Dennis Sun: Dire Thoughts About That Recent ‘Billion Dollar’ Storm

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By Dennis Sun, Wyoming Livestock Roundup

As I write this column, the March snowstorm is hopefully on its last leg. Some are calling it a “million dollar storm,” and it could be with the year-long drought some of us are experiencing. Maybe to keep in tune with all the spending in Washington, D.C., it was a billion dollar storm.

Whatever we call it, the moisture was well needed. We realize it was hard on livestock and those taking care of them, but it may have saved us for the coming year. We hear there are other storms following. We really don’t need another storm of this magnitude – whatever happened to a three-day rain?

Storms this time of the year, besides helping the soil moisture, spur activity in the cattle and sheep markets – especially in the Great Plains area. Stockers are headed for the weekly sale barns looking for summer cattle.

The last few days have produced a wide range of weather conditions across cattle country, and in some parts of the cattle and sheep country it is still terribly dry. It will be interesting to see what happens weather-wise between now and the middle of June.

According to Darrell Peel of Oklahoma State University in this week’s Drovers news, data from the middle two weeks of February as the result of the big storm in Texas and surrounding states, showed steer and heifer slaughter dropped over seven percent year-over-year before coming back. Steer carcass weights dropped sharply in February, declining by 20 pounds – from 919 pounds to 899 pounds – in the last two weeks of the month.

Twenty pounds per carcass may not sound like a lot, but in the U.S., we are killing around 650,000 head of cattle weekly.

Peel said, “The last week in February marks the first time in 71 weeks – since October 2019 – weekly steer carcass weights were lower than the previous year. Heifer carcass weights dropped 6.1 percent from 850 to 834 pounds in the same period.”

Beef production has since come back to average numbers before the storm in February.

Before the March storm last week, cattle volume in wheat country was high as cattle were moved off wheat fields in the Southern Plains. In the Northern Plains and southwestern part of the country, volume was traditionally low with ranchers and stockers watching the drought. It could pick up now for those looking to buy yearlings.

There are a few reasons yearling prices may be rising, demand is strong in the Southern Plains, supported by a good premium of fall feeder cattle futures to nearby contract levels.

The value of the U.S. dollar has weakened substantially in the past year. As we know, a weaker dollar generally makes U.S. agriculture products more competitive in the world export market.

After a challenging currency position in 2020, analysis says the outlook for a stronger Australian currency and Euro should make U.S. beef and pork exports the largest beneficiaries this year.

Couple this with the lower number of cattle in the U.S. and the growing demand of the global foodservice; it all paints a positive picture.

But, as always, we’ll have to watch the weather, exports and the Washington, D.C. happenings.

Two out of three isn’t bad.

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