What is in this article?:
- 2012 Midwest drought will continue to have an impact on livestock numbers, prices
- Cow inventory questions
• "I think the story is that livestock numbers are going to be tight in 2013, and meat supplies are going to be very tight — even tighter than this year," says John Anderson, deputy chief economist for the American Farm Bureau Federation.
WILLIAM DEAN ATKINS, left, and his wife, Jeanette, Monroe County peanut and grains producers, visited with Donald Gant, Bolivar County rice and grains producer, at the annual meeting of the Mississippi Farm Bureau Federation.
Last summer’s scorching Midwest drought not only took a drastic toll on the nation’s corn yields, it sent livestock feed prices soaring and caused an unusually quick and sharp reduction in beef, pork, and poultry numbers that will have repercussions through 2013, says American Farm Bureau Federation Deputy Chief Economist John Anderson.
“This year’s drought was something of an odd situation because reactions by producers were atypical,” he said at the annual meeting of the Mississippi Farm Bureau Federation.
“The striking thing about the meat sector’s reaction to the drought was that it didn’t proceed the way it usually does. Normally, when a drought is starting, everyone sorta hunkers down and tries to wait it out. Then, when everybody can’t hang on any more, we see a big market purge and everyone moves on. That’s pretty much the standard reaction. But that’s not what happened in 2012.”
When the June weather market started in the grains sector, corn prices started really taking off and the drought seemed a long-range thing, there wasn’t any hunkering down in the livestock sector, Anderson says.
“There was an immediate purge. We saw dairy cows going to market, we saw beef cows going to market, we saw hogs going to market, we saw poultry producers putting the brake on any expansion. Growers weren’t waiting to see how things would play out — they were getting numbers down to levels they thought they could live with.
“I think the biggest factor was that pork production really went through the roof, which put a lot of pressure on wholesale meat prices, and packers were unable to move meat at a level they’d like.
“The pork sector reacted really swiftly to higher beef prices and started pulling market hogs ahead a lot faster than we expected. We had a huge surge in pork production through mid-summer that not many had anticipated.
“The big run in pork prices coincided with the big leg downward in feeder cattle prices. It was even more severe on medium weights, the 400- to 500-pounders.
“We had a situation where feed prices were going up, and the bigger cows looked more attractive in the feedlots. Smaller cows just had a lot farther to go to get them finished with $8 corn. And for the most part, they still haven’t recovered as well as the larger cows.”
Looking to 2013, Anderson says, “I think the story is that numbers are going to be tight, and meat supplies are going to be very tight — even tighter than this year.
“I’m a little less optimistic than a year ago about the general economy, but if we can get some kind of slow but steady growth like we’ve had the last year or two, at least the economy won’t be a drag on the market.
“We ought to have strong fed cattle markets, with a good spring high, close to where we were last year, maybe a buck or two higher, followed by a very modest summer drop, 5 percent or so, then back up to a strong fall market.
“I think maybe we’re in a bit better shape on the supply side, because the drought has forced some additional contraction, which should give supply more support on for 2013.”