In the Cattle Markets
Crop report helps out livestock.
USDA released its crop report Aug. 10 with some real surprises for the trade. What was bad for the crop side was good for livestock producers.
Starting with corn, the report indicated a crop of 14.2 billion bushels (bu.), tied for the second largest on record (2014), behind only 2015’s 15.1-billion-bu. crop. The estimated average yield was 169.5 bu. per acre. While yields were estimated to be below last year’s in the central and western Corn Belt, yields were higher across the South and Northeast. Record-high yields were estimated in Louisiana, Mississippi, Alabama, South Carolina, Michigan, Pennsylvania and New York. The drought-hit states of North and South Dakota indicated yields 37 bu. and 21 bu. below last year, respectively.
Objective yield estimates in this report included the number of ears per acre in selected fields. About 28,000 ears per acre were estimated. When ear count is combined with estimated production, the implied ear weight was almost 0.35 lb. per ear, which would be the third largest on record, behind only 2004 and 2016. Actual production will hinge on further crop development, but this was a positive report for livestock producers.
On the soybean side, the report indicated a record-large crop of 4.38 billion bu. Estimated yields (49.4 bu. per acre) were above the trend line. As with corn, yields are expected to be greater than last year across the South, with record highs in seven states. Little change was made from previous reports for other crops important to livestock producers, including wheat, oats, barley, sorghum and hay. Less of each of these will be produced this year compared to last year.
If these large crops survive the rest of the growing season, they mean continued low costs of gain for cattle feeders. Low feed costs will be supportive of calf and feeder prices this fall. Calf prices will need the help between falling fed-cattle prices as production increases and more calves on the market from the larger cow herd. Fed prices are slumping now as production increases in the dog days of summer. However, low feed costs will also support pork and poultry production to compete with growing beef supplies. Beef production will top 27 billion lb. in 2018 and will likely be record-large. Combined with growing supplies of pork and poultry will put total meat production at more than 100 billion lb.
Editor’s Note: David Anderson is professor and extension economist for the Department of Agricultural Economics at Texas A&M University and a regular contributor to the Livestock Marketing Information Center (http://lmic.info), for which this article was originally written.