Cattle markets turned stronger last week; it seemed like suddenly traders realized that cattle feeders have managed their inventory better than most thought. Placements into feedlots the first quarter seemed huge, but the weight distribution can mean many things through the feeding finishing stage—especially this year, when more light calves were placed.
Futures markets have finally come around. The nearby corn market has come down to around $7.30/bushel, and feeder cattle contracts gained $4.50 on Wednesday and another $3 on Thursday. Live cattle gained over $2 on Wednesday to close at $133.50 on the June contract. Futures markets have been stubborn the past few weeks with a wide basis, which was perplexing—when cash markets take the lead, all is good.
Negotiated cash markets were slow this past week with only 50,000 head trading hands between $135-140 live. Many market watchers have been expecting this slower trade since cash trade volume was very high last month. Packers have been buying lots of cattle with deferred delivery coming into high beef demand season.
Beef demand looks to be fading a little bit during these inflationary times; the latest Cold Storage report claimed there was 3 percent more product on hand than last year but was still below the five-year average.
Beef grading has come down a bit, as have carcass weights, which indicates more calf-fed cattle on show lists and fewer days on feed. It’s remarkable that corn prices have come down so much, especially when the government is going to continue to allow E15 use through summer, which will put pressure on corn supplies. According to the last Crop Progress report, 94 percent of the corn crop has been planted; the five-year average for this point in time was 87 percent. And 87 percent of the crop has emerged. This must have been positive news to bring the corn markets down.
Slaughter levels are high. Two weeks ago, packers ran 680,000 head through packing plants, then had a short Memorial Day week, but they are expected to pick slaughter levels up again to the 680,000 head level and should stay at this level for most of summer. I’m still not convinced that big backlogs of finished cattle will develop this summer as some market watchers are forecasting.
It appears that our competitors at Beyond Meat are being taken to court for labeling issues. A group of consumers in Illinois is suing because the company overstated their protein claims on the package. The plant-based protein business has fallen on tough times. Beyond Meat has lost roughly 90 percent of its market value and saw declining sales in 2021, and apparently they have lost $100 million in the first quarter of 2022.
This plant-based industry has been claiming the cattle industry is a climate changer. Concerns about animal welfare and greenhouse gas emissions from rearing livestock are driving the climate conscious to limit their animal-derived intake. Producing a gram of beef generates 25 times the volume of greenhouse gas emissions compared to producing a gram of tofu. I don’t know about you, but tofu doesn’t appeal to me.
Remember when the plant-based food industry came out with a report that said we will not have many cows producing protein by 2030? I seriously doubt that will happen.
Mother Nature is still in charge of this industry; we had some decent rain in parts of the
Intermountain West and Midwest. I doubt it will be drought ending, but it all helps, so keep on praying. Hopefully we’ll get enough spring rain to get us through summer. But for you guys in California, I wouldn’t hold your breath for June rains.
We spent the last week of May hosting our Kentucky tour. The weather cooperated very well. This country gets about 60 inches of rain a year, so you can imagine how green it was. Thoroughbred horse pastures were all mowed, while other fields were ready to be hayed. The fescue was about 3 feet tall, and most of these Westerners couldn’t believe how much grass they saw. It rained on us just one afternoon.
The differences between the western United States and the east are stark—1 acre per cow in Kentucky vs. 30-100 acres in the West, depending on the type of country. One thing for sure is the cow herds in the West are much larger. The average producer in Kentucky ran 27 head. It’s a beautiful state, and they have too much rain. So, keep praying for rain in the West. — PETE CROW
