2013, we hardly knew you. The year seemed to fly by at breakneck speed, but looking back, there was no shortage of momentous news in the cattle industry.
The over-riding issue this year centered on prices, both for inputs and for cattle, meat and dairy products. During 2012, what had been a multi-year regional drought centered over the Southern Plains went national, slamming forage and grain yields across the Midwest and Plains. The loss of production, coupled with corn demand for ethanol production drove corn prices into the range of $8 per bushel early in 2013. Beef producers continued to liquidate herds, following a trend lasting more than a decade. Cattle prices moved higher as supplies shrank, but profits were hard to come by, particularly in feedyards and dairies, as feed prices outpaced gains in livestock returns.
In May 2013, boxed-beef prices reached record-high levels, topping the $200 per hundredweight barrier for the first time. Around the same time, fed-cattle prices averaged over $125 per hundredweight. Even with those prices, cattle feeders were posting losses of about $100 per head according to our exclusive Sterling Profit Tracker.
Cow-calf producers on the other hand, fared well, with 2013 prices for 550-pound steers averaging around $165 per hundredweight. That translates to an average of about $250 per head profit, according to Sterling Marketing.
For dairy producers, exports are at record highs and milk prices are likely to average about $19.95 per hundredweight in 2013 – short of a record but high by historical standards. While the U.S. beef herd has contracted dairy-cow numbers have been fairly stable in recent years, resulting in a larger percentage of U.S. beef production coming from dairy-breed cattle.
The outlook for cattle producers began to improve as the 2013 growing season progressed, with much-improved conditions across most of the country bringing promise of full hay barns and a record corn crop. At year’s end, industry analysts are projecting a shift toward herd expansion, with growing numbers of heifers remaining in herds for breeding. Cattle Fax expects a year-over-year increase in heifer retention of about 140,000 head in 2014.
Other highlights for the year include:
- ADT – The federal animal disease traceability (ADT) rule took effect in March 2013, requiring documentation and recordkeeping for certain classes of cattle shipped across state lines. The rule applies to all sexually intact cattle 18 months of age or older, dairy-breed cattle of any age and cattle transported to shows, exhibits or rodeos. Beef calves and feeder cattle younger than 18 months are currently exempt.
- Antibiotics – In December 2013, the FDA finalized Guidance 213, which calls on companies to voluntarily remove growth-promotion or feed-efficiency claims from antibiotics used in livestock production. Under another proposed rule, a range of drugs currently available over the counter would fall under the veterinary feed directive if used in feed or water.
- BSE – In May 2013, the World Organization for Animal Health (OIE) voted to upgrade the United States' risk classification for bovine spongiform encephalopathy (BSE) be upgraded to its top rating of “negligible risk,” potentially opening up additional markets for U.S. beef exports.
- COOL – Mandatory country of origin labeling (COOL) for meat products remains as contentious as ever. In May 2013, the USDA issued a revised COOL rule, after the World Trade Organization (WTO) determined the previous rule violated trade agreements. Lawsuits ensued, but a U.S. district court upheld the rule in September. Groups such as the National Farmers Union and R-CALF USA favor the COOL law, while NCBA and the American Meat Institute oppose it. Further challenges through the WTO are likely. Stay tuned.
- Farm Bill – The House and Senate passed their respective versions of a farm bill over the summer, but at year’s end have failed to reconcile their differences. Maybe next year.
- Japan – In February 2013, Japan relaxed its rules for imports of U.S. beef, allowing beef from cattle less than 30 months of age rather than the previous limit of 20 months the nation put into place when it resumed imports following the first U.S. case of BSE in 2003. The change allowed significant increases in beef shipments to Japan this year.