Tim Petry, NDSU Extension livestock economist, recently talked about livestock industry issues with the coronavirus outbreak during an NDSU Extension weekly webinar. A different issue in the ag industry is covered by NDSU ag economists each webinar.
The Coronavirus Food Assistance Program was designed provide $51 million in aid to livestock producers, but distribution has been challenging, thus far.
“As we’ve been saying all along, it’s a monumental task that USDA has to try to figure out – how to distribute all this money,” Petry said.
Previously, the webinars mentioned there would be 85 percent compensation for cattle sold from Jan. 1-April 15.
“USDA sent the final proposed rule to the Office of Management and Budget on May 5,” Petry said. “They have two weeks to try to figure out where all the money is coming from and how to set the rules up, and they have been working with USDA.”
While there weren’t any limits on individual producers in the new rule, the Farm Bill has set limits on individual producers.
Will the USDA raise those cap limits or not? USDA Secretary Perdue said that payment limits would be increased, but he has also said that the payment limits were adjusted.
“We’ll have to wait and see when the rules come out as to what they are,” he added.
U.S. Sen. John Hoeven is saying that there is interest in adding even more money to the USDA Commodity Credit Corporation for use on the crops and livestock side of the industry.
“On the packing side, all the beef packing plants that were closed have reopened, but we had one closure this past week, Cargill in Schuyler, Neb.,” Petry said.
Tyson opened its plant in the state of Washington, and Dakota City and JBS opened their Green Bay, Wis., and Greeley, Colo., plants. A smaller plant in Aurora, Ill., has opened up, along with the national plant in Tama County, Iowa.
“We are back open. The bad news is that they are not at the capacity they were before they closed with all the distancing,” Petry said.
The Smithfield hog plant in Sioux Falls, S.D., is reopened but at a much reduced capacity.
There has been record production of beef, pork and chicken. Exports are important, and the U.S. is expecting record exports of beef and pork, above last year.
In March, beef exports were above last year and on a record pace.
However, wholesale prices have increased, and there are problems with higher prices, which limits the ability of other countries to buy U.S. beef.
What is happening with pork?
Last November, pork exports were at record highs, not quite double what exports had been previously, but regularly higher.
“Our biggest markets are usually Japan, followed by Korea, Mexico and Canada,” Petry said. “Last year, our exports to Japan, our number one exporting country, fell off, while Korea picked up. And there were quite a few months where they were at the same level.”
One of the reasons is the U.S. settled its trade agreement with Korea early in 2019, but we didn’t settle with Japan until the end of the year. “In fact, our new trade agreement with Japan only became effective on Jan. 1 of 2020,” he said.
Japan has been a very good market for the U.S.
“China has just skyrocketed to the number one place in taking pork from us because of their significant downfall, 25-40 percent reduction in pork,” Petry said.
There are plants geared up for exports, plants geared up to provide meat to restaurants and plants geared up to provide meat to retail stores.
“It’s hard to make the switch. You know, we have a hog plan on the East Coast that just does pork into carcasses and ships to China,” he said. “That way they don't break it down because China wants carcasses so they can cut it the way they want to.”
In the U.S., wholesalers and retailers want to buy boxes of hams or loins or ribs, whatever it might be.
Auction markets were going full blast, particularly in the early-spring and in fall at West Fargo, Napoleon, Mandan and Dickinson. This time of the year, however, they have stopped reporting when the markets and receipts fell away.
Last week, only Mandan was reporting, and that is the base that we have to buy in for prices for the lightweight cattle in the box.
“They’re still selling bulk, as they were last year, and at fairly decent levels given all the pandemonium that we have going on there,” he said. “A 570-pound steer that will bring 160 per hundredweight is $925. For most producers, that is above the cost of production at about a normal level.”
With planting going on and even harvest of corn, receipts are “dropping off like they do usually seasonally when we get rid of the last background cattle.”
The cash markets for medium and large feeder steers are about the same. But the big news is that the futures market the last week of April was quite strong. The May futures went up $10.
“Interestingly enough, November feeder cattle now are the same price that cash feeder cattle were in North Dakota last week,” Petry said.
Petry talked about the Livestock Risk Protection (LRP) Program.
“I had several calls, ‘Why isn’t LRP being offered? When feeder cattle and/or fed cattle move the limit, then LRP is not offered,” Petry said. “And so again, we had – both in fed cattle and feeder cattle – limit up or expanded limit up of movements.”
Petry said they have set up webinars about beef industry issues, such as imports and exports and packer profits and how can we get more local meats out, and mandatory COOL.
“We’ve set up a whole series of webinars to address those issues in detail, along with Texas and West Virginia,” he said.
For those interested in the webinars, visit www.ag.ndsu.edu/livestockextension/intersectionwebinars to register.
For the NDSU ag economics webinar login information, visit https://www.ag.ndsu.edu/alerts/coronavirus, or search for “NDSU Extension coronavirus.”