Beef Buzz News
Latest USDA Prospective Plantings Points to Lower Feeder Cattle Prices Ahead
Tue, 05 Apr 2022 11:48:12 CDT
Ron Hays features Katelyn McCullock, Director for the Livestock Market Information Center, on last week's prospective plantings report from the USDA.
McCullock said reduced corn acres reported by the USDA could make a significant difference in feeder cattle prices later this year.
"The feedlot demand for feeder animals is usually driven by feed cost and/or cost of gain and fed cattle price," McCullock said. "To have some disruption in the grain markets usually does affect feeder cattle prices."
Last time soybean acres outpaced corn by three million acres or so, there was a 25% jump in the season average corn price, McCullock added. When you apply that sort of jump today, that would easily be a $7 average.
"I do think corn acres are probably going to bid back some acres, so it might not be as low as 89.5 (million acres) once it gets in the ground, but we revised our season average price to $6.50 for the '22-'23 marketing year," McCullock said. "Normally, you would see an automatic adjustment for feeder cattle when you have that kind of adjustment, although it is a little early, so you might see that adjustment as we go through planting season."
McCullock said currently the futures board is saying they don't think the feeder cattle are out there- particularly in the back half of the year. She added that some of this is because of the high placements we saw in cattle on feed earlier this year and the late part of last year.
"There is this idea out there that possibly we do not have as many feeder animals available and that is helping support that price in a way you would not typically see when you are expecting a big rally in feed costs," McCullock said.
Higher prices ahead for corn in 2022 may yield fewer cattle being pushed toward feedlots later this year.
"Perspective Planting hay number could move quite a bit between now and the end of the summer, but that was down about 1%, and the key to that number was the big changes you saw in other hay producing states," McCullock said.
McCullock said alfalfa acres were expected to see significant declines. Texas is down 11% in hay acres, as we are seeing more drought than we have in the last two years, she added.
"Texas is the number one hay producing state in the country," McCullock said. "For Texas to have that significant of a decline might mean you are going to be paying more for other hay coming into this year.
Similar to Texas, Oklahoma is down 12% on expected harvested acres of hay for 2022.
As far as the beef market is concerned, Katelyn commented that the cull cow values have been extremely strong and Beef cow slaughter number is 15% ahead of a year ago.
"Heading into the summer, we have penciled in about a 1.5 % decline in the beef heard in 2022," McCullock said. "If that beef cow slaughter number continues to be as aggressive as it is, we will need to revise that to a much smaller number and that will help prices move forward."
Click on the LISTEN BAR below to hear more from Ron Hays and Katelyn McCullock as she shares her comments on last week's USDA Prospective Plantings Report.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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