Animal Science: Today and Tomorrow
By: Dr. Michael L. Looper and Dr. Tom Troxel
Classes begin! The Department welcomes new DVM faculty member.
Fall classes have resumed and enrollment was up again in the Department of Animal Science with over 275 undergraduates. With this increase comes the challenge of accommodating students in both lecture and lab sections. To help with increased teaching loads, we are pleased to welcome Dr. Andrew Fidler to the Department of Animal Science. Dr. Fidler comes to us from his position with Dairy Farmers of America. Dr. Fidler completed a B.S. degree in Animal Science from Cornell University, a DVM from the University of Tennessee, and a veterinary residency in ruminant health at North Carolina State University. Dr. Fidler began his teaching duties on August 20.
What will the future bring?
- The fundamentals shaping the 2012 markets are going to have long lasting effect on the industry. Many of the trends that shaped 2011 are still in place – declining cattle supplies, stronger domestic beef demand and a sluggish U.S. economy.
- Weather has played a big role in changing expectations. Drought has now spread across most of the U.S., and it will likely threaten profitability for nearly every beef industry segment before it is finished. Tighter forage, feed grain and cattle supplies will increase the importance of managing input costs in 2012 and 2013 for all producers.
- Cow-calf producers will have limited opportunities for expansion in 2012, and the potential for a 2013 expansion will face pressure from record-high input costs. Beef cow slaughter is 6% below a year ago and 2% below the five-year average, but that is not enough to offset continued liquidation. The drought has sent calves to the market early and buyers will be hesitant to bid aggressively for calves amid higher feed prices.
- Record-high calf prices this spring threatened stocker and backgrounding margins. Then, demand for feeder cattle faded quickly this summer as drought forced earlier marketings and moved corn prices to new highs. Demand for feeder cattle should improve later in the year. However, upside price potential will depend on increasing deferred live cattle futures prices and declining corn prices.
- Most feedyards have been operating with negative margins on a cash-to-cash basis for at least two months, and that is not likely to change in 2012. Due to continued liquidation of the cow herd coupled with tight corn supplies, margins will remain thin in 2012 and 2013.
- The economy remains a concern, but domestic demand continues to be stronger than a year ago. Demand for Choice beef has been stronger with increasing customer traffic in restaurants and additional buying pressure from Wal-Mart. For the rest of 2012, continued strong demand will be needed if prices are to reach or exceed first half highs due to larger than expected per capita supplies. For 2013, if demand can at least run steady with 2012, prices will likely reach new record highs as supplies are forecast to decline for the year.
- Expect increases in the U.S. beef cowherd to be delayed until January 1, 2015.
- CattleFax expects the 2012 calf crop to decline 800,000 head – the largest decline since 1997.
- U.S. beef production will drop nearly 1 billion pounds in 2012 and 2013 combined.
- Beef demand is up 5% year to date. CattleFax expects demand to finish at or modestly below that level by year end.
- Calf prices through the second half of 2012 will face extreme pressure as grain values trade near record prices. This will be a limiting factor into early 2013. Expect calf market values to increase as stocker operator demand increases. Prices are expected to move higher as green grass fever kicks in during the spring. CattleFax expects spring highs in the $190/cwt. price range. Calf values could find higher support in the second half of 2013 – providing corn supplies increase and prices can move back toward $5/bu.
- The bred female market will continue to be affected by drought, lack of feedstuffs and the next 12 months of high corn values. Bred females values will increase significantly from fourth quarter 2012 to second quarter 2013 if winter precipitation can relieve current drought conditions and benefit spring and summer pasture conditions. Values could improve as much as $350 per head.
- The cull cow market will follow a normal seasonal pattern during the next 18 months. Expect Utility grade cull cows lows this fall under $70/cwt., which will put the 2012 average near $78/cwt. The market should average close to $88/cwt. for 2013, with a range of $72 to $100/cwt (CattleFax).