May 30, 2016
2016 Beef Markets So Far
by Derrell S. Peel, Oklahoma State University Extension Livestock marketing specialist
Memorial Day weekend is an important test of beef sales and beef demand. The success of the first big grilling holiday will be assessed over the coming days. There are indications that beef advertising features increased to support large volumes of beef purchased by retailers for the weekend.
The first seasonal bulge in beef production started in February with a 5.5 percent year over year increase in cattle slaughter in the month, which resulted in a 6.6 percent increase in beef production compared to one year ago. Average cattle carcass weights were 828 pounds. Increased slaughter continued in March with a 6.5 percent increase in cattle slaughter compared to last year. Total March beef production was 8.4 percent higher than one year earlier, with cattle carcass weights averaging 832 pounds. Both feedlots, with discounted live cattle futures ahead, and packers, with good beef margins, had incentives to increase cattle slaughter and beef production during the period.
Choice boxed beef, which posted a mid-March weekly peak of $231.77/cwt. dropped to a weekly average of $205.72/cwt. the first week of May as sharply higher February and March beef supplies worked their way through the beef pipeline. Wholesale beef sales were strong and there are indications that large volumes of beef were forward sold for Memorial Day and beyond. Father’s Day and the upcoming extended Fourth of July weekend will be important for beef demand. Weather from Memorial Day through early July, along with other factors will determine if retail sales are strong enough to confirm continuing good beef demand in the second quarter. For the first quarter of 2016, the retail all fresh beef demand index was equal to last year, a very good sign given the 4 percent jump in per capita beef consumption during the period.
The year over year rate of beef production increase slowed in April as feedlots became more current. Total cattle slaughter increased 1.2 percent year over year in April and total beef production was up 1.8 percent compared to one year earlier. Average cattle carcass weights dropped through April from a mid-March peak of 836 pounds to the current level of 813 pounds. More impressively, steer carcass weights dropped 33 pounds from a mid-March peak of 896 pounds to 863 pounds in the latest May data. Choice boxed beef prices bounced back from the early May lows to $222.07/cwt. the last week of May.
Supply pressure will continue as beef production will likely increase to a seasonal peak in June. This burden is made easier by the fact that strong cattle slaughter so far this year pulled cattle forward and somewhat reduces June slaughter numbers and by the fact that sharply lower carcass weights reduces the year over year beef production increase. The balance of summer beef demand to supply will determine how much seasonal pressure will develop to weigh on wholesale and retail beef prices into the summer.
Beef production will continue to grow in the second half of the year as large feedlot placements from February through April begin showing up in slaughter by late summer. The industry has done a lot to helps itself prepare for that by getting current and pulling down carcass weights but good feedlot marketing discipline will be needed for many months to come as cattle numbers coming into feedlots continue to grow.
Wholesale and retail beef prices will continue to trend down in the face of growing beef production. However, beef markets so far in 2016 are encouraging, suggesting that modest decreases in prices are stimulating beef demand quickly. Going forward, beef trade – both exports and imports – will be very important, along with domestic beef demand, in determining how beef markets fare in a world of growing beef supplies.
Understanding Wet Hay
by Glenn Selk, Oklahoma State University Emeritus Extension animal scientist
Spring rain in Oklahoma has allowed cool season forages to grow in abundance. Harvesting and baling cool season crops such as fescue and wheat hay is a challenge during a wet spring. The timing of the rains can make it difficult for cattlemen that are trying hard to put quality hay in the bale for next winter’s feed supply. All producers that harvest hay occasionally will put up hay that “gets wet” from time to time. Therefore, ranchers and hay farmers need to understand the impact of wet hay in the tightly wound bales.
Extra moisture in hay can cause heat inside the hay bale or hay stack. Heat produced by the bale comes from two sources:
First) biochemical reactions from plants themselves as hay cures. (This heating is minor and rarely causes the hay temperature to exceed 110 degrees F. Very little if any damage occurs if the hay never exceeds 110 F.);
Second) Most heat in hay is caused by the metabolic activity of microorganisms. They exist in all hay and thrive when extra moisture is abundant. When the activity of these microbes increases, hay temperature rises. Hay with a little extra moisture may not exceed 120 degrees F., whereas, wetter hay can quickly exceed 150 degrees.
If the hay rises above 170 degrees, chemical reactions can begin to occur that produce enough heat to quickly raise the temperature above 400 degrees and the wet hay can begin to burn and cause fires. Be wary of the fire danger of wet hay and store it away from buildings and other “good” hay just in case this would occur.
Below is a table with moisture guidelines at time of baling. (Adapted from “Preventing hay fires” Martinson, University of Minnesota)
|Less than 10||Too dry. Hay may be brittle and dusty|
|10 – 15||Recommended moisture range. Minimal risk of fire|
|16 – 20||Could mold. Slight risk of fire hazard|
|21 -25||Will likely mold. Moderate risk of fire hazard|
|Greater than 25||Severe heat damage likely. High risk of fire hazard|
Heat damage causes hay to be less digestible, especially the protein. Heat damaged hay often turns a brownish color and has a caramel odor. Cattle often readily eat this hay, but because of the heat damage, its nutritional value might be quite low. Some ranchers have reported that “the cows ate the hay like there was no tomorrow, but they did very poorly on the hay.”
Testing wet hay may be very important. Determining the internal temperature of large bales or stacks of hay should be done carefully. Make certain that checking the temperature in suspicious hay is done safely. Read the E-Extension Fact Sheet “Preventing Fires in Baled Hay and Straw.”
Testing the protein and energy content of stored wet hay will allow for more appropriate supplementation next winter when that hay is fed. Moldy hay could be a source of mycotoxins that could present several health problems for cattle. Many animal disease diagnostic laboratories can examine feedstuffs for mycotoxins or can recommend laboratories that do such testing.
Cow-Calf Corner is a weekly newsletter by the Oklahoma Cooperative Extension Agency.