Reports of aflatoxins in harvested corn appear to be inconsistent. Several States were granted permission to blend affected grain, subject to final-use requirements. Blended aflatoxin corn will affect feed efficiency in all livestock species, especially hogs and poultry. However, discounts for such corn could help offset efficiency losses. Advanced ethanol production technologies are reducing the energy content of distillers’ grains and other co-products, lowering the energy feeding value of these co-products, particularly for hogs and poultry. The large forecast crops in Brazil and Argentina, combined with reduced availability of energy from feed grains and ethanol co-products in the United States, is expected to lead to increased feed-grain imports to partly help meet U.S. feed-energy needs.
Precipitation in some wheat-growing areas of the Southern Plains has encouraged farmers there to plant wheat. Regardless of the slightly improved near-term outlook for dryland wheat pasture in some areas, it is irrigated land in the Central and Southern Plains that will still provide the greatest potential for limited winter wheat pasture that will likely be in great demand.
Light-weight steer calf prices are steady to higher relative to heavier feeder cattle. This price relationship reflects expectations for wheat pasture and higher feeder cattle prices in 2013 to affect prices for the lighter weight feeder calves and reflects effects of current negative cattle feeding margins on prices for the heavier weight feeder cattle. Prices for all classes of feeder cattle are expected to gain strength in 2013 as reduced cattle inventories lead to reduced feeder cattle supplies and increased demand for feedlot placements and replacement heifers. Retention of replacement heifers will further reduce feeder cattle supplies as decisions to begin increasing cow inventories are made. However, it is likely that beef-cow herd expansion will be limited until feed grain supplies increase and prices decline to levels that will allow at least the anticipation of positive margins for cattle feeders, packers, and retailers.
After some improvement to near-breakeven levels, cattle-feeding margins are expected to retreat as feeding costs increase in response to the tight U.S. corn supplies and as prices for near-term placement-weight feeder-cattle hold steady.
Cow prices recently slipped, as federally inspected cow and bull slaughter has increased from a weekly average of total estimated daily federally inspected slaughter of 20-22 percent in the last 2-3 weeks. This proportion of federally inspected cow and bull slaughter is slightly below the 23-24 percent share of total commercial slaughter in September-October 2011. The increased cow-and-bull share of total slaughter and its associated adverse price effect is largely a seasonal phenomenon, but it is likely also affected by the apparent reduced retail demand for beef in general.
Five-day moving average wholesale cutout values declined in late September but were holding in the $190-$192 range. Expectations through the end of 2012 are for little improvement in cutout values given abundant pork supplies and relatively lower pork and poultry prices at the wholesale and retail levels. Beef packers have reduced weekly federally inspected slaughter levels from corresponding levels in 2011 to provide support for near-term cutout values. Monthly retail Choice beef prices--$4.94 in September, down slightly from August--also appear to have reached a resistance level with consumers. The monthly retail All-fresh beef price for September was also down from August. Monthly prices seem unlikely to move much higher than 2012 levels already achieved for the remainder of the year, largely due to pork and poultry supply and price effects.