Pricing Forecaster Predicts 2021 Profits for Livestock Producers

Prepared and written by Jeff Swenson, DATCP Livestock and Meat Specialist. The Market Update draws information from several sources, including trade publications, radio broadcasts, agricultural news services, individuals involved in the industry as well as USDA NASS and AMS reports.

Cash cattle prices were stronger the last week of 2020.  The New Year has brought lower cutout values, continuing the seasonal post-Holidays slump. Live Cattle futures contracts at the Chicago Mercantile Exchange (CME) were an up and down affair this week with fairly large trade ranges.  Cash cattle prices throughout the United States were called steady at $110.00 to $112.00/cwt for high dressing beef breed steers.  Reports of cattle owners holding out for higher bids were fairly common at mid-week.  The Sterling Profit Tracker estimated cattle feeder profits at $28.00/head last week, $20.00/head higher than the previous week.  Profits per head for the same week in 2019 were estimated at $151.00.  The Sterling Profit Tracker calculated feeder cattle cost represented 66 percent of the cost of finishing a steer in 2020, compared to 73 percent in 2019. Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2021 will average $123 per cow. For feedyards, Nalivka projects average profits of $83 per head in 2021.  

It appears this week will result in a large hog harvest based on USDA estimates. Cash hog prices are lower this week. Much like other ag commodity futures this week, Lean Hog futures experienced an early week surge then backed off.  Higher Corn, Soybean and Soybean Meal futures prices tempered optimism in the livestock complex at times this week.  The Sterling Profit Tracker estimated farrow to finish operators lost $9.00/head last week compared to a $6.00/head loss the week before.  Sterling Marketing president John Nalivka projects farrow to finish operators will see an average of $5.00/head profit in 2021. Arlan Suderman of StoneX Group, a commodity trading/brokerage firm, has reservations about future imports to China. In an interview with PORK Magazine, Suderman said, “we’re seeing local provinces that are punishing consumers from buying imported meat, making them pay fines in some cases, making them have extra COVID-19 testing at their expense as they buy imported meat.”   He sees this as one challenge to maintain exports to China in 2021. #

The November 2020 average price received by farmers for corn in Wisconsin was $3.57 per bushel according to the latest USDA, National Agricultural Statistics Service – Agricultural Prices report. This was up 20 cents from October and 5 cents above the previous November. The November soybean price, at $10.40 per bushel, was up 95 cents from October and up $2.01 from the previous November. All hay prices in Wisconsin averaged $186.00 per ton in November, up $28.00 from October but down $37.00 from November 2019. The alfalfa hay price averaged $196.00 per ton in November, up $26.00 from October but $36.00 below the previous November. The November average price for milk was $22.70 per cwt, up $1.20 from October and 20 cents above November a year ago.

High yielding Choice beef breed steers and heifers at Wisconsin and surrounding state auction markets were $1.00 to $2.00/cwt higher when compared to trade early last week, bringing $104.00 to $110.00/cwt. High-yielding cattle with an overnight stand were up to $112.00 with a very small sampling selling higher.  Choice and Prime Holstein steers were mostly steady at $90.00 to $95.00/cwt. There were exceptional groups of Holstein steers bringing $96.00/cwt with reports of a limited amount selling higher.  Cows were $1.00 to $2.00/cwt lower at $38.00 to $51.00/cwt. Blemish free cows in fleshier condition were selling from $50.00 to $60.00/cwt while doubtful health cows sold for $32.00 and down.  Dairy breed bull calves were steady at $45.00 to $160.00/head with a few selling higher.  Market lambs were lightly tested with reports of new crop lambs weighing 110 to 140 pounds bringing $180.00 to $250.00/cwt.   Most feeder cattle sales took a break for the Holiday Season and will resume late this week.  Replacement dairy cattle are still experiencing very good demand. 

Deane Thomas of Cobb, WI passed away on January 1.  Deane was a farmer and active member of Wisconsin’s livestock community, holding leadership positions through the years with the Wisconsin Cattlemen’s Association, Wisconsin Beef Council, Wisconsin Livestock and Meat Council, National Cattlemen’s Beef Association and Cattlemen’s Beef Board.  Deane was 89.