Overseas tensions spills into the agriculture futures markets
Prepared and written by Jeff Swenson, DATCP Livestock and Meat Specialist. The Market Update draws information from several sources, including trade publications, radio broadcasts, agricultural news services, individuals involved in the industry as well as USDA NASS and AMS reports.
Financial markets were pressured early this week by Russia amassing troops near the Ukraine border. This was coupled with anxiousness surrounding the U.S. economy. That volatility spilled into the agriculture futures markets.
While Live Cattle futures were pressured early in the week, Lean Hog futures found support with speculators gambling that beef demand will weaken and benefit retail pork sales.
Agriculture markets were also dealing with new USDA reports and news of poor crop weather regions of South America. There is optimism that weekly harvest numbers have bottomed as the latest COVID-19 variant cases may have already peaked among America’s workforce.
Recent Cattle on Feed report bullish
Released on January 21, 2022, the Cattle on Feed report was bullish, with data outside trade estimate ranges.
The number of cattle on January 1, 2022 was 100.6 percent compared to 2021, nearly one percent higher than expected. The largest surprise was the 6.5 percent increase in cattle moved into feedlots during December compared to 2020. Fed cattle marketed in December was only slightly higher than the previous year.
Calves continue to head directly to feedlots due to lack of wheat pasture. This will increase fed cattle supply the first half of 2022. Conversely, there will be fewer heavy feeders and yearlings available this spring. Heifers made up 38.8 percent of cattle placed in December, indicating a lower than average number being kept for replacement.
The estimated slaughter of 636,000 last week was 18,000 head higher than the previous week and 26,000 head lower than the same week in 2021. The latest USDA Livestock Slaughter report showed record high beef production in December. Beef harvest by number of head was 3.2 percent above 2020 with the average weight of cattle .05 percent lower.
Beef cow harvest for 2021 was nine percent higher than 2020, another sign feeder cattle will be in tighter supply. Dairy cow harvest was one percent higher than 2020.
Hog harvest up
The estimated harvest of 2.44 million hogs last week was 74,000 head higher than the previous week and 278,000 lower than the same week last year. The December USDA Livestock Slaughter report showed 2021 pork production 2.2 percent below 2020 by pounds and 1.9 percent lower when measured by head harvested.
Sows harvested ran six percent below 2020 levels. Pork export sales were strong according to the latest weekly report at 49,100 metric tons (mt). Lead buyers were Mexico at 17,300 mt and China at 16,900 mt. The pork cutout value continues its march higher, posting at $94.60 Wednesday afternoon. Hams have been a strong contributing factor, gaining $10.17 from the day before.
Mexico demand for U.S. raised hams is one reason for the recent strength.
Sheep and lamb harvest up 1.7 percent
Sheep and lamb harvest in 2021 was 1.7 percent higher than the previous year. While lamb and yearling harvest was slightly higher, mature sheep harvest was 24 percent higher year-to-year. Wisconsin USDA inspected meat establishments harvested 4,300 sheep and lambs in December with an average live weight of 148 pounds. The national average for December was 123 pounds.
Wisconsin livestock market roundup
Choice beef breed steers and heifers at Wisconsin and surrounding state auction markets were mostly steady to $1.00 higher. High-yielding, high-grading cattle brought $122.00 to $138.00/cwt with tops in the mid $140.00s/cwt. Choice and Prime Holstein steers were higher at $93.00 to $120.00/cwt. A few packages were selling higher. Silage fed, under finished, or heavy dairy breed steers brought $70.00 to $94.00/cwt. Dairy x beef steers were mostly $96.00 to $138.00/cwt.
Cows were $2.00 to $3.00 higher at $44.00 to $60.00/cwt. Blemish free and beef breed cows in fleshier condition sold into the $70.00s/cwt. Doubtful health and thin cows were bringing $35.00/cwt and down. Dairy breed bull calves were steady to higher bringing $50.00 to $115.00/cwt with heavier, well cared for calves up to $170.00/cwt. Beef and beef cross calves were lower bringing up to $340.00/cwt.
Market lambs were lower selling up to $240.00/cwt.