In this file:
· CAB Insider: Feedyard Performance Slips as Costs Rise
· Winter weather (that just won’t stop) matters to cattle markets
CAB Insider: Feedyard Performance Slips as Costs Rise
Paul Dykstra, Certified Angus Beef
via Drovers - March 6, 2019
Heavy winter precipitation has continued at intervals spanning December through early March while brutally cold temperatures add often devastating effects, and sub-zero readings continued this week in many areas.
The full impact has yet to be measured in the feedlot sector but average daily gains and feed conversion ratios on pen closeouts are starting to reveal the trend.
Shawn Walter, respected analyst with AgStrata, says feedlot cost-of-gain (see chart) has developed an upward slope based on early 2019 cost data from their member feedyards.
While the long-term cheapening trend turned a bit higher in 2018, we expect closeouts for the next several months to reflect heavy weather impacts on efficiency and gain.
Feedyards placing cattle in the fall will see cost adjustments in a wide range, varying by location, but likely up to 10¢/lb. of gain over initial projections.
January closeout data gives us a glimpse of the earliest impacts, with steer costs of gain already ratcheting 5¢/lb. higher than a year ago.
Dry-matter feed conversions in AgStrata member feedyards were reduced by a quarter-pound of gain per pound of feed in the January year-on-year comparison as well.
Days on feed (DOF) have partially made up for some of the lost performance, according to Walter, bringing steer finished weights in the Northern Plains to within 1 lb. of a year ago in January to average 1,458 lb.
Nationally, January closeouts indicated an average of 180 DOF compared to 168 a year ago. The rate of decline in carcass weights to the anticipated spring low near May 1st is a key component to prices in both the boxed beef and fed cattle markets.
Bear in mind that as feedyards in the most weather-impacted areas begin to thaw out in the spring, environmental performance challenges do not disappear as muddy pens will reappear.
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Winter weather (that just won’t stop) matters to cattle markets
From a market perspective, this winter has been somewhat of a double-edged sword.
Nevil Speer, BEEF Magazine
Mar 06, 2019
Weather, weather, weather – it’s THE story of the past several months. It doesn’t matter where you go, most everyone’s tired of winter. If you haven’t been fighting cold, snow and wind, you’ve been fighting rain, mud and gray. All of which made February, the shortest month on the calendar, seemingly an especially long month.
The influence of winter has definitely been felt by the feeding sector. Many feedyards have had their fair share of tough feeding conditions. As a result, closeouts have been challenged by reduced performance during the past 30-60 days. That’s best evidenced by the sharp decline in slaughter weights in recent weeks (Figure 1).
From a market perspective, this winter has been somewhat of a double-edged sword. On one hand, it’s added some additional support underneath the market.
Fed prices finished January at $123-124 per cwt. From there, the market stepped up to $125 by mid-month, added another $1 the following week and finished out the last week of business with some $128-9 trade – that put cattle feeders ahead of last year’s mark at this time (Figure 2). But on the other hand, wide-ranging winter conditions have also hampered commerce.
Meanwhile, cattle feeders continue to be challenged by several factors when it comes to marketing leverage. First, beef production and supplies remain ample. That’s largely the result of bigger year-over-year production heading into the holidays.
Weekly beef production peaked at nearly 528 million pounds (on a moving average basis) in 2018 versus 520 million pounds in 2017 (Figure 3). As a result, beef inventories in cold storage at the end of December were running ahead of both last year’s stocks and the five-year average.
Meanwhile, as noted above, winter’s influence also slows down beef purchases from end-users – boxed beef sales during the five weeks between Christmas and the end of January were behind last year’s pace by just over 260 loads. That trend finally reversed during February and helped boost the market in recent weeks.
Second, feedyards are still front-end loaded. December’s 120-day plus on-feed population totaled 3.64 M head – the largest December mark in the series history (Figure 4). Given the pace of marketings thus far, the official January number will also likely rival the historical record.
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