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.
Read MoreAfter 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.
Read MoreJust 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.
Read MoreIn 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.
Read MoreLast week, the Labor Dept. reported that the Consumer Price Index for March was up 3.5% from a year ago. Driving the index higher: shelter costs, representing 36.2% of the CPI, were up 5.7% - and showing no signs of abating. So now - faced with the combination of higher-than-expected GDP growth, a stronger-than-expected jobs market, and sticky inflation – the Federal Reserve will likely shift gears again.
Read MoreOn Friday, the Labor Dept reported that U.S. employers added 303,000 net new jobs in March – an incredibly high number at this “mature” point in an economic recovery. It was the 4th straight month with employment gains above 250k. By comparison, the U.S. economy managed just 166,000 new jobs per month pre-pandemic in 2019.
Read MoreIn last week’s quarterly Hogs & Pigs Report, the USDA pegged total U.S. inventories on March 1 at 74.6M head, up 0.6% from a year ago. The market hog inventory at 68.6M head was up 0.8% from a year ago. The Dec-Feb pig crop was up 1.9% and pigs-per-litter up 4.6% from a year earlier. These numbers are mildly bearish for current hog prices.
Read MoreIn Friday’s cattle report, the USDA said feedlot inventories on Mar 1st were 11.83M head, up 1.3% from a year ago. New placements onto feedlots in Feb were up 9.7%, as producers recovered from harsh winter conditions that slowed placements in Jan. In March’s WASDE, the USDA projected a 2.4% drop in beef production for 2024, coming on top of a 4.7% decline in 2023.
Read MoreAt last week’s Market Vision Conference, Eric Meyer of HighGround Dairy said that replacement heifers are at a 20-year low and very expensive. As a result, no milk-cow herd growth is expected in 2024 despite lower feed prices. Jan milk production was 1.1% below a year ago and future milk supplies could have difficulty meeting any increase in demand.
Read MoreIn Friday’s WASDE report, the USDA left corn and wheat balance sheets mostly unchanged, while lowering its 2023/24 corn price forecast to $4.75 per bushel, and wheat to $7.15. At Feb’s Agricultural Outlook Forum, the USDA said 2024/25 prices will be even lower: $4.40 for corn and $6.00 per bushel for wheat. The USDA also cut its 2023/24 soy-oil projection to $.49 per pound, down 24.9% from a year ago.
Read MoreIn last week’s cold storage report, the USDA said that total beef supplies in freezers at the end of January were down 11% from a year ago; pork supplies were down 10%; and chicken down 7%. Meat demand remains strong, while producers have yet to ramp up production. In February’s WASDE report, the USDA projected a 2.9% drop in beef production for 2024, coming on top of a 4.7% decline in 2023.
Read MoreIn Friday’s cattle report, the USDA said feedlot inventories on Feb 1st were 12.80M head, up 0.4% from a year ago. New placements onto feedlots in Jan were down 7.4%, but higher than expected, given harsh winter weather conditions that slowed cattle operations and transportation. In Jan’s semi-annual cattle inventory report, the USDA pegged all cattle and calves in the U.S. on Jan 1st at 87.16M head, down 1.9% from a year ago.
Read MoreLast week’s USDA Agricultural Outlook Forum gave a first look at crop potential for the 2024/25 growing season – and it was a good one for feed prices. Corn output next year is projected to be 15.04B bushels, down 2.0% from a record large 15.43B this year (2023/24). However, it will be enough to raise the corn stocks-to-use ratio to 17.2% for 2024/25, up from 14.9% this year.
Read MoreTwo forces should be driving soy-oil prices higher. The first is El Niño, which historically brings drought to Malaysia and Indonesia, cutting palm oil production. Secondly, new refining techniques allow renewable diesel to be made from 100% veg-oil - and be indistinguishable from petroleum-based diesel. Renewable diesel plants under construction will double production from 2022 to 2025.
Read MoreIn last week’s semi-annual cattle inventory report, the USDA pegged all cattle and calves in the U.S. on Jan 1st at 87.16M head, down 1.9% from a year ago. The all-beef inventory was down 2.5%, while dairy cow numbers were 0.4% lower than a year ago. The estimates were close to expectations, but it’s still hard to believe that this is the smallest USDA herd data since they began the survey in 1972…
Read MoreIn Jan’s WASDE, the USDA increased corn yield to 177.3 bushels per acre and raised production to 15.34B bushels, both record highs. Corn futures had averaged a drought-induced $6.49 per bushel for the first 7 months of 2023, until late-season rain helped the crop recover. Prices tumbled to $4.75 (on average) for Q4 2023. Lower corn/feed prices should keep poultry producers in the black for 2024.
Read MoreIn Friday’s cattle report, the USDA said feedlot inventories on Jan 1st were 12.93M head, up 2.1% from a year ago. New placements onto feedlots in Dec were down 4.5%, and Dec marketings were 0.9% below last year. Like last month, larger feedlot inventories, combined with fewer placements and marketings, indicate a back-up in supply and/or a slowdown in demand.
Read MoreThe consensus of 71 economists surveyed by the Wall St Journal is for 1.0% U.S. GDP growth in 2024, down from 2.6% in 2023. They put the probability of recession in 2024 at 39%, with Q2 and Q3 the most likely quarters to see negative growth. The economists project that unemployment will rise from 3.7% in Dec 2023, to 4.1% by mid-year 2024 and 4.3% by year’s end.
Read MoreIn Dec’s quarterly Hogs & Pigs Report, the USDA pegged total U.S. inventories on Dec 1 at 75.0M head, about the same as a year ago and down slightly from the prior quarter. Breeding inventory (6.0M head) was down 3% from both last year and the previous quarter. The market hog inventory at 69.0M head is up 0.3% from a year ago.
Read MoreIn its monthly cattle report, the USDA said feedlot inventories on Dec 1st were 12.01M head, up 2.7% from a year ago. New placements onto feedlots in Nov were down 1.9%, and Nov marketings were down 7.4%. Larger feedlot inventories, combined with fewer placements and marketings, indicate a back-up in supply and/or a slowdown in demand.
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