Cattle markets finally seem to be able to move out from under the specter of the pandemic, said Oklahoma State University Extension Livestock Marketing Specialist, Derrell Peel, in a letter to Extension agents called Cow-Calf Corner.
A series of Black Swan events kept the industry on the defensive for more than two years, but the latest breakout of fed cattle markets clears the way for cattle markets to move forward, Peel said.
Many challenges still face the industry going into 2022, he said. COVID effects bring much uncertainty, and US and global economies will struggle with pandemic ripple effects for months.
Higher input prices will affect cattle operations and test profitability, Peel said. Drought is an ongoing threat and may affect the industry and many producers.
It is not known whether, or how and where, drought will affect the cattle industry in 2022, he said. La Niña conditions have redeveloped, which may result in some relief for some, but southwestern regions that did see some improvement in 2021 could have redeveloping drought.
REASON FOR HOPE
Despite the challenges, many producers may be able to look forward to the coming year, Peel said.
The beef cow herd has been declining since 2019 and declined even faster in 2021, he said. It will decline again in 2022 and likely in 2023.
However, strong domestic beef demand bolstered by even stronger demand and potential in international markets suggests cyclical expansion could resume, Peel said. Producers should consider strategic and tactical plans for industry outcomes.
Winter is a good time to consider animal and forage production and management plans for the coming year, he said. Once calf marketing is complete and herd culling decisions are implemented, a relative down-time is ideal for a bit of review and planning with a series of questions like what are the conditions of pastures and rangeland, and should grazing plans or stocking rates be adjusted?
Were production and reproductive rates and weaning weights as expected? What is the current body condition of the cows? What is the herd health status? Are upcoming herd nutritional needs evaluated and matched with feed and supplement resources?
The industry has waited many months for a bit of relative stability, he said, as he asked if producers were ready to be on offense rather than defensive? There will be adversity, and producers must be prepared for risks and negative outcomes, but they also need to be ready to grab the opportunities that will come.
The cattle industry can look forward to 2022, Peel said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $138.98 to $140.14 per cwt, compared with last week’s range of $131.81 to $135.75. FOB dressed steers and heifers went for $217.12 to $217.39 per cwt, versus $205.64 to $209.84.
The USDA choice cutout Tuesday was down $5.90 per cwt at $271.68, while select was off $1.73 at $260.29. The choice/select spread narrowed to $11.39 from $15.56 with 156 loads of fabricated product and 42 loads of trimmings and grinds sold into the spot market.
The USDA reported Tuesday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.35 to $1.45 a bushel over the Dec futures and for southwest Kansas were unchanged at $0.40 over Dec, which settled at $5.67 a bushel, down $0.14.
The CME Feeder Cattle Index for the seven days ended Monday was $162.46 per cwt up $1.17. This compares with Tuesday’s Jan contract settlement of $164.85 per cwt, down $0.87.