Cash hog prices continue to go up, but still aren’t enough to make hog producers profitable. There seems to be two prevailing opinions when it comes to supply. The first is there are 2 million hogs backlogged and at harvest rates of 2.6 million per week the backlog will grow by 500,000 to 600,000 more once the usual seasonal increase of market ready hogs hits this fall. Those of this opinion would argue that the decrease in hog weights is due to summer heat and producers feeding for less than optimal weight gains. The second argument is that the backlog is nowhere near 2 million head. The reports of market hogs being euthanized in some states, and smaller processing facilities harvesting an incredible amount of pigs would be two factors in chipping away at the large supply. Both sides make strong arguments to support their opinion. What waits on the other side of this wall of pigs is uncertain. Sow harvest is running above year ago levels. There have been reports of sow units terminating pregnancies and holding off on rebreeding sows. At some point there should be a decrease in supply, it’s a matter of when that will happen.
Dairy breed steers showed the most strength at auction markets this week selling mostly steady to $2.00/cwt higher. The price difference between Holstein steers and their beef breed counterparts is as narrow as seen in some time. Cow prices remain strong. Some Wisconsin beef producers are talking about pregnancy checking cows and weaning early in an attempt to take advantage of recent demand, although pasture conditions in the state have been favorable to leaving pairs out on grass. Last week’s Cattle on Feed report showed cattle on feed at 99.9 percent compared to a year ago which was within trade estimates. Cattle placed into feedlots were 2 percent higher than June 2019 and cattle marketed was 1 percent above a year ago. It appears there will be less “new” cattle ready for market during the fourth quarter of 2020, providing an opportunity for backlogged cattle to work through the system. All cattle and calves in the United States totaled 103 million head – less than 1 percent higher than July 1, 2019 according to last week’s USDA Cattle Inventory report. The number of beef cows that have calved is 1 percent less than a year ago, while dairy cows are 1 percent higher. Both beef and dairy replacement heifers are unchanged compared to last year. Outside of the increase in dairy cow numbers, the largest increase is in heifers in or headed to feedlots (+1 percent) and steers over 500 pounds (+2 percent.)
A weakening US dollar and low agricultural commodity prices typically means more and larger export sales. Last week’s export sales numbers were impressive overall. Corn orders were for 609,400 metric tons and soybean sales came in at 3.6 million metric tons. South Korea and Japan were the largest beef customers spurring export sales to 30,700 metric tons. Pork sales were for 40,000 metric tons with China the largest buyer.
Favorable weather conditions have started talk of a record corn yield. Some parts of the Cornbelt, Iowa and Nebraska specifically, look to be moving into a dry pattern, but corn and soybean development has moved past critical pollination phases. Sixty two percent of corn in Wisconsin was silking according to the most recent Crop Progress and Conditions report. That’s 13 days ahead of last year and three days ahead of the five-year average. Wisconsin corn is rated 82 percent good to excellent, while 84 percent of the state’s soybeans are rated good to excellent. Eighty six percent of second crop alfalfa cutting is completed, which is ahead of last year, and one day behind the average. All hay in Wisconsin is 83 percent good to excellent and pasture conditions are rated 79 percent good to excellent.
Choice Holstein steers sold from $87.00 to $92.00/cwt with exceptional lots bringing $93.00 to $97.50. There was word of some sales above that. The best lots of beef breed steers and heifers were bringing $95.00 to $101.00/cwt. Cows were steady and saw best demand early in the week. A bulk of the cows brought $48.00 to $60.00. Higher dressing cows sold for $60.00 to $70.00/cwt. Healthy dairy bull calves were steady, selling from $55.00 to $170.00/head. Auction and stockyard managers are reporting good demand for feeder cattle. High quality replacement dairy cows are also finding homes. #