Skip to main content

Limit Up

By Tori Uhland

March 1, 2024

We are now officially over two months into 2024. Business has been slow in the feed ingredient world, but despite that, these last two months have still passed in the blink of an eye. As you probably know, the Texas Panhandle has been devastated over the last week or two with the largest wildfire in the state’s history. There are also large fires throughout Oklahoma and in Kansas. My heart breaks for everyone who has been affected. It will be a while before we know the final numbers of acres burned, homes destroyed, and livestock lost. I can’t help but wonder how much impact it will have on the grain, feed, and cattle markets. As of this writing, it hasn’t caused any huge swings as most of the land has been rangeland with a very low population of cattle per acre, but it certainly isn’t helping anything.

The Cattle on Feed report was disappointing, though the Live Cattle contract survived as the trend is still pointing to a tighter supply. Higher trends in cash cattle and boxed beef prices are helping to support the Live Cattle market. The fires across the plains have raised more concerns about the US cattle supply as inventories are already low and dry pasture conditions discourage herd expansion. Normally, I would preach that it’s all about supply and demand, and a low supply means higher prices, which would be good for anyone selling cattle. While this still holds true, it’s kind of a fine line in this scenario. Beef prices are the highest they have been in four months, but so are the prices of cattle to replace the herds.

The fires have also put a lot of attention on the US wheat crop as the dryness is certainly being noticed in hard red winter wheat areas. The wheat market has had a hard time finding anything to get bulled up about over the last couple of years, aside from a war in the bread basket on the other side of the pond. However, with extremely weak prices in the Black Sea and rains in the forecast for the US Southern Plains, any upside momentum has been lost. We have had some way above normal temperatures which could lead to some worries about crop damage if the wheat crop were to come out of dormancy and then we see a big cold snap later on. As of last week, condition ratings are much better than last year with the Kansas Good/Excellent rating at 57 percent compared to 19 percent last year.

The corn market seems to have found some support around the $4 range, but a major price rally probably won’t happen until we see a big threat to the US or Safrinha corn crop. February is the month that spring crop insurance prices are added, and it is eye-opening how much they can differ from year to year. Back in 2018, the spring crop insurance price came out at $3.96. In 2019, it was $6.03, and in 2020 it was $3.88 (a drop of $18.08 per acre in coverage from the year prior). It went back up to $4.58 in 2021 (an increase of $105.49 per acre) and in 2022 increased by $198.93 per acre when the crop insurance price was $5.90. 2023 was very similar, coming in at $5.91 (coverage increased by $1.51 per acre from 2022). This year looks a little different…the 2024 crop insurance price is $4.66, making a decrease in coverage of $188.38 per acre compared to 2023. Just like many things this year, the spring price is disappointing especially when comparing it to that of the last couple of years.

Other News