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John Maday, Managing Editor, Drovers CattleNetwork | Updated: December 14, 2012

Cow-calf producers are in the best profit position among beef-cattle segments coming into 2013. Stocker operators also have good profit potential, but cattle feeders and packers will continue to face tight margins, according to Cattle-Fax. Analysts Lance Zimmerman and Todd Kalous presented their latest projections to an international group of beef producers hosted by Novus International during their Global Beef Roundtable this week.
The group included individuals from Australia, Brazil and Mexico, along with Novus representatives and media from the United States.
The analysts say on average, cow-calf producers are earning $150 to $200 per head on their calves this year and good profitability will continue through 2013. Prices for all classes of cattle are likely to continue moving higher, but the rate of increase is slowing as the high price of beef begins to affect demand.
In spite of the 2012 drought, which affected at least 50 percent of the U.S. cow herd, cow slaughter dropped off compared to the 2011 rate. Zimmerman says producers in the Midwest have been highly motivated to keep their cows and are using a variety of alternative feeds to carry them through the winter in hopes of better conditions to come. If the drought continues over a wide area, we could see increased culling during the next year.
Cattle Fax expects the rate of U.S. cow culling to drop off 5 percent this year relative to 2011, and drop another 11 percent during 2013. Heifer slaughter has slowed somewhat, indicating producers in some areas are beginning to hold more heifers for breeding.
Eventually, as conditions improve, producers will begin rebuilding herds. A question though, is just how many more cattle we need, as beef production per cow continues to grow. Assuming that domestic per-capita beef consumption holds steady at around 57 pounds per year, beef exports expand to 20 percent of production and carcass weights level off, Cattle Fax says we will need to add four million more cows to U.S. herds over the next decade. If carcass weights continue to increase at the current trend line of about six pounds per year, we will need to add just two million cows to meet demand by 2022.
This year, supplies of calves and feeder cattle are down by over a million head. For 2013, Cattle-Fax projects a smaller decline of 200,000 head. The group expects our cow numbers to stabilize at around 29 million head over the next two years.
Domestic beef demand this year is down somewhat from 2011, largely due to higher prices, and beef demand for 2013 will depend largely on the overall economy. A 1 percent change in real income – up or down – affects beef demand by an equal percentage the analysts say.
For 2012, Cattle-Fax projects fed-cattle prices to average $122 per hundredweight, 750-pound feeders to average $150, 550-pound calves to average $170 and the beef cutout to average $188. During 2013, they expect all those prices to move […]

DECEMBER 11, 2012

Dry weather from South Dakota to Texas left the Unites States winter wheat conditions at their lowest levels since records of that type were initiated by USDA NASS in 1986. By November 25, more than one-quarter (26%) of the wheat was rated very poor to poor, fueled by abysmal crop ratings in South Dakota (64% very poor to poor), Nebraska (46%), Oklahoma (44%), Texas (40%), Colorado (34%), and Kansas (25%).
In contrast, beneficial precipitation fell across northern California and from the Pacific Northwest to Montana and North Dakota. Still, winter wheat struggled to emerge on the northern Plains due to the seasonal decline in temperatures. By November 25, a significant portion of the wheat had not yet emerged in South Dakota (60% emerged) and Montana (68%).
Toward month’s end, precipitation intensity increased across northern California and the Northwest. However, mild weather accompanied the storminess, limiting high-elevation snowfall. As a result, the end-of-month water content of the Sierra Nevada snow pack stood at just 4 inches, about 85% of normal for November 30.
Most areas from the Mississippi Valley to the East Coast experienced a cool, dry November. In the northern Mid-Atlantic region, dry weather aided recovery efforts from Hurricane Sandy. Farther south, mostly dry conditions promoted Southeastern fieldwork-including winter wheat planting and cotton and soybean harvesting-but caused renewed drought intensification in Alabama and the southern Atlantic States.
Monthly temperatures averaged more than 5 degrees Fahrenheit below normal in portions of the southern Atlantic region, but generally ranged from 5 to 10 degrees Fahrenheit above normal across the central and southern High Plains and adjacent areas of the Intermountain West.

DECEMBER 5, 2012

By Jennifer Stewart, Purdue University

A very dry Indiana November and abnormally warm start to December have sparked some nervous chatter in the agriculture community on the heels of the worst drought in decades, but the Indiana State Climate Office says it isn’t time for farmers to panic.
A cold November brought only 28% of normal rainfall to the state, but a northward shift of the jet stream and storm track are bringing warm, wet weather back to Indiana. With no definitive pattern in effect this year, such as El Niño or La Niña, that weather variability is likely to continue throughout the winter months, said Ken Scheeringa, Indiana associate state climatologist, based at Purdue.
“Our weather is going to continue to flip back and forth between dry and wet, but winter can be known for that. Don’t get too locked into one mode,” Scheeringa said. “Farmers like to look ahead to spring planting, but a lot can happen between now and April. We have four months for soils to fully recharge and our wet, early fall had already started this process.
“The combination of low winter evaporation rates and the harvest of corn and soybeans behind us means soil water demand is lower at this time of year, giving soils a chance to catch up. Even with little to no rain, soils aren’t likely to lose too much moisture.”
The lack of November rain caused parts of northern Indiana to slip back into moderate drought, according to the U.S. Drought Monitor. Sections of both northern and southern Indiana also fell back into an abnormally dry rating – a drought watch category.
That, combined with persistent drought in the western U.S., has Indiana farmers worried that the state could slip back into the same pattern. But Scheeringa said history is on our side.
“Historically, we haven’t had two significant droughts back to back, in part because of our geography directly north of the Gulf of Mexico,” he said. “The Gulf is a major source of our moisture and it’s really hard to shut off that water supply for an extended time. Our research shows the longest Indiana droughts have lasted about 18 months. The state can have frequent minor droughts, but if they happen in the colder months the impacts are less than if they happen during the growing season.”
That isn’t the case in the western part of the country. With no direct path to Gulf moisture, Scheeringa said it’s more difficult for the western states to break a drought pattern. Once western droughts take hold, they can last multiple years, or even a decade, as was the case recently.
“Indiana is in the eastern part of the country where drought years aren’t as connected,” he said.
December weather models continue to predict a wet, warmer-than-normal month around the state, although 70-degree temperatures won’t continue.
“We’ll be transitioning this week into cooler temperatures and rain, which may continue into mid-month,” Scheeringa said.

NOVEMBER 27, 2012
By: University News Release

By Steve Leer, Purdue University
The United States remains the world’s corn export king, although its empire is shrinking, says a Purdue University agricultural economist.
Foreign nations that previously relied on the U.S. for corn are growing more of their own or buying from other producing countries, said Philip Abbott. He predicted the trend will continue even if market conditions improve and U.S. corn production increases.
“The U.S. has historically been a very important part of the international corn market,” Abbott said. “Prior to the 2007-08 food crisis and spike in commodity prices, the U.S. exported well over half the amount of corn that entered international markets. Since then, the high prices have caused the rest of the world to expand their production and become more self-sufficient.
“Even if we get bigger corn crops in the future, it’s likely that the demand in foreign markets will not soon recover to the level that it once reached.”
U.S. Department of Agriculture statistics bear that out. In the 2007-08 marketing year, the U.S. exported 2.4 billion bushels of corn. The USDA estimates just 1.1 billion bushels of U.S. corn will be exported in the 2012-13 marketing year.
What has happened to U.S. corn exports, and why might the U.S. not claim 50% of future world corn markets? There are a few reasons, Abbott said.
First, ethanol. The federal Renewable Fuel Standard mandates that gasoline sold in the U.S. be blended with ethanol. This year, the law requires oil companies blend 13.2 billion gallons of ethanol with the gasoline they produce. Next year, the blending requirement increases to 13.8 billion gallons.
Corn is the primary feedstock of ethanol, and 5.5 billion bushels of U.S. corn were used for that purpose in 2011-12.
“Roughly 40% of the corn that’s produced in this country is used in ethanol, although some of it is later used as distillers grain for livestock feed,” Abbott said. “That’s up from about 10-12% five years ago. The amount of corn that makes up the increase is more than we export.”
Because the law requires that ethanol be produced, there is less corn available for other non-ethanol users, including foreign buyers and U.S. livestock producers. The high demand for corn, coupled with the partially regulated market, has pushed corn prices higher.
Secondly, the U.S. has not kept up with many other nations that have significantly increased their corn acreage. Although U.S. farmers have shifted acreage away from other crops and into corn, competing nations and customers have significantly increased their area planted.
“We haven’t expanded overall planted area like the rest of the world. Our acreage is basically flat,” Abbott said.
Since the late 1990s, South America has boosted crop acreage 53%. The nations that make up the former Soviet Union are growing crops on 24% more acres, with acreage up 13.4% in sub-Saharan Africa and Oceania. By contrast, crop acreage in the European Union is off 4%.
U.S. corn exports were further hurt by the summer drought. According to the USDA, domestic corn production is expected to be down […]