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Reviewing Feed Costs, Drought, and Feedlot Inventory

By James Mitchell

As I sat down to write CMN today, I struggled to think of a topic that wasn’t related to feeding costs, drought, or fed cattle supplies. Kenny, Josh, and I have taken turns taking a deep dive into each of these topics. Because of how important each of these issues will continue to be for cattle markets, I thought I would briefly summarize each of them. Throughout, I will reference past CMN articles for readers who want a more detailed explanation of feed costs, drought, and feedlot inventory.

A few weeks ago, Kenny did an excellent job connecting feed costs to feeder cattle markets. Kenny described how feeder cattle markets are driven by the expected future value of fed cattle and the costs of producing those fed cattle. If we think of feed and feeder cattle as inputs for fed cattle production, then an increase in feeding costs will impact feedlot demand for feeder cattle. Corn markets provide a good reference for feed costs. As of this writing, the nearby corn contract is trading at $6.48/bu. This gives a good indication of what it might currently cost to feed cattle. Currently, the December corn futures contract is trading at $5.37/bu. The December harvest contract is important to monitor as it coincides with fall cattle markets when a large share of calves are sold. With 67% of the corn crop planted, conditions this growing season will be important to monitor.

corn prices

Drought conditions do not appear to be improving. Last month, Josh discussed drought concerns and market implications. Nationally, 44 percent of pasture is in poor or very poor condition. The western U.S. and Northern Plains are being impacted especially hard. In the southeast, 9 percent of pasture is in poor or very poor condition. Cattle inventories peaked in 2019, and persistent drought could accelerate herd liquidation. This would suggest elevated cow slaughter and perhaps selling feeder cattle earlier than anticipated. In general, cull cow markets are a more regional market, and it is unlikely that cow markets in the southeast would be impacted by culling decisions in the western U.S. However, if drought conditions do not improve, we could see impacts in southeast feeder cattle markets.

range and pasture conditions

The feedlot inventory situation largely reflects COVID-19 dynamics from last year. Following the April-June disruptions, June-September 2020 feedlot placements averaged 10.7 percent above the 2015-2019 average. These high placements have resulted in April feedlot inventories that are 5.3 percent above year-ago levels. We still have a lot of cattle to move through the system. In fact, April 2021 was the second largest feedlot inventory in the data that goes back to 1996. This month’s Cattle on Feed report will provide an important update on the feedlot situation. Look for Kenny’s analysis of the May COF report next week in CMN.

Large fed cattle supplies have impacted cattle slaughter. This year cattle slaughter has been averaging 9.8 percent higher than the 2015-2019 historical average. Saturday slaughter has played an important role in raising weekly slaughter totals. As Josh described in last week’s article, Saturday slaughter accounts for 59 percent of the weekly increase over the 2015-2019 average. On the demand side, strong boxed beef cutout values support increased processing. Ultimately, it will take time to move these large supplies through the system. Tightening of fed cattle supplies will support fed cattle prices (all else constant).

Feed costs, drought, and fed cattle supplies all present challenges for cattle markets in 2021. However, it is important to remember that it takes supply and demand to determine price. The export situation has improved from last year, which is a positive for beef demand. Domestic beef demand remains strong as an important time of year for beef approaches. Grilling season!

Source : osu.edu

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Guardians of Swine Health - Unveiling the PRRS/PEDV Enigma with Dr. Gisele from Lanxess

Video: Guardians of Swine Health - Unveiling the PRRS/PEDV Enigma with Dr. Gisele from Lanxess

Welcome to a riveting episode of "Guardians of Swine Health," where we embark on a journey through the intricate tapestry of swine health. Joining us today is the esteemed Dr. Gisele from Lanxess, a beacon in the field of biosecurity. Together, we delve into the enigma of PRRS and PEDV, unraveling the complexities that challenge swine herds worldwide. Exploring the Viral Enigma: Dr. Gisele takes center stage, guiding us through a captivating PowerPoint presentation. She unravels the mysteries surrounding PRRS and PEDV, shedding light on the pathogens that threaten the respiratory, reproductive, and digestive systems of our beloved swine populations. Focus on Critical Gaps: Our exploration zeroes in on the critical gaps that persist during disinfection and cleaning practices. Dr. Gisele, with her wealth of expertise, navigates us through the nuances of biosecurity, emphasizing the need for a holistic approach in safeguarding swine herds. Cost Savings through Strategic Biosecurity: The presentation takes an insightful turn as Dr. Gisele unveils the economic impact of strategic biosecurity measures. She demonstrates how a robust approach not only protects swine health but also translates into substantial cost savings for farmers. It's a win-win for both the pigs and the pocketbook.

Key Points:

1. Understanding PRRS and PEDV:

o Dr. Gisele provides a comprehensive overview of the PRRS and PEDV pathogens, ensuring a deep understanding of the threats faced by swine herds.

2. Navigating Biosecurity Gaps:

o The discussion explores the critical gaps in current disinfection and cleaning practices, offering insights on how to fortify these weak points.

3. Cost-Effective Strategies:

o Dr. Gisele unveils actionable strategies that not only enhance swine health but also contribute to significant cost savings for farmers.

Conclusion: As Dr. Gisele concludes her presentation, we're left with a profound appreciation for the intricate dance between science and practicality in swine health. This episode serves as a beacon for farmers, veterinarians, and enthusiasts alike, guiding them in the relentless pursuit of safeguarding our swine herds against the enigmatic threats of PRRS and PEDV.