First Quarter ’22 Cattle & Ranch Report
Green grass is growing finally down south as some rainfalls are being received east of the Colorado River, not that Colorado River, the other one that moves through Austin, and has very little to do with it’s namesake. Grass growing in the spring brings on the grazing and let’s the ranchers get off the expensive feed. Now is also the time to sow sorghum for the herds to clear in the next few months. Net, net it’s still an expensive business to be in.
As the ranchers eyed the beginning of this year, a reduction had been discussed in the total herd population. A culling of 800,000 was expected to drive farmgate prices up to actually cover costs, as the packers have gotten record bounties, the ranchers have enjoyed none of higher prices. The supply adjustment ended up being a little over three million culled. Total herd population is now 91.9 million with nine of that in the dairy barn.
The USDA headcount for beeves is now 2% lower than where we were last year. There are quite a few reasons for this:
- Ranchers are barely making money on the herds due to pricing pressures from the processors
- Lack of grazable fields out west due to considerable drought west of the Mississippi
- Feed prices are up 7% from just a few months ago, and likely to continue to rise further
- Transport prices have shot up due to increase in diesel costs
We’ve also seen considerable slow downs at the auctions that feed the system. At this point last year 394,000 head were moved in a week, this year only 288,000 were moved on the 10th of March, a considerable decline. Auction prices have also responded in kind with Carl Hermann of the Caldwell Livestock Commission calling a higher strike price recently. This time last year 400 pound prime steers were auctioned for $1.81 per pound, the March 9th moves for the 400 pound class are now $1.97 per pound. This is around a $62 increase per calf head in my area year over year. Most auction reports are notated in the hundreds of pound per last week’s range ledger, which is now higher still:
Feed prices have gone up $40 a ton in the past six months. Given that each beeve will consume around 25 pounds of feed per day, an operation such as the J.D. Simplot Company in Idaho with 150,000 head to feed just saw their daily feed bill go up $1,875 a day.
Most concentrated feedlot operations feed out cattle for around 100 to 120 days. This increase is a bit staggering, but given last year’s ending silage increase, not unexpected. Six months out are showing much higher beef prices. It is still to be shown what the processors and retailers are willing to absorb, but $5 per pound ground beef on average has been here in the US since February per the St. Louis Fed, with record profits from the processors still being had, I don’t expect the Big Four to absorb much, as with the retailers.
I expect this trend to continue over the next three to six months until silage harvest can be assessed. With fewer head, drought, and high feed prices, I don’t see this trend reversing this year and depending upon this crop year, further inflation and the ongoing European conflict, we could see new records in food system prices.
Chick-fil-A “Eat Mor Chikin” Cow Parachutists
Just wait til they hear about the bird flu. It’s hitting all flocks, both meat and layers.
Wife will be having pork chops and I will be eating fish then. Living in central VA, then pork prices have remained very reasonable here and of course so have chicken and turkey prices so far.
Beef has been pricey, but I avoided it anyway except for a couple winter pot roasts, a few summer London Broils with leftovers going into garden salads, and one corned beef at St Patty’s Day each year. Fifty years ago when I was young, single, and lifting weights, then I ate a ribeye steak almost every day until gout broke me of the habit.
I was raised on fish and game and returned to my roots (sort of), but way more fish from the market and not so much game from the bird feeder with my 0.177 pellet gun. By the late 70’s then I was back to catching most of my own fish until I bought my present home in 2004, became house poor, and parked my boats (16′ canoe, 17′ 75HP flats, 21′ 150HP bay). I plan to restore all three after a few more years of fixing up my now debt free homestead. My wife is allergic to sea food and will not eat squirrel, so I guess that possum and racoon (both readily available to be live trapped here) are entirely out of the question.
Dairy farming is a lot more work that beef, but that is what farmers in my family did. For some reason beef in my experience has been subsistence rather than market. Probably because my family did not have that much money. I had a brother-in-law that worked on a big farm that raised Black Angus for show competition. So, someone must be in the beef business around here.
OK, so I googled Virginia beef farms. They are mostly small (average 30 head) with a big (oxymoron) niche of grass fed. We have small farms and beautiful grass – opposite Texas.
Go see Joel at Polyface Farms in Swope. He’s got a pastured beef operation on 2,000 acres now. He’s the godfather of modern sustainable ag. Him and Temple Grandin are two voices in the community who have significant impact.
“Joel F. Salatin is an American farmer, lecturer, and author. Salatin raises livestock on his Polyface Farm in Swoope, Virginia, in the Shenandoah Valley.”
[Did not know of him, but it makes sense given VA land costs and beef cattle trend. Shenandoah Valley green grass epitomizes what our warm humid balanced climate can do for grazing – rich bottom land don’t hurt either. Temple Grandin has had several lectures on CSPAN about her animal science and was featured on 60 minutes interview regarding her autism. I watch her whenever I know she is on.
We may pay more here now for industrial production beef, but our prices for grass fed Black Angus choice and prime are probably less than the norm. Recent events have reduced the grocery market price delta between the two here at least where one can buy the good stuff such as LIDL and Publix. Kroger is almost entirely mainstream industrial production sourced. There are a couple of boutique butcheries in Richmond, but no price breaks there. Since beef for our household is an occasional treat rather than staple, then better beef at LIDL or Publix is a good deal for us. My wife has either prime rib or filet mignon most the time when we dine out, which is rare here in town but about half our meals when we travel. I prefer Cajun influenced seafood.]