June 27, 2016
Many factors affecting beef market prices and volatility
by Derrell S. Peel, Oklahoma State University Extension livestock marketing specialist
A wide variety of internal and external factors are impacting beef and cattle price levels and volatility. Beef production is at a seasonal peak in June with weekly beef production since late May estimated to be nearly 7 percent above year ago levels. Fed cattle prices have dropped and could be near an early seasonal low with feedlots ahead of schedule for summer marketings. Year over year cattle slaughter is up while cattle carcass weights are lower compared to last year, moderating beef production increases somewhat. With Independence Day meat already booked, wholesale beef values have dropped sharply the past ten days to support sales of seasonally large beef supplies. If the three-day July 4 weekend results in strong retail beef movement, beef markets may maintain good momentum through the summer doldrums between July 4 and Labor Day meat sales in August. The latest retail beef prices indicate that beef prices are declining quite slowly; in fact, the all fresh beef price for May was up slightly from April. Overall indications are that beef demand is holding strong in the face of growing beef supplies. Beef movement this spring has been good; indicated in part by the drawdown of large beef cold storage supplies to levels six percent below year earlier levels in the latest report.
The June Cattle on Feed report was very close to expectations and should not provoke much market reaction. The report did confirm strong marketings that suggest that feedlots continue to be very current, as evidenced by declining carcass weights. The report also confirmed continued year over year increases in feedlot placements meaning that feedlot production will be cyclically higher late in the year. The increased placements were all in the heavy weight categories and will be marketed out of feedlots in the fourth quarter of the year. June 1 feedlot inventories were 102 percent of year ago levels. Despite larger feedlot inventories and big feedlot placements, feedlots are in significantly better shape now compared to this time last year and well positioned to handle the challenges of increased feedlot production in the coming months as long as marketings continue at a good pace
Last week’s Brexit vote, with the United Kingdom opting in a close vote to exit the European Union, sent shock waves through global markets and especially for currency exchange markets. The U.S. dollar strengthened, not only against the British pound, but also against most other currencies. The Japanese yen also strengthened sharply as global markets turned to the safe havens of the dollar and the yen. It is likely that a good deal of the uncertainty surrounding the UK departure from the European Union will subside but the timetable is unknown and some impacts will persist for extended periods or permanently. Meantime, U.S. beef and other meat markets are hampered by the additional headwinds of a stronger dollar slowing exports and supporting imports.
Soybeans led a crop price rally over the last month, mostly on crop concerns out of South America. Corn followed suit supported by ample fund buying which all crashed down last week on the reality that the U.S. corn crop is large and in very good shape at this point in the year. Higher average soybean prices are expected in the coming crop year, with U.S. corn prices close to year earlier levels. This week’s crop acreage report could show some shift of corn acres to soybeans although total planted acreage could be bigger with less prevented plant acres expected compared to last year. Corn, soybean and wheat acreage could all shift somewhat with this next report. Major impacts on crop markets and prices are not expected but the uncertainty is there. In general, beef market fundamentals are quite strong but broad-based market volatility will continue to be a challenge for producers.
Monitor mineral intake closely during summer
by Glenn Selk, Oklahoma State University Emeritus Extension animal scientist
Summer often becomes a busy time of year for ranchers (especially during haying season). Don’t forget to check the mineral feeders or blocks to be certain that they are supplying the minerals that your cows need. In some cases, medications may be recommended by your veterinarian to be included in the mineral mix. Cow calf operators will want to monitor mineral consumption closely to be certain that the label-recommended amounts are being consumed by the cattle. In the near future, a “Veterinary Feed Directive” (VFD) will be necessary for most antibiotic feeding in mineral supplements. Contact and work with your local large animal veterinarian about the appropriate VFD for your operation. For more information about the Veterinary Feed Directive refer to this brochure from Oklahoma State University Extension.
Placement of mineral feeders and blocks can aid in achieving optimum mineral intake. Place them in areas where cattle spend a lot of time. Minerals should be placed in loafing areas, near water sources, in shady areas, or any other location that tends be a popular place for the herd to congregate. A rule of thumb is to provide one mineral feeding station for every 30 to 50 cows. Check feeders at least once a week and keep a clean, fresh supply of minerals present at all times. A good feeder should keep minerals dry, be portable and hold up to abuse and corrosion. Open tubs are not adequate in high rainfall areas.
Choosing a mineral mix requires understanding of the animal’s requirements and the minerals available in the forages and feedstuffs available to the animals. Mineral needs tend to be area specific and change with soil type, fertilization rates, rainfall and many other factors. Mineral requirements also will depend on animal age and stage of production. An excellent reference source for Oklahoma beef producers about mineral supplementation can be found in the Oklahoma State University Extension Bulletin E-861 “Vitamin and Mineral Nutrition of Grazing Cattle.”
Cow-Calf Corner is a weekly newsletter by the Oklahoma Cooperative Extension Agency. More information is available at sunup.okstate.edu/category/ccc.