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Calf pricesare at “unprecedented levels," says John Anderson, deputy chief economist for the American Farm Bureau Federation, Washington. "This year, we saw prices drop through spring and bottom out in early summer, followed with a really strong market through the fall. To a large extent, that’s a reflection of the market’s reaction to tight numbers and a decline in corn prices. As corn prices have come down, it has provided support for calf prices.”
WILLIE HUDNELL, from left, Brenda Adair, Rachel Jones, and Lamar Boren, all from Meridian, Miss., were among those attending the annual convention of the Mississippi Farm Bureau Federation.
In the fall of 2012, says John Anderson, “Everybody was saying we’d have about a 5 percent decline in beef production in 2013 — that we’d get back into herd expansion, producers would hold females off the market, and we’d get tighter numbers overall.
“And everybody was wrong,” he said at the Mississippi Farm Bureau Federation’s annual meeting.
“We started 2013 expecting a big drop in beef production, and we did see a modest decline in the first quarter. But, second and third quarter production was actually higher than the previous year. We’re seeing a drop in the fourth quarter, but for the year overall, the decline is only going to be maybe 1 percent or so.”
The reason, says Anderson, who is deputy chief economist for the American Farm Bureau Federation in Washington, is that “we didn’t get the expansion that had been expected.
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“We moved a lot more females into the mix than we thought we would; early in the year, we culled cows a lot more aggressively than expected; and we got more production than we expected. So the big break in beef production that everyone had been talking about for several years didn’t happen.
“It looks like it may be happening now — like we may be just in the beginning phase. If we look at cattle on feed, size of the beef cow herd, calf crop numbers, we do have tight cattle numbers overall.”
Anderson says he considers cattle on feed numbers “a good mid-point in the supply chain,” and 2013 numbers have consistently been running 5 percent to 7 percent below last year’s cattle on feed numbers.
“We don’t have enough cattle to keep the feedlots full. We’ve all heard of lots that are 60 percent full, 40 percent full, of packing plants and feedlots that have closed. These are the symptoms of having fewer cattle available.”
There are “some confounding numbers,” he says. “Even though cattle on feed numbers are down, last month we had a big jump in placements, almost at the 2009-2011 average, when we had a lot more cattle to pull from.
“Where do those calves come from, and what does that say about future availability as we look ahead the next three to five months? My interpretation of the placement numbers is that we had a really strong fall calf market, and it was tough to hold on to anything that could be loaded on a truck and sold. The market was saying, if you’ve got ‘em, send ‘em to market — and that’s what people did
“We saw a lot of calves get pulled ahead, and because of that I think we’ll see future numbers lower than they would otherwise have been.”