Looking Forward: What Does the Cattle Market Have in Store for 2015?

United States Department of AgricultureBy Brett Crosby, Custom Ag Solutions

The USDA’s National Agricultural Statistics Service (NASS) cattle inventory report for January 2015 confirms that beef herd expansion is underway.  The number of beef cows that have calved increased over 600,000 head in 2014 to 29.7 million head.  The increase in beef cow numbers is the largest since 1994 and the second largest increase in over 30 years.  The herd expansion was impressive by any measure, but especially remarkable given the cost of replacement animals and the smaller number of replacement females available compared to 1994, when there were 34.6 million beef cows in the U.S.  While increased herd numbers have been expected by many, the new inventory statistics and rapid growth leave many producers wondering what this means for cattle prices going forward.

While a 600,000 head increase is sizeable, the U.S. beef cow herd is still small by historical measures and has decreased by over 3.9 million since 1996.  Nearly half of that decrease, 1.7 million head, came in 2012 and 2013 alone, when a drought ravaged the Southwest and forced massive herd liquidations.  Even if cattle numbers continue to increase at the 2014 rate, it will take several years just to get the U.S. herd back to the size it was only four years ago.  Clearly, total per capita beef supply in the US will remain at historically low levels for several years while the U.S. population continues to grow, resulting in per capita beef supply and beef prices remaining at or near their current levels.

While the current herd expansion suggests that calf prices likely hit their high water mark in the fall of 2014, prices should remain strong in 2015.  The 2015 calf crop is likely to be 10 to 15 percent higher than 2014, but calf supplies will likely remain tight while producers retain inordinately large numbers of heifers during this expansion phase.  As a result, deferred feeder cattle futures suggest calf prices holding very close to the levels seen last fall.  Of course, there is still a long time between now and the fall, and corn prices and winter wheat conditions this fall will play a large part in determining calf prices late in the year.

Feed cost and forage availability aren’t the only sources of uncertainty for this year’s calf prices.  Exports have been incredibly strong and a strengthening economy has also supported domestic beef demand.  Therefore, a U.S. recession or a global economic slowdown could have a substantial adverse impact on cattle prices.  With the U.S. beef herd expanding and a strong dollar and soft oil prices indicating global economic uncertainty, there is more downside risk for cattle prices than upside potential.

With increased downside market risk, this is a good year to consider carefully managing price risk.  Forward contracts, futures, options, and RMA’s Livestock Risk Protection (LRP) insurance are all worth considering.  If fundamentals hold steady, the calf market is expected to remain strong, so producers should consider a risk management strategy that limits or softens unexpected downside market moves.  Also, because a repeat of 2014’s explosive upside move is unlikely, 2015 is probably a good year to consider early forward contracts at current price levels.

Despite national herd expansion, the next several years should remain profitable for cow/calf producers.  Beef demand domestically and abroad is strong, and heifer retention that is fueling expansion will help offset the effects of larger calf crops in the coming years.  With prices still near historic highs, however, a price risk management strategy should be employed to protect against downside movements triggered by high feed costs or macroeconomic issues.  For 2015, the old adage “Nobody ever went broke locking in a profit” is a good one to remember.

Custom Ag Solutions (CAS) is a USDA/RMA education partner that works to promote risk management tools, including Federal crop insurance programs such as the Livestock Risk Protection (LRP) program.

CAS neither sells nor services crop insurance policies.  For a list of crop insurance agents, please visit www.USDA.RMA.gov/tools/agent.html.  For more information, visit the RMA website at www.USDA.RMA.gov.

NCBA: Dietary Guidelines Recommendations are Misleading

WASHINGTON  – Yesterday, the U.S. Department of Health and Human Services and the U.S. Department of Agriculture released the 2015 Dietary Guidelines Advisory Committee’s report. This report is a recommendation to the Secretaries as they develop the 2015 Dietary Guidelines for Americans that will be released later this year. Unfortunately, the report is inconsistent, and if adopted will lead to conflicting dietary advice. On one hand, the Committee has endorsed the Mediterranean style diet, which has higher red meat levels than currently consumed in the U.S.; and on the other hand, they have left lean meat out of what they consider to be a healthy dietary pattern.

Dr. Shalene McNeill, Registered Dietitian and Nutrition Scientist with National Cattlemen’s Beef Association said the recommendation that a healthy dietary pattern should be lower in red meat is not consistent with scientific evidence and would be unsound dietary advice.

“Lean meat is red meat. Today’s beef supply is leaner than ever before with more than 30 cuts of beef recognized as lean by government standards,” said McNeill. “The protein foods category, which includes meat, is the only category currently consumed within the current guidelines, and it is misleading to conclude that a healthy dietary pattern should be lower in red meat.”

According to the report, “dietary patterns with positive health benefits are described as high in vegetables, fruit, whole grains, seafood, legumes, and nuts; moderate in low- and non-fat dairy products; lower in red and processed meat; and low in sugar-sweetened foods and beverages and refined grains.”

Unfortunately, the statement disregards the positive role of lean meat. Lean beef is one of the most nutrient rich foods, providing high levels of essential nutrients such as zinc, iron and protein, as opposed to empty calories.

Dr. Richard Thorpe, Texas medical doctor and cattle producer, said the key to a healthy lifestyle is building a balanced diet around the healthy foods you enjoy eating, coupled with physical activity.

“It is absurd for the Advisory Committee to suggest that Americans should eat less red meat and focus so heavily on plant-based diets,” said Thorpe. “The American diet is already 70 percent plant based and to further emphasize plant-based diets will continue to have unintended consequences. The Advisory Committee got it wrong in the ‘80s advising a diet high in carbs, and look at what that got us – an obesity problem. My colleagues and I commonly encourage people to include lean beef more often for their health, not less.”

Thorpe added, “We are disappointed the Advisory Committee would go outside the purview and expertise of nutrition/health research to bring in topics such as sustainability. We urge the Secretaries to reject the Advisory Committee’s recommendations on topics outside of diet and health.”

Lean meat plays an important role in the American diet and science shows it needs to be recognized as part of a healthy dietary pattern just as it was in the 2010 Dietary Guidelines for Americans. On behalf of U.S. cattle producers that work each and every day to provide a nutritious and healthful beef product for consumers, we encourage Secretaries Burwell and Vilsack to reject the Advisory Committee’s recommendation that healthy American diets should be lower in red meat. The process was incomplete with flawed conclusions specific to health benefits of red meat’s role in the American diet.

MSU Extension and USDA offer educational Farm Bill meetings

United States Department of AgricultureBOZEMAN – Montana State University Extension, in partnership with U.S. Department of Agriculture, will be visiting 28 Montana communities this fall to conduct a series of informational meetings about important new programs authorized by the Agricultural Act of 2014.

The meetings will focus on the price-loss coverage and agricultural-risk coverage that will be administered by USDA’s Farm Service Agency and the supplemental-coverage option administered by USDA’s Risk Management Agency through federal crop insurance providers. MSU Extension will explain the new online Farm Bill Decision Tool that will be available this fall to assist producers in understanding their options.

The schedule of meetings runs Oct. 15 through Nov. 12:

  • Oct. 15. Belgrade, 8 a.m. to noon, Holiday Inn Express, 309 West Madison Ave.
  • Oct. 16. Helena, 2-6 p.m., MSU Extension Office, Lewis and Clark County Fairgrounds, 98 W. Custer Ave.
  • Oct. 17. Ronan, 8 a.m. to noon, Ronan Community Center, 300 3rd Ave. NW; Missoula, 2-6 p.m., Guesthouse Inn and Suites, 3803 Brooks Street.
  • Oct. 20. Miles City, 2-6 p.m., Miles City Community College, 2715 Dickinson St.
  • Oct. 21. Sidney, 8 a.m. to noon, MSU Extension Office, 1499 N. Central Ave.; Plentywood, 2-6 p.m., Sheridan County Courthouse, 100 W. Laurel Ave.
  • Oct. 22. Glasgow, 8 a.m. to noon, Cottonwood Inn, 45 First Ave. NE. Wolf Point, 2-6 p.m., Dumont Building, Fort Peck Community College, 301 Benton St.
  • Oct. 23. Circle, 8 a.m. to noon, Community Building, McCone County Fairgrounds, one-half mile southwest of Circle on Highway 200; Glendive, 2-6 p.m., Dawson County Courthouse, 207 W. Bell St.
  • Oct. 24. Baker, 8 a.m. to noon, Exhibit Hall, Fallon County Fairground, 3440 Highway 7.
  • Oct. 27. Choteau, 2-6 p.m., Stage Stop Inn, 1005 Main Ave. N.
  • Oct. 28. Browning, 9 a.m. to noon, Roland Kennerly Building, Blackfeet Tribal Office. Shelby, 2-6 p.m., Coyote Club Eagles Lodge, 137 Main St.
  • Oct. 29. Conrad, 8 a.m. to noon, Conrad High School Auditorium, 308 South Illinois; Great Falls, 2-6 p.m., Montana Expo Park, State Fairgrounds, Trades and Industries Building, 400 3rd St. NW.
  • Oct. 30. Fort Benton, 8 a.m. to noon, Ag Center, 1205 20th Street. Havre, 2-6 p.m., MSU-Northern Student Union Ballroom, 300 West 11th Street.
  • Oct. 31. Malta, 8 a.m. to noon, Great Northern Hotel, 2 S first Street E.
  • Nov. 3. Lame Deer, 2-6 p.m., Chief Dull Knife College, Room 205, 1 College Drive.
  • Nov. 4. Crow Agency, 9 a.m. to noon, Little Big Horn College Cultural Center, 8645 South Weaver Drive; Billings, 2-6 p.m., Big Horn Resort and Convention Center, 1801 Majestic Ln.
  • Nov. 5. Harlowton, 8 a.m. to noon, Kiwanis Youth Center, 204 Third St. NE. Hobson, 2-6 p.m., Bos Terra Feedlot Auditorium, 342 Sale Barn Drive.
  • Nov. 6. Box Elder, 9 a.m. to noon, Jon Morsette Vocational Technical Center, 8294 Upper Box Elder Rd.; Fort Belknap Agency, 2-6 p.m., Aaniiih Nakoda College, Returning Buffalo Building, 269 Blackfeet Avenue.
  • Nov. 10. Informational webinar, contact MSU Extension for details.
  • Nov. 12. Whitehall, 2-6 p.m., Whitehall Community Center, 11 N. Division Street.

For more information, including a printable schedule, visit MSU Extension’s Farm Bill website at http://www.montana.edu/farmbill and Montana FSA’s website at www.fsa.usda.gov/mt. Visit RMA’s Farm Bill website at http://www.rma.usda.gov/news/currentissues/farmbill/.

United States Department of Agriculture

USDA Reports Show Total Cattle and On Feed Inventory Declines

July 1 Cattle Inventory Down 3 Percent from 2012

All cattle and calves in the United States as of July 1, 2014, totaled 95.0 million head, 3 percent below the 97.8 million on July 1, 2012. This is the lowest all cattle and calves inventory for July 1 since the series began in 1973. After a year absence due to sequestration, the July Cattle report has been reinstated.

All cows and heifers that have calved, at 39.0 million, were down 2 percent from July 1, 2012.

  • Beef cows, at 29.7 million, were down 3 percent from July 1, 2012.
  • Milk cows, at 9.3 million, up 1 percent from July 1, 2012.

Other class estimates on July 1, 2014 and the changes from July 1, 2012, are as follows:

  • All heifers 500 pounds and over, 14.9 million, down 5 percent.
  • Beef replacement heifers, 4.1 million, down 2 percent.
  • Milk replacement heifers, 3.9 million, down 5 percent.
  • Other heifers, 6.9 million, down 7 percent.
  • Steers, weighing 500 pounds and over, 13.5 million, down 4 percent.
  • Bulls, weighing 500 pounds and over, 1.9 million, unchanged.
  • Calves under 500 pounds, 25.7 million, down 3 percent.
  • All cattle and calves on feed for slaughter, 11.6 million, down 6 percent.

The 2014 calf crop is expected to be 33.6 million, down 1 percent from 2013 and down 2 percent from 2012. Calves born during the first half of the year are estimated at 24.3 million, down 2 percent from 2013 and down 3 percent from 2012.

United States Cattle on Feed Down 2 Percent

Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 10.1 million head on July 1, 2014. The inventory was 2 percent below July 1, 2013. The inventory included 6.46 million steers and steer calves, down 1 percent from the previous year. This group accounted for 64 percent of the total inventory. Heifers and heifer calves accounted for 3.60 million head, down 5 percent from 2013.

Placements in feedlots during June totaled 1.46 million, 6 percent below 2013. Net placements were 1.38 million head. During June, placements of cattle and calves weighing less than 600 pounds were 400,000, 600-699 pounds were 245,000, 700-799 pounds were 320,000, and 800 pounds and greater were 490,000.

Marketings of fed cattle during June totaled 1.85 million, 2 percent below 2013. This is the lowest fed cattle marketings for the month of June since the series began in 1996.

Other disappearance totaled 75,000 during June, 19 percent above 2013.

United States All Cattle on Feed down 6 Percent from 2012

Cattle on feed July 1, 2014, from all feedlots in the United States, totaled 11.6 million, down 6 percent from the 12.30 million on July 1, 2012. Cattle on feed in feedlots with 1,000 or more head accounted for 87 percent of the total cattle on feed on July 1, 2014, up slightly from July 1, 2012.

Released July 25, 2014, by the National Agricultural Statistics Service (NASS), Agricultural Statistics Board, United States Department of Agriculture (USDA).

United States Department of Agriculture

USDA Announces Funding to Train and Educate Next Generation of Farmers and Ranchers

United States Department of AgricultureThe following is a Press Release from the USDA, April 11, 2014 – Today, USDA Secretary Tom Vilsack announced the availability of more than $19 million in grants to help train, educate and enhance the sustainability of the next generation of agricultural producers through the Beginning Farmer and Rancher Development Program (BFRDP).

“USDA is committed to the next generation of America’s farmers and ranchers because they represent the future of agriculture and are the backbone of our rural economy. As the average age of farmers continues to rise, we have no time to lose in getting more new farmers and ranchers established.” said Secretary Vilsack. “Reauthorizing and expanding the Beginning Farmer and Rancher Development Program is one of the many resources the 2014 Farm Bill gave us to build America’s agricultural future. Through this program, we can build a diverse next generation of farmers and ranchers.”

BFRDP is an education, training, technical assistance and outreach program designed to help farmers, ranchers and managers of non-industrial private forest land – specifically those aiming to start farming and those who have been farming or ranching for 10 or fewer years. It is managed by the National Institutes of Food and Agriculture (NIFA). NIFA will competitively award grants to organizations conducting programs to help beginning farmers and ranchers. Learn more about eligibility and how to apply (applications are due June 12, 2014).

Priority will be given to projects that are partnerships and collaborations led by or including non-governmental, community-based, or school-based agricultural educational organizations. All applicants are required to provide funds or in-kind support from non-federal sources in an amount that is at least equal to 25 percent of the federal funds requested.

By law, at least five percent of available funding will be allocated to programs and services for limited-resource and socially-disadvantaged beginning farmers and ranchers and farmworkers. Additionally, another five percent of available funding will be allocated for programming and services for military veteran farmers and ranchers.

BFRDP was authorized by the 2014 Farm Bill, receiving $100 million to be awarded over the next five years. The program was originally funded through the 2008 Farm Bill. Since then, NIFA has awarded more than $66 million through 136 grants to organizations that have developed education and training programs. More than 50,000 beginning farmers and ranchers have participated in projects funded by BRFDP.

NIFA is hosting two upcoming webinars for interested applicants on April 30 and May 6 at 2:00 p.m. Eastern. The first webinar will focus on general guidelines for the program, while the second webinar will focus on the funding allocations for socially-disadvantaged and military veteran farmers and ranchers.

Through federal funding and leadership for research, education and extension programs, NIFA focuses on investing in science and solving critical issues impacting people’s daily lives and the nation’s future. More information is available at: www.nifa.usda.gov.

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USDA is an equal opportunity provider and employer. To file a complaint of discrimination, write to USDA, Assistant Secretary for Civil Rights, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue, S.W., Stop 9410, Washington, DC 20250-9410, or call toll-free at (866) 632-9992 (English) or (800) 877-8339 (TDD) or (866) 377-8642 (English Federal-relay) or (800) 845-6136 (Spanish Federal-relay)

USDA Natural Resources Conservation Service logo

USDA Extends Deadline for Conservation Stewardship Applications

WASHINGTON, Jan. 7, 2014 – The U.S. Department of Agriculture’s Natural Resources Conservation Service (NRCS) has extended the deadline for new enrollments in the Conservation Stewardship Program (CSP) for fiscal year 2014. Producers interested in participating in the program can submit applications to NRCS through Feb. 7, 2014.

“Extending the enrollment deadline will make it possible for more farmers, ranchers and forest landowners to apply for this important Farm Bill conservation program,” NRCS Chief Jason Weller said. “Through their conservation actions, these good stewards are ensuring that their operations are more productive and sustainable over the long run and CSP can help them take their operations to the next level of natural resource management.”

Weller said today’s announcement is another example of USDA’s comprehensive focus on promoting environmental conservation and strengthening the rural economy, and it is a reminder that a new Food, Farm and Jobs Bill is pivotal to continue these efforts. CSP is now in its fifth year and so far, NRCS has partnered with producers to enroll more than 59 million acres across the nation.

The program emphasizes conservation performance — producers earn higher payments for higher performance. In CSP, producers install conservation enhancements to make positive changes in soil quality, soil erosion, water quality, water quantity, air quality, plant resources, animal resources and energy use.

Eligible landowners and operators in all states and territories can enroll in CSP through Feb. 7 to be eligible during fiscal 2014. While local NRCS offices accept CSP applications year round, NRCS evaluates applications during announced ranking periods. To be eligible for this year’s enrollment, producers must have their applications submitted to NRCS by the closing date.

A CSP self-screening checklist is available to help producers determine if the program is suitable for their operation. The checklist highlights basic information about CSP eligibility requirements, stewardship threshold requirements and payment types.

Learn more about CSP by visiting the NRCS website or any local USDA service center.

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USDA is an equal opportunity provider and employer. To file a complaint of discrimination, write: USDA, Office of the Assistant Secretary for Civil Rights, Office of Adjudication, 1400 Independence Ave., SW, Washington, DC 20250-9410 or call (866) 632-9992 (Toll-free Customer Service), (800) 877-8339 (Local or Federal relay), (866) 377-8642 (Relay voice users).