008.
This transition to renewable fuel is really hurting the economy. The climate change agenda is costing us big money. The Environmental Protection Agency is handing out millions to state school systems to buy electric school buses. I can’t think of a vehicle that is used less in a day than a school bus. An hour in the morning and an hour in the afternoon. These buses cost between $350,000-400,000 per unit. This is an area where the federal government can spread their influence; they should let the states do it on their own and not bribe them.
We have heard that the Bureau of Land Management is working on new grazing regulations for federal land ranchers. You can bet that it has everything to do with climate change—that’s all the Biden administration can think about. We understand that a rough draft is floating around various cooperating agencies. Kaitlynn Glover, executive director of the Public Lands Council (PLC), told us they are a bit nervous. PLC hasn’t seen the rough draft and doesn’t expect to see any proposals until 2023. This is an agency initiative and must go through the proper rule-making process.
Western grazers have a good story to tell. This administration should be friendly to cattle grazing. New research has shown that cattle grazing is a positive management practice for sage grouse populations. The Natural Resources Conservation Service (NRCS) published a report that flies in the face of the assumed conservation outcomes for sage grouse. NRCS proved that, “If it’s good for the herd, it’s good for the bird.” And remember, this is a government scientific report, so it is the best science available to the agency making policy decisions. The radical conservation groups have been using the sage grouse to try and keep cattle off federal lands for years through the Endangered Species Act. Twenty five years ago, these same groups tried to convince policymakers that prairie dogs were threatened and grazing was at fault. This debate with radical conservation groups and natural resource users must come to an end if this country is to grow, prosper and feed its citizens.
Cattle grazing is the only practical way to manage large landscape tracts of land in the West. The conservation groups have been promoting western lands as if they were a national park. Western lands are a natural resource and need to be used and managed, including timber. You have heard the term “Use it or lose it.” We don’t use the timber, fuel builds up and poof—the resource is gone, burnt up. Log it, graze it or watch it burn. So move over, spotted owl, it’s time to share. Pray for rain and snow. — PETE CROW
