Farmers and agricultural businesses have been dealing with the overarching impacts of COVID-19, and that’s taking a toll on rural America. The Creighton University Rural Mainstreet Index (RMI) for June was released Thursday (June 18.) The outlook improved to a weak level compared to May’s feeble reading. June’s overall index was 37.9, up from May’s 12.5, and April’s record low rating of 12.1. The monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture
and/or energyshowed over 75 percent of bankers reporting an economic downturn in their area. Over a third of bankers expect low commodity prices to be the greatest economic challenge over the next 12 months. More than one-fourth of bankers indicated that rising loan defaults represented the biggest challenge for their banks for the next 12 months. On the producer level, BEEF’s annual State of the Industry survey, showed short-term optimism by farmers and ranchers was the lowest since the index began in 2006. The survey showed long-term optimism lower than 2019, but outpacing the short-term index.
Packer capacity is mentioned in the ag media often, and weekly in this Market Update. Capacity at major packing plants has rebounded faster than expected. There are varying opinions about how many hogs and cattle are backlogged and how long it will take to work through the live supply. We are entering the summer season when fewer hogs typically move to market, and that may help get hogs through the system. On the cattle side, weights have increased, and that means more beef on the market. The weekly harvest numbers only tell one part of the story. When carcass weights get heavier, it can be the equivalent of harvesting thousands of additional head each week. Available fed cattle numbers were expected to decrease in the fourth quarter of 2020. A Cattle on Feed Report comes out later today (June 19.) The average industry estimate for cattle marketed in May is 73.8 percent compared to May 2019. Placements have been running below year ago numbers. This information indicates there are plenty of cattle in feedlots getting heavier, and there is a supply of feeder cattle waiting to be put on feed. The National Oceanic and Atmospheric Administration (NOAA) forecasts July, August, and September to be above normal temperatures. That could slow feedlot gains and could keep weights down. Willingness of
packer employees to continue Saturday harvests will also impact how long it takes to work through the supply of hogs and cattle. In short, there are plenty of variables that will influence supply and demand in the months ahead.
Application numbers by Wisconsin farmers to the state Farm Support Program have been strong. The application period ends on June 29. Feedback from farmers has been that the application process is quick and simple. More information and the application can be found here: https://www.revenue.wi.gov/Pages/TaxPro/2020/FarmSupportProgram.aspx .
During the week ending June 6, the USDA reported 2,452,597 hogs were harvested under federal inspection, compared to 1,981,447 the week ending May 30. The week of May 30 included the Memorial Day holiday, so a better comparison would the week previous to that, which came in at 2,173,162. Sow harvest rebounded from the previous two weeks to 69,290 head. Cattle harvest for the week ending June 6 was 627,701 head and that was up from 527,119 head the week ending May 30 and 519,123 the week ending May 23. Dairy cow harvest was 53,549 compared to 48,120 the week before and 55,853 the week ending May 23.
Beef breed fed cattle were under pressure this week with a bounce higher late in the week. Bids were reported nationally from $100.00 to $102.00/cwt. Wisconsin and other Midwest auction markets saw high yielding beef breed steers with an overnight stand bring up to $105.00. Holstein steers were fully steady to $1.00 higher at $85.00 to $90.00/cwt. Market cows were mostly steady at $46.00 to $54.00/cwt. with better cows in the high $50’s to low $60’s. Dairy breed bull calves are steady this week. Healthy calves brought $50.00 to $180.00/head, with calves over 100 pounds capturing top prices.
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