Beef prices are sky-high and look to remain so for the next several years. That’s going to put a lot of pressure on chicken producers, especially with restaurants putting more and more chicken on the menu. Feed prices should help. Corn futures that averaged $6.94 per bushel in 2022 and $5.64 in 2023 are down to $3.78. Soymeal that averaged $440 per hundred short tons in 2022 & 2023 is $311.

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In Friday’s monthly cattle report, the USDA said feedlot inventories on Aug 1st were 11.09M head, up 0.3% from a year ago. New placements onto feedlots in July were up 5.8% and marketings up 7.7% from a year ago. The big, year-over-year differences are the result of producers being able to hold cattle on pasture longer this year due to favorable grass conditions.

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Highly pathogenic avian influenza (HPAI) has been a bit subdued this summer but will likely pick-up this fall when wild birds start migrating again. In last week’s WASDE, the USDA again cut projected 2024 egg output, which has now declined from +1.0% to zero over the past two months. USDA also raised its 2024 forecast for NY large eggs from $1.98 per dozen (on average) to $2.71.

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Beef prices are sky-high and look to remain so for the next several years. That’s going to put a lot of pressure on chicken producers to step up and fill in that lower-priced protein supply gap. Feed prices should help. Corn futures that averaged $6.94/bushel in 2022 and $5.64 in 2023 are down to $3.76. Soymeal that was $440 per hundred short tons in 2022 & 2023 is $326.

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Last week, the Labor Dept. said that U.S employers added just 114,000 net new jobs in July – and that the unemployment rate rose from 4.1% to 4.3%. New unemployment claims were 249,000 for the last week of July, compared to a 2-year average of 218,587 per week for 2022/2023. Stock markets are shaky.

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The U.S. became a net oil exporter in 2023. We imported 8.5M barrels per day (bpd) of petroleum products last year, but we exported over 10M – of which 4M bpd was crude oil. Earlier this month, the U.S. Energy Information Administration (EIA) projected that U.S. crude oil output will reach a record-high 13.2M bpd in 2024 and jump to 13.8M in 2025.

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In Friday’s monthly cattle report, the USDA said feedlot inventories on July 1st were 11.30M head, up 0.5% from a year ago. New placements onto feedlots in June were down 6.8%, and marketings down 8.7% from a year ago. The report was near expectations and should be neutral to slightly bearish for cattle prices.

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On Friday, the Bureau of Labor Statistics reported that inflation eased a bit in June, with the Consumer Price Index up 3.0% from a year ago. The CPI hit a 40-year high of 9.0% just two years ago in June 2022. The easing inflation rate, combined with a rising unemployment rate, means the Federal Reserve will likely start cutting interest rates soon.

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Last week, the Labor Dept said that U.S. employers added 206,000 net new jobs in June. Despite the higher-than-expected job gains, the unemployment rate still rose from 4.0% to 4.1% as more Americans got off the sidelines and started looking for jobs. That broke a 30-month stretch of unemployment at or below 4%.

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In last week’s quarterly Hogs and Pigs Report, the USDA said the U.S. hog inventory, at 74.49M head, is up 1.3% from a year ago. Producers appear to be trying to reduce herd numbers. Hogs kept for breeding were down 3.2% from last year and farrowing intentions are down 2.5% for Jun-Aug and down 0.6% for Sep-Nov. Pigs per litter are up 1.8% - and that should help offset declines in the breeding herd and farrowings.

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In Friday’s cattle report, the USDA said feedlot inventories on June 1st were 11.58M head, down 0.1% from a year ago. New placements onto feedlots in May were up 4.3%, and marketings up 0.2%. The increase in placements was unexpected and should be bearish for cattle prices. Additionally, steer carcass weights were up 3.8% in May from a year ago.

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It was expected that new refining techniques - which allow renewable diesel to be made from 100% veg oil and be indistinguishable from petroleum-based diesel - would send soy oil prices sharply higher. But soy oil prices have weakened instead, mostly because lower carbon intensity oils (canola, animal fat, used cooking oil) have been in higher demand for biofuel.

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The U.S. employment situation bounced back in May with 272,000 net new jobs - more than half coming from industries that are still staffing up: healthcare, government, and hospitality. As impressive, average pay was up 0.4% from April and is now 4.1% above a year ago. Wage gains continue to exceed inflation gains, which is likely to support consumer spending and GDP growth for the balance of the year.

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In May’s WASDE report, the USDA revised 2024 U.S. broiler production from 1.5% to just 0.9% above a year ago. Feed prices, which bottomed out in February, have bounced back in recent months but are still favorable for producers. However, breeder issues continue to plague the broiler industry. Eggs set and chicks placed through the week ending 5/25/24 are up just 1.0% and 0.6%, respectively, from a year ago.

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In Friday’s cattle report, the USDA said feedlot inventories on May 1st were 11.65M head, down 0.9% from a year ago. New placements onto feedlots in April were down 5.8%, and marketings up 10.1%. The higher demand for finished cattle, combined with the steep drop in placements, should be bullish for cattle prices. On a positive note: The USDA reported just 13% of the U.S. cattle herd is located in drought areas, compared to 37% a year ago.

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Tight beef supplies are a big problem for chain restaurant companies this year. The USDA is projecting beef production declines of 1.4% in 2024 and 5.5% in 2025, and those come on top of a 4.7% decline in 2023. The USDA is forecasting cattle prices to average $188.00/cwt in 2025, up from a projected $183.51 in 2024 and $175.54 in 2023. Are prices high enough yet to encourage herd expansion?

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In its first look at feed prices for the 2024/25 crop year, the USDA (in Friday’s WASDE report) forecast corn prices to average $4.40 per bushel, down from $4.65 in 2023/24, and $6.54 in 2022/23. Soymeal was pegged at $330 per short ton, down from $380 in 2023/24 and $452 in 2022/23. Those numbers should improve profitability for both poultry and hog producers – and hopefully encourage a bit more production.

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After hitting 3-year lows of $3.99 per bushel in February, corn futures have rallied back to $4.60. U.S. corn planting intentions are below year ago. In global markets severe flooding in S. Brazil and crop disease in Argentina are threatening to reduce world supplies – potentially increasing demand for U.S. corn exports. On the plus side, spring weather has been generally favorable.

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Just a month ago it was reported that Highly Pathogenic Avian Influenza (HPAI) had spread from birds to dairy cows. This past Thursday, the FDA said that HPAI in dairy cows is widespread, with 1 in 5 milk samples taken from grocery stores testing positive for HPAI gene fragments. On Friday, the FDA clarified that fragments are not live virus, which is killed off during the pasteurization process, and that milk is safe for consumption.

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In Friday’s cattle report, the USDA said feedlot inventories on Apr 1st were 11.82M head, up 1.5% from a year ago. However, new placements onto feedlots in March were down 12.3%, and marketings down 13.7% from last year. Herd liquidation may be slowing. Last week’s U.S. drought monitor showed some lingering issues in Kansas and Iowa, but mostly improvement over a year ago and expectations of better grazing conditions this spring.

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