MIdwest beef market snapshot

Posted on October 6, 2021 in Starting Strong - Calf Care
By Tyler Johnson, Vita Plus beef specialist

It has been a tough year for many farmers in the Upper Midwest. We have seen areas of extreme drought (especially here in Minnesota), severe weather that has damaged crops and other crop health issues. As a result, our markets are still going through their ups and downs.

As I write this article, national corn yield estimates are currently 4% over last year, but there is some skepticism of that number.  In some parts of Minnesota, feed mills and ethanol plants are currently paying up to a dollar over-board for corn, keeping the cash corn price high for feeders. Although most of the Upper Midwest has had some much-needed rain relief since the end of August, the drought through the spring and most of the summer led to lower-than-average forage yields. Lower corn yields are also expected in many areas of the Upper Midwest and could keep the cash corn price high at the local mill level through new crop. These factors are contributing to higher ration costs for feeders into the foreseeable future.

The recent fire at the JBS plant in Grand Island, Nebraska, sent a scare to producers, but luckily production resumed the following day and slaughter volume ended higher than the previous week. We are seeing higher-than-normal cull cow slaughter because of the drought. As a result, next year’s cattle inventory is expected to be lighter. But for now, beef production is high and we have been seeing boxed beef prices slowly falling. Cash sales to packers were fairly light in mid-September, leaving the live price steady at $1.25 to $1.27 per hundredweight.

Calf prices have been strong so far this fall. This is a relief to many of the western ranchers who are weaning early and at weights up to 100 pounds lighter than average.  Even with strong calf prices and high ration costs, 2022 projections are in the black. Unfortunately, current closeouts are currently in the red for many.

Holstein feeders are happy to see the Holstein-colored cattle basis tightening in the last two months to as low as $7 in areas. Holstein feeder prices have also been higher this year as demand for large groups stays strong. Feeders who have been feeding Holsteins for a long time are now struggling to find large groups and paying a premium for quality sources of bull calves.

We continue to see more dairies shift to crossbreeding with beef genetics to add value to their bull calves. Genetics companies have improved these programs in the last few years, resulting in a more consistent final product and some packers are finding a place for them. A few of my customers feed a combination of Holsteins and dairy-beef crosses, selling them in mixed loads at the same contract price. Although the Holsteins have heavier carcass weights, the crosses are still more profitable because of their better feed conversion and fewer days on feed. We have also seen fewer health issues and better performance in the severe cold.

Combines are rolling here in Minnesota and, even with some rain, the weather looks to be favorable for a great harvest season. I hope that all the famers and feeders stay safe and healthy this fall!

Category: Business and economics
Dairy beef production
Starting Strong - Calf Care