Maybe the stars are finally lining up for the beef industry. With the fed cattle market pinch point removed, cattle and beef markets are poised to realign and rebalance.
The beef cattle industry will receive $5.1 billion of CFAP funding to partially offset 2020 losses due to COVID-19. USDA expects to begin sign-up in early May and distribute payments by late May or early June.
Average drought conditions currently are slightly worse than the drought conditions at this time last year. Although there has been some regional changes in drought situation, the overall picture has not changed much.
While it has taken longer than expected to turn the corner on tighter feedlot supplies, the change may be relatively sudden as the dynamics of fall placement weights should result in a rapidly changing inventory.
Increased feed costs have impacted feedlots for several months and the trend will grow as cow-calf and stocker/background producers face additional feed and supplement needs this winter.
Beef exports during August were an all-time record for any month. U.S. beef exports continue to be fueled mostly by the strong growth in the China/HK market, up 160.5 percent year over year in August.
The latest USDA Crop Progress report showed that winter wheat planting was at 28 percent the last week of September, equal to the 2016-2020 average for the date.
The question for several months has been when feedlots would “turn the corner” on the large fed cattle supplies and set the stage for improving fed cattle prices. It always seems to take longer than it should.
It is not clear exactly how much and how fast the industry will liquidate going forward but cattle cycles continue to be an important fundamental feature affecting cattle markets in the U.S.
