Livestock Monitor – 7/22/2024
CATTLE ON FEED
Cattle on feed as of July 1st was up marginally (+0.5% or 61,000 head) from a year ago to 11.3 million head. Analysts’ pre-report estimates were expecting a +1.2% increase in cattle on feed inventory levels with a range of estimates of up +0.1% to +2.0%. Cattle marketings in June were nearly 1.8 million head, down -8.7% (171,000 head) from last year. Pre-report estimates had an average estimate of down -8.2% with estimates ranging from down -5.5% to -10.0%. Although marketings posted a large decline, there were two fewer slaughter days during the month of June compared to the previous year.
As expected, placements in June had a wide range of pre-report expectations with analysts’ estimates ranging from down -10.1% to up +2.0% with an average of down -3.0%. Actual June placements were reported down -6.8% (115,000 head) from a year ago to nearly 1.6 million head. Compared to a year ago, Colorado posted an +11.1% (15,000 head) increase over last year while Texas was down
-1.4% (5,000 head) from the previous year. Nebraska was down -2.4% (10,000 head) from last year, and Kansas posted a -22.5% (90,000 head) drop in June.
The July Cattle on Feed report also contained quarterly data on steer and heifers on feed. This gives another piece of information regarding the percentage of heifers on feed and an indication if producers are looking to hold back heifers for herd expansion. The July report showed that the percentage of heifers on feed was 39.6%, an increase from the prior quarter’s 38.6% and similar to a year ago (39.8%). These numbers still signal that producers are currently not actively seeking to rebuild the herd.
CORN AND SOYBEAN MARKET OUTLOOK
Following the USDA National Agricultural Statistics Service (NASS) release of crop planting estimates in late June, corn and soybean prices have trended lower. Both old-crop and new-crop corn futures contracts declined 16 cents from the end of June to July 18. Corn markets trended slightly higher during the first week of July but have since declined, highlighting the influence of favorable weather for crop development and rising optimism for record crop yields. Soybean futures market prices echo the picture in the corn market, even more so, as new-crop soybean prices were 57 cents lower than at the start of the month, as of July 18. Old-crop soybean prices were only down 36 cents over the same period.
The change in price direction after the first week of the month highlights the waning influence of planted acreages with an increasing focus on crop development conditions. Early in the year, crop yield productions were driven by crop yields in recent years. Corn yields over the 2020-2023 period averaged 174.7 bushels per acre on a national basis. Soybean yields averaged 50.7 bushels per acre over the same interval. The USDA’s World Agricultural Supply and Demand Estimates (WASDE) released on July 12 set its corn yield assumption at 181 bushels, unchanged from the prior month, which would be a record. The soybean crop yield is assumed to be 52 bushels per acre, the same as a month earlier.
Articles at https://farmdocdaily.illinois.edu/ by Gregg Ibendahl from Kansas State University analyze the relationship between USDA-National Agricultural Statistics Service (NASS) weekly condition ratings and national crop yields at the end of the year. Based on crop ratings on June 30, the national corn yield is estimated to be 179.7 bushels per acre. The national average soybean crop yield is projected to be 51.9 bushels per acre.
Last spring, LMIC was looking for an average corn yield of 175.7 bushels per acre on a planted acreage of 91.3 million acres (current NASS estimate is 91.5 million acres). This drives a forecast for farm corn prices in the 2024-2025 crop year of $4.15 per bushel. The current WASDE projection for this year’s corn harvest average price is $4.30. The current corn harvest production estimate is about 500 million bushels higher than the projection in the spring. The demand for corn has been stable since last spring, so the additional supply leans towards a bias of corn prices in the next year close to $4, similar to what the December corn futures contract is trading at in the last week.
Prospects for the soybean market in the next crop years are in a similar vein to the corn market. Higher yields than expected last spring with a planted acreage that was in line with projections lead to more soybeans that need to be marketed than had been penciled in. Both LMIC and WASDE are looking for soybean prices to be $1.00-$1.50 lower in the coming crop year than in the 2023-2024 crop year.
PASTURE AND RANGE TRENDS – JULY
USDA-NASS reported that 40% of pastures nationally were in good to excellent condition as of their July 15 Crop Progress report. A year ago, 47% of pastures were rated in good to excellent condition. At the other end of the scale, 29% of pastures were rated poor or very poor this year versus 25% a year ago. A month ago, 24% of pastures were rated poor or very poor and 48% of pastures were rated good or excellent. The Southeastern US has seen a sharp decline in pasture conditions during the last month with the percentage of pastures rated as good or better declining from 66% to 35%. A year ago, pastures in the Southeast went from a rating of 55% good to excellent to 63%.
