In last week’s cold storage report, the USDA said that total beef supplies in freezers at the end of January were down 11% from a year ago; pork supplies were down 10%; and chicken down 7%. Meat demand remains strong, while producers have yet to ramp up production. In February’s WASDE report, the USDA projected a 2.9% drop in beef production for 2024, coming on top of a 4.7% decline in 2023.

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In Friday’s cattle report, the USDA said feedlot inventories on Feb 1st were 12.80M head, up 0.4% from a year ago. New placements onto feedlots in Jan were down 7.4%, but higher than expected, given harsh winter weather conditions that slowed cattle operations and transportation. In Jan’s semi-annual cattle inventory report, the USDA pegged all cattle and calves in the U.S. on Jan 1st at 87.16M head, down 1.9% from a year ago.

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Last week’s USDA Agricultural Outlook Forum gave a first look at crop potential for the 2024/25 growing season – and it was a good one for feed prices. Corn output next year is projected to be 15.04B bushels, down 2.0% from a record large 15.43B this year (2023/24). However, it will be enough to raise the corn stocks-to-use ratio to 17.2% for 2024/25, up from 14.9% this year.

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Two forces should be driving soy-oil prices higher. The first is El Niño, which historically brings drought to Malaysia and Indonesia, cutting palm oil production. Secondly, new refining techniques allow renewable diesel to be made from 100% veg-oil - and be indistinguishable from petroleum-based diesel. Renewable diesel plants under construction will double production from 2022 to 2025.

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In last week’s semi-annual cattle inventory report, the USDA pegged all cattle and calves in the U.S. on Jan 1st at 87.16M head, down 1.9% from a year ago. The all-beef inventory was down 2.5%, while dairy cow numbers were 0.4% lower than a year ago. The estimates were close to expectations, but it’s still hard to believe that this is the smallest USDA herd data since they began the survey in 1972…

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In Jan’s WASDE, the USDA increased corn yield to 177.3 bushels per acre and raised production to 15.34B bushels, both record highs. Corn futures had averaged a drought-induced $6.49 per bushel for the first 7 months of 2023, until late-season rain helped the crop recover. Prices tumbled to $4.75 (on average) for Q4 2023. Lower corn/feed prices should keep poultry producers in the black for 2024.

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In Friday’s cattle report, the USDA said feedlot inventories on Jan 1st were 12.93M head, up 2.1% from a year ago. New placements onto feedlots in Dec were down 4.5%, and Dec marketings were 0.9% below last year. Like last month, larger feedlot inventories, combined with fewer placements and marketings, indicate a back-up in supply and/or a slowdown in demand.

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The consensus of 71 economists surveyed by the Wall St Journal is for 1.0% U.S. GDP growth in 2024, down from 2.6% in 2023. They put the probability of recession in 2024 at 39%, with Q2 and Q3 the most likely quarters to see negative growth. The economists project that unemployment will rise from 3.7% in Dec 2023, to 4.1% by mid-year 2024 and 4.3% by year’s end.

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In Dec’s quarterly Hogs & Pigs Report, the USDA pegged total U.S. inventories on Dec 1 at 75.0M head, about the same as a year ago and down slightly from the prior quarter. Breeding inventory (6.0M head) was down 3% from both last year and the previous quarter. The market hog inventory at 69.0M head is up 0.3% from a year ago.

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In its monthly cattle report, the USDA said feedlot inventories on Dec 1st were 12.01M head, up 2.7% from a year ago. New placements onto feedlots in Nov were down 1.9%, and Nov marketings were down 7.4%. Larger feedlot inventories, combined with fewer placements and marketings, indicate a back-up in supply and/or a slowdown in demand.

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‘Twas the night after Christmas, and down at Mar-a-Lago, the ex-Pres was thriving on loans from Wells Fargo. Indictments were hung by the chimney with care, in hopes that immunity would soon be declared. Then up on the roof there rose such a clatter, he sent up Melania to see what was the matter. When what to her wondering eyes should appear…

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The Federal Reserve has finished raising interest rates. At last week’s Open Market Committee Meeting, the Fed held rates steady, and Chairman Jerome Powell said that he anticipated 3 rate cuts next year – most likely in the 2nd half of the year. Some private economists expect 5 cuts. That’s because inflation has mostly been tamed.

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The 6-month pause in Avian Flu ended last month. A warm summer delayed wild bird migration (from Canada southward), but now the number of HPAI inflected flocks is piling up. In the month of November, we lost 5.1M egg layers, 1.4M turkeys, and 1.0M broilers. The states up & down the Mississippi flyway have been hardest hit.

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Chicken looks to be what’s on the menu for 2024. Following 11 months in the red, chicken producers finally turned profitable in Sept and look to stay that way. High prices for competing proteins have helped support chicken prices. While on the cost side, corn prices that averaged $6.43 per bushel for the first half of 2023, have tumbled to $4.64 (12/1).

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Consumers still crave beef but are increasingly forced to trade down from higher-priced beef cuts. That will keep demand for ground beef strong in 2024. On the supply side, beef and dairy cow herd numbers have declined, reducing fat and lean trimmings supplies. In Oct’s WASDE, the USDA forecast that beef imports (mostly lean 90s trim from Australia) will be up 7.8% for 2023 - but increase by just 1.0% in 2024.

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In Friday’s monthly cattle report, the USDA said feedlot inventories were 11.74M head on Oct 1, up 1.7% from a year ago. New placements onto feedlots in Oct were up 3.8%; Oct marketings were down 2.5%. The Oct 1st percentage of heifers in feedlots was a 22-year high of 40.0% – with no signs (so far) of ranchers retaining additional heifers for breeding.

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El Niño’s effect on palm oil prices, and a big increase in soy-oil usage for renewable diesel, are both bullish for soy-oil prices. The USDA pegged soy-oil use for biofuel at 12.8B pounds or 47.4% of all 2023/24 U.S. soy-oil output. However, at Market Vision’s Orlando Conference, Brian Williams of Macquarie Bank said that a large volume of ancillary oils has been filling the gap on additional capacity due to their lower carbon intensity scores.

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The U.S. economy has shown resilience, supported by a strong job market and a jump in “experience” spending (travel, concerts, restaurants) by younger Americans. But if the economy takes a turn for the worse in 2024, we may look back on Friday’s Labor Dept. report as a turning point. U.S. employers added 150,000 net new jobs in Oct, less than half Sept’s level.

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In Sept, milk production was down 0.2% and below year-ago levels for the 4th straight month. In Oct’s WASDE, the USDA projected milk production to increase by a slim 0.5% in 2023. Class III milk futures, which averaged $13.87/cwt in July, have rebounded to $16.85 (10/27). Cream supplies have been ever tighter, with hot weather boosting ice cream demand this past summer and consumers considering higher-fat dairy products “healthy” these days.

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In Friday’s monthly cattle report, the USDA said feedlot inventories were 11.58M head on Oct 1, down 0.6% from a year ago. New placements onto feedlots in Sept were up 6.1%, and Sept marketings were down 10.6%. The mid-year percentage of heifers in feedlots and headed to slaughter was a 22-year high of 40.0% – with no signs (so far) of ranchers retaining additional heifers for breeding.

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