US Cattle on Feed Up 1 Percent

After a very active trading week for live and feeder cattle, a very quiet cattle on feed report was released on Friday. Reaction to the latest US Department of Agriculture report looks to be limited. Tom Leffler of Leffler Commodities called the December cattle on feed numbers "neutral". As of December first, the US had 10.9 million head of cattle. Leffler said this was 4.6 percent below the five year average. Nebraska was up five percent for their cattle on feed. Kansas and Texas were both up two percent over a year ago. This was the second largest on feed number in the past 20 months, but its also the third smallest December number of the past 19 years.  


Placements for November came in at 1.8 million head. That's four percent below a year ago.   Leffler said this was 7.2 percent lower than the five year average and the second smallest placements of the past 19 years. Kansas was down 12 percent, Texas down five percent and Nebraska was up two percent versus a year ago.


On the weight break down of placements, cattle less than 600 pounds were down 5.2 percent, 600 - 699 pounds was down 13 percent, 700 - 799 pounds was up 2.8 percent and cattle above 800 pounds was up 3.5 percent over a year ago.


November marketings totaled 1.475 million head. That's down 11 percent from 2013 and down 14 percent over the five year average. November marketings were the lowest since the series began in 1996. Kansas marketings were down 17 percent. Texas and Nebraska were both down 10 percent over a year ago.  

Click here to listen to the interview with Leffler as he talks about how much impact this report will have this morning and this holiday shortened week in our cattle markets.  

Fewer Crop Acres in Years Ahead Because of Chronically Low Farmgate Prices- USDA 

Farmers will scale back plantings of the eight major field crops by nearly 5 percent - a total of 12.3 million acres - over the next five years in response to sustained, lower commodity prices, projects the US Agriculture Department. The biggest cutbacks would be in wheat, down 8 percent, and soybeans, down 7 percent, from this year's levels. Corn, the most widely grown crop in the nation, would drop by 1.5 percent.


With lower market prices, farmers will take less-productive land out of crop and shift higher-yielding land into crops with the best potential for profit. The 258.5 million acres of corn, soybeans, wheat, sorghum, barley, oats, rice and upland cotton planted for harvest this year would contract to an eight-crop total of 246.2 million acres in 2019. Nonetheless, hefty corn, wheat and soybean supplies are expected.


USDA released its long-term "baseline" projections this week- ahead of its annual Outlook Forum, to be held on Feb 19 and 20.  The projections reflect conditions in mid-November. USDA will release later its projections of farm income, food inflation and international crop developments. It has forecast a 21 percent drop in net farm income this year because of a large decline in crop revenue, offset somewhat by sky-high cattle, hog, poultry and dairy prices. Click for the projections as found on the USDA website.

Click here for more about the price outlook for commodities.  

USDA Secretary Vilsack Backs Off Second Separate Beef Checkoff- Cattle Groups Are Pleased

USDA won't proceed with its proposal for a new and separate beef checkoff program, said US Agriculture Secretary Tom Vilsack acceding to congressional opposition. Vilsack told DTN in an interview, perhaps tongue in cheek, "That's the first time in three years they (the beef industry) have agreed on anything." He proposed the new checkoff when informal discussions over reforms to the current $1-a-head program bogged down. Lawmakers included language in the $1 trillion government funding bill telling USDA not to create the checkoff.

 One of the targets of the proponents for a new beef checkoff, the National Cattlemen's Beef Association, is pleased with the pull back.  Their President and Victoria, Texas cattleman, Bob McCan, offered the following statement in regards to the announcement by Secretary Vilsack regarding a duplicative beef checkoff under the 1996 Act:


"We greatly appreciate Secretary Vilsack's action, allowing the industry stakeholders to continue working together to enhance the Beef Checkoff Program. All of us involved in this process have been very mindful of the tremendous producer support of the Checkoff, and we will continue to work with the Beef Checkoff Enhancement Working Group and our members to enhance the program while building on that support."  Click here to read more from NCBA and Missouri Cattlemen.   

The Oklahoma Cattlemen's Association is also pleased to see the proposal pulled back.  OCA Executive Vice President Michael Kelsey told us Friday in a radio interview that he reviewed a lot of the comments that were published in the Federal Register on the proposal and he found virtually no one supported the concept. He found that it didn't matter if organizations traditionally supported the checkoff or not. Neither supported the idea of creating a second beef checkoff that would run side by side with the current beef checkoff.   


"Probably the biggest reason for that, in our opinion, is the mass confusion that would cause of two different programs trying to operate simultaneously under different boards, etc.," Kelsey said. "It would just be too confusing."  Click here to  hear more from Michael on the Beef Checkoff issue as well as the subject of fresh or frozen beef being allowed into the US from the northern areas of Argentina.  This is an issue being considered by USDA and Kelsey and OCA are telling USDA NO.

China Commits to Lift Ban on US Dried Distillers Grains

Following the news that China's Vice Premier Wang Yang committed to USDA Secretary Tom Vilsack that the ban on U.S. DDGs containing the MIR 162 trait will be dropped, Tom Buis, CEO of Growth Energy, released the following statement:


"While we are still awaiting the official regulatory announcement from China regarding the approval of this policy, it is welcome news for America's ethanol industry. I would like to personally thank Secretary Vilsack for his leadership and steadfast commitment to ensuring a resolution to this issue. Additionally, the many hardworking professionals of the USDA and the USTR deserve praise for their dedicated work behind the scenes and for their persistence in working with their Chinese colleagues to re-establish market access for U.S. DDGs. Furthermore, I commend both the USDA and USTR for continuing to work with China to improve its GMO approval process in a way that is consistent with sound science.

"China has been the largest market for U.S. DDGs and with the restriction removed, we look forward to once again providing our highly nutritious animal feed to Chinese livestock producers, while also offering American producers the opportunity of an expanded market for the co-products of ethanol production."

 

"This development is an encouraging first step in building a 21st century U.S.-China relationship on agricultural biotechnology and trade," said BIO President and CEO Jim Greenwood. "The biotechnology industry looks forward to working with leaders within the United States and Chinese governments to structure a framework that will ensure agricultural trade can be facilitated." Click here to read more from Biotechnology Industry Organization

Anderson Urges Farmers to Take Advantage of Wheat Market Rally

Christmas came early for Oklahoma wheat farmers. In this past weekend's edition of SUNUP, Oklahoma State University Grain Marketing Specialist Kim Anderson talks about the rally that surprised. The Kansas City wheat price has been "wallering" around $6 dollars for the past several weeks. Recently wheat broke through $6.20 and went higher to $6.60, then came down, only to return higher and now is north of $6.60 as of the close of trade on Friday.


SUNUP host Lyndall Stout asked Anderson about what contributed to the bounce in the market. He said the rally comes from the usual suspects with Russia having potential problems with quality and restricting exports, the European Union has crop quality problems with their harvest, Australia looks to have a slightly smaller harvest than anticipated and Argentina has policy restrictions on their wheat exports. In addition to these factors- this week the Obama Administration announced efforts to normalize trade relations with Cuba which could result in potential wheat exports.


For the past several weeks Anderson has talked about this market going into the holiday season, which can bring some unexpected moves. Anderson believes we will have to wait until the start of the new year when there is more volume and participation in the market. He is attributing the latest price rally to the funds moving their money out of the cattle market and putting that capital into corn and wheat. He said they went from net short in wheat to net long and he thinks that is a big reason for the move. 

Click here to hear Lyndall's conversation with Kim and to read more about Anderson's marketing advice for 2015.  

As we said in our latest edition of the Beef Buzz, You can stick a fork in it-  the 113th Congress is done. Before they left town, the US Senate did pass the tax extenders package. That includes a revision and an amendment to section 179 of the Internal Revenue Service code that allows for a large jump in the amount of available deductions for capital purchases. Normally under section 179, it's twenty five thousand dollars but the revision takes it all the way up to a half million dollars.   National Cattlemen's Beef Association Vice President of Government Affairs Colin Woodall says his organization representing cattle producers across the country is glad they finally got his done. (and note- the President did sign it before jetting off to Hawaii for vacation.)


"They waited just about as long as they could to get the tax extension package passed, but it is in place," Woodall said. "So basically what it does, it takes all of the tax provisions that expired at the end of 2013 and makes them retroactive for all of 2014." 


Producers can benefit from the section 179 expensing. This includes any capital purchases that have been made this year, any investment in new equipment or new buildings. Woodall said producers will also get to use bonus depreciation and the conservation easement tax incentive stayed in place. While Congress just passed this tax extenders package it is only for the 2014 calendar year. Woodall said the package will expire on December 31st and the country will be back in the same position in 2015. 

I interviewed Woodall about the package and what this means for cattle producers.  Click here to listen to the Beef Buzz feature.   

AND- you can go and hear the entire Colin Woodall interview from this past week by clicking here which takes you to the Ag Perspectives Podcast with him.

This N That- OCA Urges Cattle Producers to Comment on Imports from Argentina, Kelly Vierling and the Holiday Ahead

As we mentioned in a story higher up in the Email list- the Oklahoma Cattlemen's Association is watching a proposal to allow beef from Argentina to be imported into the United States. The proposed rule from the Animal Plant Health Inspection Service (APHIS) would allow for the importation of fresh and frozen beef from Argentina. OCA 's Michael Kelsey said they are opposed of the idea because Argentina has not demonstrated the ability to secure their borders and to follow risk mitigation strategies involving specifically Food and Mouth Disease (FMD).


"We just can't afford to have that disease in the United States in terms of our herd health," Kelsey said.


Secondly, Kelsey said they are not confident the APHIS division will kept the nation's herd safe.


"We're just not seeing the documentation that we need to see that inspections have taken place and those types of things on our side," Kelsey said. "Nor have we, in our opinion, followed the proper rule making process in this case." 

We covered two topics in this conversation with Kelsey- the Beef Checkoff and then the APHIS regs on Argentine beef- click here to hear yours truly talk about first the Beef Checkoff but then secondly about the OCA worries over Argentine beef- and a call for cattle producers to offer comments to USDA on this subject.

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