In Friday’s monthly cattle report, the USDA said feedlot inventories on July 1st were 11.30M head, up 0.5% from a year ago. New placements onto feedlots in June were down 6.8%, and marketings down 8.7% from a year ago. The report was near expectations and should be neutral to slightly bearish for cattle prices.

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On Friday, the Bureau of Labor Statistics reported that inflation eased a bit in June, with the Consumer Price Index up 3.0% from a year ago. The CPI hit a 40-year high of 9.0% just two years ago in June 2022. The easing inflation rate, combined with a rising unemployment rate, means the Federal Reserve will likely start cutting interest rates soon.

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Last week, the Labor Dept said that U.S. employers added 206,000 net new jobs in June. Despite the higher-than-expected job gains, the unemployment rate still rose from 4.0% to 4.1% as more Americans got off the sidelines and started looking for jobs. That broke a 30-month stretch of unemployment at or below 4%.

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In last week’s quarterly Hogs and Pigs Report, the USDA said the U.S. hog inventory, at 74.49M head, is up 1.3% from a year ago. Producers appear to be trying to reduce herd numbers. Hogs kept for breeding were down 3.2% from last year and farrowing intentions are down 2.5% for Jun-Aug and down 0.6% for Sep-Nov. Pigs per litter are up 1.8% - and that should help offset declines in the breeding herd and farrowings.

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In Friday’s cattle report, the USDA said feedlot inventories on June 1st were 11.58M head, down 0.1% from a year ago. New placements onto feedlots in May were up 4.3%, and marketings up 0.2%. The increase in placements was unexpected and should be bearish for cattle prices. Additionally, steer carcass weights were up 3.8% in May from a year ago.

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It was expected that new refining techniques - which allow renewable diesel to be made from 100% veg oil and be indistinguishable from petroleum-based diesel - would send soy oil prices sharply higher. But soy oil prices have weakened instead, mostly because lower carbon intensity oils (canola, animal fat, used cooking oil) have been in higher demand for biofuel.

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The U.S. employment situation bounced back in May with 272,000 net new jobs - more than half coming from industries that are still staffing up: healthcare, government, and hospitality. As impressive, average pay was up 0.4% from April and is now 4.1% above a year ago. Wage gains continue to exceed inflation gains, which is likely to support consumer spending and GDP growth for the balance of the year.

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In May’s WASDE report, the USDA revised 2024 U.S. broiler production from 1.5% to just 0.9% above a year ago. Feed prices, which bottomed out in February, have bounced back in recent months but are still favorable for producers. However, breeder issues continue to plague the broiler industry. Eggs set and chicks placed through the week ending 5/25/24 are up just 1.0% and 0.6%, respectively, from a year ago.

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In Friday’s cattle report, the USDA said feedlot inventories on May 1st were 11.65M head, down 0.9% from a year ago. New placements onto feedlots in April were down 5.8%, and marketings up 10.1%. The higher demand for finished cattle, combined with the steep drop in placements, should be bullish for cattle prices. On a positive note: The USDA reported just 13% of the U.S. cattle herd is located in drought areas, compared to 37% a year ago.

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Tight beef supplies are a big problem for chain restaurant companies this year. The USDA is projecting beef production declines of 1.4% in 2024 and 5.5% in 2025, and those come on top of a 4.7% decline in 2023. The USDA is forecasting cattle prices to average $188.00/cwt in 2025, up from a projected $183.51 in 2024 and $175.54 in 2023. Are prices high enough yet to encourage herd expansion?

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In its first look at feed prices for the 2024/25 crop year, the USDA (in Friday’s WASDE report) forecast corn prices to average $4.40 per bushel, down from $4.65 in 2023/24, and $6.54 in 2022/23. Soymeal was pegged at $330 per short ton, down from $380 in 2023/24 and $452 in 2022/23. Those numbers should improve profitability for both poultry and hog producers – and hopefully encourage a bit more production.

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After hitting 3-year lows of $3.99 per bushel in February, corn futures have rallied back to $4.60. U.S. corn planting intentions are below year ago. In global markets severe flooding in S. Brazil and crop disease in Argentina are threatening to reduce world supplies – potentially increasing demand for U.S. corn exports. On the plus side, spring weather has been generally favorable.

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Just a month ago it was reported that Highly Pathogenic Avian Influenza (HPAI) had spread from birds to dairy cows. This past Thursday, the FDA said that HPAI in dairy cows is widespread, with 1 in 5 milk samples taken from grocery stores testing positive for HPAI gene fragments. On Friday, the FDA clarified that fragments are not live virus, which is killed off during the pasteurization process, and that milk is safe for consumption.

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In Friday’s cattle report, the USDA said feedlot inventories on Apr 1st were 11.82M head, up 1.5% from a year ago. However, new placements onto feedlots in March were down 12.3%, and marketings down 13.7% from last year. Herd liquidation may be slowing. Last week’s U.S. drought monitor showed some lingering issues in Kansas and Iowa, but mostly improvement over a year ago and expectations of better grazing conditions this spring.

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Last week, the Labor Dept. reported that the Consumer Price Index for March was up 3.5% from a year ago. Driving the index higher: shelter costs, representing 36.2% of the CPI, were up 5.7% - and showing no signs of abating. So now - faced with the combination of higher-than-expected GDP growth, a stronger-than-expected jobs market, and sticky inflation – the Federal Reserve will likely shift gears again.

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On Friday, the Labor Dept reported that U.S. employers added 303,000 net new jobs in March – an incredibly high number at this “mature” point in an economic recovery. It was the 4th straight month with employment gains above 250k. By comparison, the U.S. economy managed just 166,000 new jobs per month pre-pandemic in 2019.

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In last week’s quarterly Hogs & Pigs Report, the USDA pegged total U.S. inventories on March 1 at 74.6M head, up 0.6% from a year ago. The market hog inventory at 68.6M head was up 0.8% from a year ago. The Dec-Feb pig crop was up 1.9% and pigs-per-litter up 4.6% from a year earlier. These numbers are mildly bearish for current hog prices.

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In Friday’s cattle report, the USDA said feedlot inventories on Mar 1st were 11.83M head, up 1.3% from a year ago. New placements onto feedlots in Feb were up 9.7%, as producers recovered from harsh winter conditions that slowed placements in Jan. In March’s WASDE, the USDA projected a 2.4% drop in beef production for 2024, coming on top of a 4.7% decline in 2023.

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At last week’s Market Vision Conference, Eric Meyer of HighGround Dairy said that replacement heifers are at a 20-year low and very expensive. As a result, no milk-cow herd growth is expected in 2024 despite lower feed prices. Jan milk production was 1.1% below a year ago and future milk supplies could have difficulty meeting any increase in demand.

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In Friday’s WASDE report, the USDA left corn and wheat balance sheets mostly unchanged, while lowering its 2023/24 corn price forecast to $4.75 per bushel, and wheat to $7.15. At Feb’s Agricultural Outlook Forum, the USDA said 2024/25 prices will be even lower: $4.40 for corn and $6.00 per bushel for wheat. The USDA also cut its 2023/24 soy-oil projection to $.49 per pound, down 24.9% from a year ago.

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