We knew, based on industry estimates, that June 19th’s Cattle on Feed report wouldn’t be bullish, and when the report was released it was even more bearish than expected. Cattle on Feed on June 1 was just under June 2019, and called 100 percent in comparison. This is the second largest June 1 on feed number since the series began in 1996. Placements (cattle moved into feedlots during May) were 99 percent of May 2019. The average industry estimate was 97.5 percent, meaning more cattle were put on feed in May than was estimated. The number of fed cattle marketed in May was just 72 percent of a year ago. The average industry estimates were for 73.8 percent.
A larger number of cattle being fed, with more than expected being placed on feed, and 28 percent less being harvested will be a challenge as we head into the dog days of summer. It’s generally calculated that packing plants are running at 95 percent capacity. Beef output is up compared to last year due to heavier cattle and the resulting heavier carcass weights. Monday’s (June 22) Cold Storage Report showed frozen beef stocks down 13 percent at the end of May when compared to April, but were 2 percent higher than a year ago. Fed cattle prices dipped below $100.00/cwt this week. That’s a long distance from the projections of $125.00 to $130.00/cwt cattle feeders were looking forward to before COVID-19. The question now is whether fed cattle prices can hold at current levels, or will they sink below $90.00 to $95.00/cwt. in August?
Cash hogs are bringing just over half the farmer’s breakeven costs. Similar to beef, hog packers are running close to capacity, but the end to the backlog of hogs is nowhere in sight. Adding insult to the already low price, is the discount farmers get for pigs weighing over 320 pounds. With so many hogs in the pipeline, hogs are on the farm longer. Feed costs continue, hogs get heavier, and then are discounted when they can be marketed. On June 1, there were 73.3 million market hogs in the United States and that is 6 percent higher than last year and 3 percent higher than last quarter.
That would mean there are about 4.4 million more market hogs on feed than this time last year. The 73.3 pigs would represent the next six months of live hog supply. Pork in Cold Storage on May 31 was 24 percent below the end of April, and 26 percent lower than May 31, 2019. Questions regarding strong pork export sales, high domestic wholesale prices, shortages of pork available to retail outlets, and low farm gate prices have reached Washington DC with some lawmakers asking for an investigation.
Wisconsin Secretary of Agriculture Designee Randy Romanski says over 10,000 farmers have completed applications to the Farm Support Program. The application period ends at 11:59 pm Monday, June 29. More information and the application can be found here: https://www.revenue.wi.gov/Pages/TaxPro/2020/FarmSupportProgram.aspx
As of June Monday (June 22,) 17,918 Wisconsin farmers have submitted applications to the Coronavirus Food Assistance Program (CFAP.) Payments to those farmers amount to $286.5 million. That’s the second largest total of all states and is behind only Iowa. FSA has processed $4,006,461,973 in payments to 252,489 producers.
Dairy breed fed steers haven’t seen the price pressure of their beef breed counterparts during the past two weeks. Dairy steers were fully steady this week with instances of being $1.00 higher at auction markets, bringing $85.00 to $91.00/cwt. Cows have been fully steady with high yielding cows $64.00 to $70.00/cwt, and most selling in a range of $45.00 to $60.00/cwt. Beef breed fed cattle were lower – prices at Midwest auctions markets were in a wide range. Some cattle with an overnight stand sold for $100.00 to $103.00. Cash bids across the country were called $95.00 to $97.00/cwt.
Harvest Under Federal Inspection for the week ending June 13 was 644,660 head of cattle compared to 627,701 the week prior. Hog harvest came in at 2,463,679 head compared to 2,452,597 the week ending June 6. Dairy cow harvest was 51,873 head compared to 53,549 the previous week. Dairy breed cows made up 8 percent of the week’s beef harvest.