Out with 2013, now bring on 2014!

Dec 27, 2013

With 2013 on its way out this week, it’s out with the old and in with the new…time to make and break those New Year’s resolutions. The past year has definitely not been short on the news end, with climate change, Obamacare, the farm bill, COOL and a number of other hot topics to fill the ink pages and the world wide web. Throw in the rollercoaster weather, with fires, drought and blizzards, and some producers may be breathing a sigh of relief rolling into 2014.

Despite all of the drama, cattle prices were record high in 2013 with tight supplies finally becoming the dominant market force, according to the Livestock Marketing Information Center (LMIC).

Calendar year 2014 is forecasted to bring more record highs. But the lesson of the last two years is that high prices don’t always mean profits. Feedlot closeouts gushed red ink until the last few months of 2013, LMIC points out. Many cow/calf operations recorded their highest costs ever due to huge winter feeding bills.

The USDA-AMS 5-market aver age steer price was above $120 per cwt. each quarter of 2013 and annually eclipsed the prior record high set in 2012 by over $3 per cwt. Calf and yearling prices were generally on a downward trajectory in the first half of 2013, but as soon as improved corn crop prospects and forage conditions came onto the scene, the market direction changed dramatically. In the fourth quarter, yearling and calf prices were higher than any time in history, LMIC pointed out. Instead of the normal softening of calf prices during the fourth quar ter of the year, prices took off.

In the Southern Plains, 500-to 700-pound steer calves averaged over $187 per cwt. in the fourth quarter, 16 percent above 2013’s. Yearling steers (700- to 800-pound) averaged over $167 per cwt. in the final three months of 2013, 14 percent above a year earlier.

But according to LMIC, U.S. beef production in 2014 is expected to decline dramatically, posting an annual drop of 6 percent to 7 percent, falling to its lowest level since 1993. If beef demand is rather stable in 2014 (both domestic and foreign), both beef and fed cattle prices have room to continue higher.

Current forecasts put 5-market average slaughter steer prices for 2014 5 percent to 7 percent above 2013’s and should average over $130 per cwt. for the first time. After the price run-up in late 2013, resistance to further calf and yearling price increases will come from returns for those feeding cattle. At least into early 2014, all the profit potential of feeding cattle has been bid into feeder animal prices.

Further strength in the fed cattle market and lower feedstuff costs will be required to significantly bid-up feeder cattle prices. Year-on-year gains in calf and yearling prices will likely be the smallest in late 2014. In next year’s fourth quarter, another good crop growing year in the Midwest could put calf and yearling prices 1 percent to 5 percent above 2013’s.

The coming year will likely continue its rollercoaster ride on the political end, with unfinished business at the Capitol.

Last week Agriculture Under Secretary Michael Scuse joined Tim Hamilton, Executive Director of Food Export-Midwest and Food Export-Northeast, as well as Dave Ramirez of Ohio-based Trophy Nut, to discuss the benefits of the farm bill to expand markets around the world and grow American agricultural exports. Secretary Vilsack has called on Congress to expedite passage of a new food, farm and jobs bill.

Under Secretary Scuse emphasized the importance of agricultural exports to job creation, as well as the critical need for a dependable safety net that will allow America’s producers to continue providing a reliable food supply at home and abroad.

U.S. agricultural exports reached a record $140.9 billion in fiscal year 2013 and supported about a million U.S. jobs. In fact, compared to the previous fiveyear period from FY 2004- 2008, U.S. agricultural exports from FY 2009-2013 increased by nearly $230 billion. The past five years represent the strongest five-year period in our nation’s history for agricultural exports.

As a result of America’s agricultural productivity, U.S. families pay less for the food they consume at home, as a portion of their income, than the people of any other nation, according to a USDA release.

According to USDA, a new farm bill is a necessity in 2014.

• A farm bill would continue trade promotion programs that provide $35 in economic benefits for every dollar invested. Specifically, a new farm bill would continue efforts under the Market Access Program and Foreign Market Development Program.

• Since 2009, USDA has led more than 150 U.S. agribusinesses on agricultural trade missions to China, Colombia, Ecuador, Georgia, Indonesia, Iraq, Panama, Peru, the Philippines, Russia, Turkey and Vietnam.

• In addition more than 1,000 U.S. companies and organizations—about 70 percent of them small and medium-sized businesses—participated in USDAendorsed trade shows around the world. A new farm bill will allow this number to grow further over the next several years by enabling even more direct efforts to market U.S. products abroad.

• In addition to new trade agreements with Colombia, Panama and South Korea, USDA helped achieve organic equivalency agreements with Canada, the European Union and most recently Japan, reducing red tape and boosting opportunity for organic growers.

• Farm bill programs would complement efforts that USDA has undertaken to break down unfair barriers to U.S. trade.

• USDA has assisted in Administration efforts to challenge more than 750 sanitary and phytosanitary trade barriers since 2009. These challenges in World Trade Organization monitoring and enforcement meetings have helped to ensure a level playing field for U.S. producers. This compares to less than 400 such challenges in the previous fiveyear period.

• In 2013 alone, these efforts expanded market access for U.S. beef to nations around the world including Mexico, Japan, Hong Kong and Indonesia, and contributed to record U.S. beef exports of $5.9 billion.

• In recent years, USDA trade enforcement efforts have expanded access for U.S. dairy exports to China and the European Union; potatoes and rice to South Korea; horticultural products to Japan, Taiwan and Indonesia; cattle to Iraq, Jordan, Kazakhstan, Thailand and Vietnam; poultry to Russia, the Gambia and Belarus; and more.

• And a new farm bill would ensure that our producers have the tools they need to continue growing more at home, keeping food affordable for Americans and fueling exports around the world.

• More than 159,000 direct and guaranteed farm operating and ownership loans since 2009 have helped America’s producers keep growing. A new farm bill would allow for continued credit programs to assist farmers and ranchers across the nation.

• Farm bill disaster assistance provided more than 400,000 payments to farmers and ranchers before these programs expired in 2011. Critical assistance has been unavailable since that time for producers dealing with drought, floods, severe storms and many other disasters. A new farm bill would not only reauthorize disaster assistance; it would provide retroactive help for livestock producers who have been hit by drought and other disasters in recent years. — Traci Eatherton, WLJ Editor