Comments prepared by Jeff Swenson of DATCP.
The coronavirus threw markets into turmoil earlier this week starting with non-ag commodities and investments and eventually pulling ag futures markets with them. The number of new cases of coronavirus continues to decrease in China, but more cases are being reported in other countries, causing worry that the continued spread could bring a global economic slowdown. The number of cases rose sharply in South Korea, Italy and Iran last week. The Center for Disease Control is telling Americans to begin preparing for its spread in the United States. The Trump Administration asked Congress for $1.25 billion on Monday (2/24) for emergency funds to bolster coronavirus response. It’s likely any developing news regarding the virus, good or bad, will impact the markets.
USDA’s National Agricultural Statistics Service (NASS) released a Cattle on Feed Report Friday, February 21. The number of Cattle on Feed came in 2 percent higher than a year ago. Marketings (cattle sold during the month) was 1 percent above January 2019. Placements were 1 percent below a year ago. The number of heifers on feed continues to grow. In January, heifers and heifer calves made up 38 percent of the feedlot population, and that’s 4 percent higher than January 2019.
The number of farms nationally decreased by 5,800 in 2019 according to the USDA. The Agency estimates there are 2.023 million farms in the United States. Looking at historical data, the number of farms has dropped by 3 percent since 2014. Half of the farms in the country sell less than $10,000 a year in ag products, and half of those sell less than $1,000 in goods. Four percent of farms have more than $1 million in sales, and that 4 percent operate a quarter of U.S. farmland. One area that saw growth in 2019 was the range of farms with sales between $100,000 and $500,000 a year, increasing 400 farms to total 224,000.
The number of dairy cows in Wisconsin was down 2,000 head when comparing January 2020 to December 2019. At 1.26 million head, the number was 10,000 head lower than January last year. Milk production in Wisconsin is down 1 percent from last year and milk production per cow was down 5 pounds. Milk production nationally went up 1.2 percent compared to January 2019 and production per cow was up 21 pounds per head. The number of dairy cows in the 24 major states was up 16,000 head from a year ago and 5,000 head above last month.
U.S. Trade Representative Lighthizer is planning to meet with British officials to begin trade talks. Britain will likely be asking for tariff reductions on their products coming in to the United States. U.S. organizations are already concerned it will be an uphill battle for trade officials, as it’s expected Britain will strongly oppose our country’s genetically modified crops and meat processed using antibacterial washes.
Cash fed cattle prices are lower again this week with both beef breed and Holstein steers showing some weakness. As mentioned in last week’s Update, we hope that this downward trend means prices are putting in a seasonal low and prices will go up soon. Coronavirus fears are playing a role, and could cause beef prices to bounce along at lower prices for longer than we would normally expect. Cash hogs were lower last week and it’s an understatement to say we need pork demand domestically and globally to lead us to higher cash prices. Distribution challenges in China continue with containers full of U.S. pork sitting in ports waiting to be unloaded by a labor force that is quarantined or recovering from the coronavirus.
Josh Scramlin talks with Jeff Swenson about this report; to hear their conversation click the play button below:
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