April’s USDA Cattle on Feed report requires careful interpretation. The typical year-to-year comparisons are mostly meaningless because of the pandemic disruptions affecting markets one year ago.
Drought is significantly worse now than at the same time last year with 63% of the country now in D0-D4 categories. Producers should inventory forage and hay reserves and carefully evaluate forage production potential.
Beef exports have evolved significantly in a very dynamic environment of global politics and trade policies; direct and indirect impacts of animal disease outbreaks; and growing beef preferences and consumption.
USDA-NASS released two reports last week that added more fuel to red-hot grain and oilseed markets. The information about current and future corn markets has significant implications for cattle markets.
Drought conditions loom as the grazing season begins across the Central Plains. The latest Drought Monitor shows 43% of the U.S. is experiencing some degree of drought, compared with just 24% last year at this time.
Fed cattle prices have not put together any sort of spring rally with cash markets trading in a narrow range for several weeks, but there is considerable optimism beginning in the second quarter of the year.
Cattlemen experienced a wide variety of weather across the Central Plains and mountain states last week, bringing much-needed moisture along with some unwelcome cold temperatures.
U.S. beef exports are expected to increase modestly in 2021 to reach the second highest level behind the 2018 export record. A key to export growth includes continued growth in the China/Hong Kong market.
The feedlot situation in early 2021 is a carryover from the disruptions and unusual dynamics last year. For the entire year in 2020, feedlot placements were down 4.0 percent.
