Who's Feeding the Beef????
Hello to all our customers and friends,
Wheat harvest has come and gone and it was better than expected with the northern plains drought pulling up our hard, red winter wheat prices. The $.75 per bushel run-up during harvest gave many producers an unexpected opportunity to sell at prices above what they had expected. The corn market seems to be oblivious to the drought conditions in several locations and just moves up and down with no real marketing opportunities for fall. Soybeans however have moved similarly to the wheat market and have seen a run-up of $1.00 per bushel, but at this time seem to be softening again. There’s been a lot of beans planted this year and a lot more double crop beans after wheat was harvested. Traditionally this has been a crap shoot for this area but with some August rain we could be pleasantly surprised. While wheat planted acres were down this past year, I think it might hold at least steady for next year as several producers are planting a few more acres basically for rotational reasons such as weed control.
The scandal that rocked the JBS Company headquartered in Brazil has been very costly to them. At this time they are trying to sell their feedlots located in five states that have a combined one-time capacity of 980,000 head of cattle to generate funds to pay fines and penalties. This may have had some effect on our cattle markets that have been better than expected. Fat cattle prices have been softening but that is normal pricing history for this time of year. Rumors of who might be interested in purchasing the feedlots from JBS are widespread and have many entanglements even to involving chickens from China. As of this time I don’t understand how, for example, December fat cattle are $1.18/pound and the August feeder cattle market now is $1.53. When you feed cattle to finished weights of 1250 to 1500 depending on breed, sex and age you can usually figure to “back them up” $15 to $18 per hundred weight. The spread between the August feeders and the December fats is $35 per hundredweight. Something is probably going to change in the near future. While corn to feed these animals is relatively cheap right now, I don’t think it’s cheap enough to make up that much difference. Exports of beef in both volume and revenue are ahead of last year and pork is even doing better than beef. This has also been a big factor in keeping markets above what was expected.
Until next month, Myron