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3 Gaming Stocks To Watch For January 2022

Could gaming stocks be poised for a strong 2022?
The post 3 Gaming Stocks To Watch For January 2022 appeared first on Stock Market News, Quotes, Charts and Financial Information | StockMarket.com.

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Do You Have These Top Gaming Stocks On Your Watchlist? 

Gaming stocks have not seen the same level of momentum in the stock market as they did at the early stages of the pandemic. After all, with the reopening of the economy, people have more entertainment choices. That said, the recent Omicron scare has gotten governments around the world on their toes. Countries around the globe are reconsidering their restriction policies to curb the spread of the virus. Therefore, it should not be surprising that gaming stocks are starting to gain traction among investors again. In fact, even Bank of America remains bullish on some of the top names in the industry. The bank’s analyst Vivek Arya believes that NVIDIA (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD) are poised to keep growing this year.  

On one hand, the analyst believes Nvidia is a “top compute pick” as consumers are willing to buy graphics cards at inflated prices. On another hand, AMD’s “Big Navi” products now sell between $299 and $399, well above previous AMD products that went for $150 to $200. Overall, the demand for gaming products remains high and this can only be viewed as a positive for the industry.

Besides that, the industry also rarely lacks exciting developments. For instance, Sony (NYSE: SONY) started the year by announcing its PlayStation VR2 and its new controller, the PlayStation VR2 Sense controller. This would take gaming to a whole new level as players can escape into virtual worlds like never before. Keeping these factors in consideration, do you share the same sentiment regarding the gaming space right now? If so, here are some of the top gaming stocks to watch in the stock market today.  

Best Gaming Stocks To Watch This Week

Take-Two Interactive 

First, let us take a look at one of the leading developers, publishers, and marketers of interactive entertainment, Take-Two. Serving entertainment for consumers around the world, the company is no stranger to most gaming enthusiasts. Some of its most notable products include RockStar Games, 2K, Playdots, and many more. You could access its games through gaming consoles such as Sony’s PlayStation, Microsoft’s (NASDAQ: MSFT) Xbox One, and even portable devices such as smartphones and tablets. Well, it is without question that the past year has been a challenge for TTWO stock. Could things be changing this year?  

Last week, Take-Two announced that it has entered a definitive agreement with Zynga (NASDAQ: ZNGA) to acquire all of its outstanding shares. Under the agreement, the transaction will be in cash, and the stock transaction is valued at $9.86 per share, based on the market close as of January 7, 2022. This transformative transaction will significantly diversify Take-Two’s business while solidifying its place as one of the leaders in mobile gaming. Also, it would allow the company to operate at a much larger scale which would deliver significant value to both sets of stockholders.  

On top of that, the company will be announcing its third-quarter earnings report on February 7, 2022. Investors should note that the company had a strong financial showing for its previous quarter. During its second quarter, the company’s GAAP revenue continued to grow despite strong economic reopening plays. It reported net revenue of $852.2 million, an increase of 2%. Consequently, it raised its Net Bookings outlook for the fiscal year 2022 to $3.3 to $3.4 billion. Hence, it is understandable that investors will be on the lookout for how the company does in its upcoming financial update. With that in mind, would you consider adding TTWO stock to your watchlist ahead of time? 

best gaming stocks (TTWO stock)
Source: TD Ameritrade TOS

[Read More] Best Lithium Battery Stocks To Buy Now? 4 To Know

Corsair Gaming

Another top gaming company that should not be overlooked is Corsair. Unlike Take-Two that develops the games directly, Corsair provides gear for gamers and content creators. In detail, Corsair designs and sells gaming and streaming peripherals, components, and systems globally. From gaming keyboards, mice, and headsets to cooling solutions, the company has it all. 

Earlier this month, the company announced that it acquired a 51% stake in iDisplay Technology. For those unaware, iDisplay is a leader in electronic development and design specializing in display technology. Its expertise has earned it a reputation as an innovator of small-form-factor displays and has developed a broad patent portfolio. Safe to say, this addition would be a huge boost for Corsair as it continues to integrate touch-screen technologies into its feature-rich products. 

Not to mention, Corsair also recently announced its new CORSAIR ONE i300 range of compact desktop PCs, the latest in the award-winning lineup. The computer will be powered by the latest 12th Gen Intel Core processors, debuting with a formidable Intel Core i9-12900K. Also, it will come with an assortment of premium CORSAIR components including VENGEANCE DDR5 memory. Overall, this could be one of the premier choices for PC gaming, creative applications, and more. Given such exciting developments lately, should you be keeping an eye on CRSR stock?  

CRSR stock
Source: TD Ameritrade TOS

[Read More] Best Monthly Dividend Stocks To Buy Now? 5 For Your List

Unity 

Last but not least, we have the gaming giant, Unity. Essentially, the company provides a platform for creating and operating interactive, real-time three-dimensional content. This includes Create Solutions and Operate Solutions that enable customers to express their imaginations across a range of third-party content distribution platforms. With a belief that technology can change the world, it strives to provide the world with more creators that could play a pivotal part. 

In December, Unity announced the availability of the Meta Audience Network for in-app bidding access in Unity Mediation, available within Unity Ads. The solution will give developers access to the most comprehensive demand with over 60+ ad ecosystem partners as well as enhanced tools to set pricing strategies and bid competitively. This means that publishers get self-serve and streamlined access to a premium demand source. Hence, making it quicker and therefore easier to maximize their revenue. 

In addition, the company had a stellar third quarter that was driven by innovation and growth. Unity announced revenue of $286.3 million, an increase of 43% year-over-year. In light of this, it was able to confidently raise its revenue growth guidance to 40% for the full year. Therefore, it is not surprising that investors are eyeing the stock right now, in anticipation of its fourth-quarter financial update. All things considered, should U stock be a top gaming stock to watch right now?

U stock chart
Source: TD Ameritrade TOS

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Six Commodities Investments to Buy as Putin Wages War on Ukraine

Six commodities investments to buy amid the sustained attack of Ukraine by Russia’s President Vladimir Putin and rising inflation provide potential to…

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Six commodities investments to buy amid the sustained attack of Ukraine by Russia’s President Vladimir Putin and rising inflation provide potential to profit even as the market has been pulling back so far in 2022.

The six commodities investments to buy include those involved in oil, gold and grain due to current supply shortages that are showing no signs of abating anytime soon. Putin’s order for Russian troops to invade Ukraine on Feb. 24 has disrupted the neighboring nation’s agricultural production, led to the theft of grain and imposed an ongoing blockade in the Black Sea to stop farmers from exporting their crops.

Crude oil inventories are down to a “dangerously low point” across Europe, North America and Organisation for Economic Co-operation and Development (OECD) Asia, just as spare production capacity from OPEC+ nations slid to the lowest levels since April 2020, according to BofA Global Research. Inventories of petroleum products also have fallen to “precarious levels” for middle distillates and even gasoline as the market heads into the peak of the U.S. summer driving season, the investment firm added.

As a result, refined petroleum cracks — the differences between crude oil and the prices of the wholesale petroleum products such as gasoline — recently have “spiked to record levels,” contributing to volatility, BofA wrote. In addition, strategic oil barrels held by OECD governments already are low and likely to decline steeply going forward, leaving consumers exposed to future negative supply shocks, BofA predicted.

Pension Fund Chairman Recommends Broad Commodity Funds

Bob Carlson, a pension fund chairman who also leads the Retirement Watch investment newsletter, recommended Cohen & Steers MLP & Energy Opportunity Fund (MLOAX) to all the portfolios in his June 2022 issue. 

Oil and natural gas should be good investments as Europe looks to reduce dependence on Russian exports, Carlson told me. Plus, energy producers in the United States are focused on increasing cash flow and earnings, not maximizing drilling expenses in the short run to increase output, he added.

Bob Carlson, who leads Retirement Watch, meets with Paul Dykewicz.

Good investment opportunities can be found with companies that provide the pipelines, storage facilities and other infrastructure needed to supply the world with oil, natural gas and other energy sources, Carlson continued. 

“One of the attractive qualities of these investments is that their revenues are independent of the prices of the commodities,” Carlson counseled. “The firms charge fees for their services, and the fees often are adjusted for inflation. Their revenues and earnings depend on the volume of commodities passing through their facilities, not the price of the commodity.”

Key energy service companies provide total returns, aided by current income and price appreciation, through investments in energy-related master limited partnerships (MLPs) and securities of industry companies, Carlson pointed out. Those businesses are expected to derive at least 50% of their revenues or operating income from exploration, production, gathering, transportation, processing, storage, refining, distribution or marketing of natural gas, crude oil and other energy resources.

Chart courtesy of www.stockcharts.com

Cohen & Steers Fund Leads List of Six Commodities Investments to Buy

Cohen & Steers MLP & Energy Opportunity Fund recently held 53 positions and had 50% of its portfolio in the 10 largest positions. Top holdings of the fund included Enbridge (NYSE: ENB), Cheniere Energy (NYSEAMERICAN: LNG), Williams Companies (NYSE: WMB), TC Energy (NYSE: TRP) and Energy Transfer (NYSE: ET).

The fund has achieved strong returns since April 2020. Indeed, it has been on an upward trajectory since the second half of December 2021.

“Crucially, oil prices have held up well even in the face of a slowing Chinese economy and widespread lockdowns,” according to BofA. “Given that most China indicators point to a major decline in mobility across the country, any improvement in the COVID-19 situation in large Chinese cities could send oil prices much higher.”

Carlson’s Chooses DBA to Join Six Commodities Investments to Buy

Despite the evils of war, investors still can profit from the rise in grain prices and other commodities through the futures markets, even as many other equities slip. Instead of buying futures directly, investors can purchase diversified agriculture commodities through Invesco DB Agriculture Fund (DBA), Carlson said.

That ETF seeks to track changes in the DBIQ Diversified Agriculture Index Excess Return. The ETF also earns interest income from cash it invests primarily in treasury securities, while holding them as collateral for the futures contracts.

The major holdings in the index are soybeans, wheat, corn, coffee and live cattle. The index is reconstituted each November.

Chart courtesy of www.stockcharts.com

Gold Funds Featured Among Six Commodities Investments to Buy

Carlson also is recommending gold through iShares Gold Trust (IAU). He described it as the “cheapest, most liquid way” to invest in the shiny yellow metal.

Gold has had its ups and downs in the face of rising global inflation, Russia’s invasion of Ukraine, China’s increasing military flyovers of nearby Asian nations and other geopolitical conflicts. At the same time, the U.S. dollar has been appreciating amid high inflation after the Fed recently raised interest rates by 0.5% and promised additional increases later in 2022.

However, there are many risks for the U.S. dollar, so continuing to hold gold remains a good hedge, Carlson counseled.

IAU has retreated since early March, so investors seeking to buy it now that it is rebounding still may do so. Those who believe inflation may stay through 2022 can try to capture gains before the trend no longer is a friend.

Chart courtesy of www.stockcharts.com

Skousen Calls GLD One of the Six Commodities Investments to Buy

“Gold has done far better than stocks, which are down 15-25% this year,” said Mark Skousen, who is recommending SPDR Gold Shares (NYSE Arca: GLD) in his Forecasts & Strategies investment newsletter. 

Mark Skousen, head of Forecasts & Strategies, meets with Paul Dykewicz.

GLD has risen nearly 16% since Skousen recommended it about two years ago. Gold climbed 2021 in anticipation of rising inflation, but its performance has been flat so far this year. If gold truly is an indicator of inflation, the previous yellow metal’s stagnant price may be signaling that price inflation will wane heading into 2023.

The investment objective is for the GLD shares to reflect the performance of the price of gold bullion, after subtracting the trust’s expenses. The trust, formed on November 12, 2004, physically holds gold bars.

The trust’s shares are designed for investors who want a cost-effective and convenient way to invest in gold, according to the company’s prospectus. Skousen, who also leads the Five Star Trader, Home Run Trader, TNT Trader and Fast Money Alert services, recently was a featured speaker at the Vancouver Resource Investment Conference and advised attendees that he recommended gold as a minor holding in every portfolio.

Chart courtesy of www.stockcharts.com

EPD Is Another of the Six Commodities Investments to Buy

Oil has done much better as an inflation hedge than gold, Skousen said. One example is his recommendation of Enterprise Products Partners (EPD, $27, 7% yield), up 27% year to date.

EPD has been the “best performer” in the Forecasts & Strategies investment newsletter so far this year, Skousen said. Enterprise Products Partners is one of the largest publicly traded partnerships and a key North American provider of midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, refined products and petrochemicals. 

The company’s services include natural gas gathering, treating, processing, transportation and storage. In addition, Enterprise Products Partners provides NGL transportation, fractionation, storage and import and export terminals. It further offers crude oil gathering, transportation, storage and terminals, along with petrochemical and refined products transportation, storage and terminals, as well as a marine transportation business.

I personally have owned Enterprise Products Partners since shortly after the 2020 stock market crash when I bought the stock as it started to recover. The stock has been trending upward since the end of 2021.

Chart courtesy of www.stockcharts.com

Money Manager Picks One of Six Commodities Investments to Buy

A seasoned investment professional told me that she likes farm machinery company Deere (NYSE: DE) to profit from agriculture. Michelle Connell, a former portfolio manager who now serves as president of Dallas-based Portia Capital Management, said she still likes Deere despite its 14% drop after it reported results last week.

Michelle Connell, CEO, Portia Capital Management

Deere’s key issues are supply-related, since demand for agricultural equipment remains strong, especially for the company’s machinery that is more environmentally friendly than its rivals, Connell continued.

Deere is also focused on providing the farming industry with autonomous equipment, Connell counseled. Wall Street analysts expect Deere to have a better story and performance in the second half of 2022 and in full-year 2023.

Connell cited the following to support her recommendation of Deere: 

-More than half its revenues come from large agriculture.

-If the war in Ukraine continues, U.S. farmers will benefit from higher prices for their crops.

-Increased agricultural profits mean that that farmers and farming corporations will be more likely to buy large, expensive farm equipment.  

Deere has fallen back since its recent high on April 20, so investors should be able to purchase shares at reduced prices, Connell continued.

Chart courtesy of www.stockcharts.com

Supply Chains May Improve as China Starts to Lower COVID Curbs

China is easing its COVID-19 restrictions and it could allow goods produced there to start flowing normally again in the coming weeks. China’s lockdowns have affected an estimated 373 million people, including roughly 40% of its gross domestic product (GDP). Disrupted supply chains have affected products such as rice, oil and natural gas.

Shanghai, home to the world’s largest port and 25 million residents, has strained to unload cargo due to strict regulations that have caused shipping containers to stack up. Some Shanghai residents posted videos online to complain about needing food, even though government officials sought to block such public expressions of frustration.

Chinese authorities also drew public criticism for forcibly separating young children with COVID-19 from their parents to prioritize stopping the spread of a new, contagious subvariant of Omicron, BA.2. The variant also has been causing new infections in European nations such as Germany, the Netherlands and Switzerland.

U.S. COVID Deaths Climb Past 1-Million Mark

U.S. COVID-19 deaths crossed the 1-million mark last week and have climbed further to 1,002,726 as of May 24, according to Johns Hopkins University. Cases in the United States, as of that date, hit 83,501,455. America retains the dubious distinction as the country with the highest numbers of COVID-19 deaths and cases.

COVID-19 deaths worldwide totaled 6,280,342 on May 24, according to Johns Hopkins. Cases across the globe have climbed to 526,664,642.

Roughly 77.8% of the U.S. population, or 258,562,059, have obtained at least one dose of a COVID-19 vaccine, as of May 24, the CDC reported. Fully vaccinated people total 221,001,614, or 66.6%, of America’s population, according to the CDC. The United States also has given at least one COVID-19 booster vaccine to 102.9 million people, up about 500,000 in the past week.

New data on so-called “long-haul” COVID patients released on May 24 reported that even though some symptoms improve others may persist, according to the Northwestern Medicine Neuro COVID-19 Clinic. Most of the 52 patients monitored in the Northwestern study reported “brain fog,” numbness or tingling, headache, dizziness, blurred vision and fatigue, even 15 months after initial diagnoses of COVID-19.

The six commodities investments to buy are intended to profit from rising energy, gold and grain prices. Despite the market’s volatility, the highest inflation in 40 years, the Fed’s plan for further interest rate hikes to curb price hikes and increasing federal deficits, investors are finding profitable opportunities in energy, gold and grains.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, Guru Focus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for multiple-book pricing.

 

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Nearly 108,000 overdose deaths in 2021: Pitt team forecast devastating toll five years ago

PITTSBURGH, May 24, 2022 – A grim prediction made half a decade ago by University of Pittsburgh School of Public Health epidemiologists and modelers…

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PITTSBURGH, May 24, 2022 – A grim prediction made half a decade ago by University of Pittsburgh School of Public Health epidemiologists and modelers has come true: More than 100,000 people are now dying from drug overdoses annually in the U.S. The milestone comes as the International Journal of Drug Policy publishes a special section of the June issue reflecting on the exponential growth in drug-related deaths the Pitt team uncovered in 2017.

Credit: Courtesy of University of Pittsburgh

PITTSBURGH, May 24, 2022 – A grim prediction made half a decade ago by University of Pittsburgh School of Public Health epidemiologists and modelers has come true: More than 100,000 people are now dying from drug overdoses annually in the U.S. The milestone comes as the International Journal of Drug Policy publishes a special section of the June issue reflecting on the exponential growth in drug-related deaths the Pitt team uncovered in 2017.

The special section – based around the Pitt team’s landmark research article in Science that analyzed nearly four decades of U.S. drug overdose data – contains commentary by four teams of epidemiologists, addiction specialists, modelers and drug policy experts, as well as an update from the original authors and an editorial by one of the journal’s senior editors.

“Since 1979, drug overdose deaths in the U.S. have inexorably climbed along a near-perfect exponential curve, despite changes in the popularity of different drugs, new drug control policies, changing demographics, economic upswings and downturns, wars – and now a global pandemic,” said Donald S. Burke, M.D., Distinguished University Professor of Health Science and Policy in Pitt Public Health’s Department of Epidemiology and senior author of the Science publication. “The fact that we’re still seeing this exponential growth in another five years of data – 413,000 more young Americans dead – shows that we really don’t understand the deep drivers of the epidemic.”

Following their Science publication, Burke and his colleagues published several more articles involving U.S. drug overdose death data. Notably, the team reported in Nature Medicine that the generation a person was born into – Silent Generation, Baby Boomer, Generation X or Millennial – strongly predicts how likely they are to die from a drug overdose, and at what age.

And, when drug overdose deaths diverged from their predictions, taking a celebrated downturn in 2018, the team showed in the journal Addiction that it was a result of a decrease in supply of the potent synthetic opioid carfentanil, and not a sign of the drug overdose epidemic abating. Sure enough, overdose deaths snapped right back onto the exponential curve in the following year.

“There are theories, but nobody has an explanation for why drug overdose deaths so consistently stick to this exponential growth pattern, marching ever upward at an annual pace of 7.4%,” said Hawre Jalal, M.D., Ph.D., who was lead author of the Science paper while at Pitt and is now at the University of Ottawa. “Five years ago, leaders in the drug addiction and policy fields called our findings a coincidence. We need to stop denying that this exponential growth will continue if we don’t get at the root causes and fix them.”

In his editorial introducing the International Journal of Drug Policy special edition, Peter Reuter, Ph.D., distinguished professor in the University of Maryland School of Public Policy, noted that although the Science manuscript had been cited by scientists hundreds of times since its original publication to support that drug overdose rates are rising, no one had investigated the underlying cause of the relentless increase.

“It’s hard to imagine that this growth rate can continue much longer,” Reuter writes. “The notion that we might see 200,000 fatal overdoses annually in 2030 is simply too frightening, though we would have made the same statement in 2010 when the figure was a mere 38,000.”

In their article for the special section, Burke and Jalal suggest that a “systems” analysis including, but not limited to, surveillance data from electronic health records, urine screening, wastewater testing, law enforcement drug seizures, surveys to measure societal well-being and despair, and the economics of the drug trade will be necessary to understand the exponential growth. Computational models and simulations will then need to be designed to guide and test interventions, they said.

“Improved understanding of the deep causal drivers of the epidemic may be necessary to bend the curve,” they conclude. “Unless something different is done, the death toll will probably continue to increase exponentially.”

#  #  #

About the University of Pittsburgh School of Public Health

Founded in 1948, the University of Pittsburgh School of Public Health is a top-ranked institution of seven academic departments partnering with stakeholders locally and globally to create, implement and disseminate innovative public health research and practice. With hands-on and high-tech instruction, Pitt Public Health trains a diverse community of students to become public health leaders who counter persistent population health problems and inequities. 

www.upmc.com/media


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Cattle Supply And Demand Issues For 2022

Cattle Supply And Demand Issues For 2022

By FarmBureau Market Intel

Introduction

At first glance, 2022 cattle prices are higher than 2021….

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Cattle Supply And Demand Issues For 2022

By FarmBureau Market Intel

Introduction

At first glance, 2022 cattle prices are higher than 2021. At $140, slaughter steer prices are 17.5% above 2021 prices, but even with higher prices, farmers and ranchers will travel a rocky road to profitability, paved with inflation and higher input costs in 2022. This Market Intel addresses the USDA’s Cattle on Feed report released on Friday, May 20, 2022, the forces driving cattle prices higher and how inflation and input costs will affect the bottom line for cattle farmers and ranchers. It will further walk through the combination of supply and demand factors that will affect the 2022 market outlook for livestock producers.  

Supply - Inventory

The Annual Cattle Inventory Report published by USDA estimated overall inventory on January 1, 2022, is down 2% or 1,887,700 head from 2021. Cattle inventory is important with respect to the market outlook because it quantifies supply and where the industry lies in what is known as the cattle cycle. The cattle cycle is the waves of expansion and contraction of the total number of U.S. beef cattle in consecutive years.  The cattle cycle is a response to farmers’ and ranchers’ perceived profitability of the beef cattle industry over roughly a 10-year period. For this Market Intel, we are going to focus on the force behind cattle inventory, the breeding herd and calf crop.

The calf crop for 2021 came in at 35.1 million head, a 1.2% decrease from 2020. As of January 1, 2022, cow inventory totaled 30.1 million head, down 2.3% from 2021. Heifer inventory with total heifers at 19.8 million. 

The last piece of this puzzle is supply and slaughter. Commercial cattle slaughter for April was 2.81 million head, down slightly from 2021. Steer slaughter was 1.33 million, 4% lower than 2021. Heifer slaughter for the month of April came in at 825,200, .05% lower than this time in 2021. Cow slaughter for the month of March came in at 640,382, 7% higher than the same time in 2021. It’s important to acknowledge the decrease in slaughter in all commercial cattle and the increase in cow and heifer slaughter. This illustrates industry position in the cattle cycle. Figure 1. illustrates the current and past two cattle cycles.

Based on Figure 1., the beef cattle industry is entering the contraction portion of the cattle cycle. Cows and heifers make up the breeding herd, which is responsible for supplying the calves entering the cattle inventory at any point during the cattle cycle.  Increased cow and heifer slaughter will result in a smaller calf crop and inventory in the upcoming months of the cattle cycle. It is natural to conclude that future inventory will be down since the calf crop, cow and heifer inventory are all declining. However, the southern Plains are experiencing extreme drought and it is not uncommon to remove grazing animals from forage early for placement into feedlots under these circumstances. The movement of cattle from grazing to feedlot placement or vice versa can throw off inventory numbers.

Pasture and range land had a rough start in 2022, especially in the Western regions and southern Plains. Winter weather and rain have brought some greener pastures to the upper Midwest but USDA crop progress reported more than 50% of U.S. pastures are still rated poor to very poor compared to just under 50% reported in that condition last year. This can be compared to the five-year average of 26.6% of pasture and rangeland rated poor to very poor. A previous Market Intel published in May 2021, demonstrated how 2021 started off with record breaking drought. While more green grass in the Midwest is likely to slow the above average cow slaughter and placement of grazing animals into the feed to slaughter supply chain, much of the U.S. is still facing drought conditions in 2022. Figure 2.  & Figure 3. illustrate the difference in the U.S. Drought Monitor between May 18, 2021, and May 17, 2022.  There has been improvement in the overall drought situation, but much of the southern Plains are still rated as extreme or exceptional drought.

Cattle On Feed

USDA National Agricultural Statistics Service’s Cattle on Feed (COF) program is a monthly feedlot survey conducted on feedlots with a capacity of 1,000 or more head. The April COF report estimated feedlot placements to be 1.99 million head, slightly below 2021 levels.

The  May COF report, released on May 20, 2022, estimates cattle on feed as of May 1, 2022 to be 12 million head. This is up 2% from a year ago. The total number of cattle placed in feedlots is 1.81 million head, down 1% from last year.

While the report fails to explain how feedlot placements are even with last year while inventory numbers and calf crop are down, drought may be a part of the answer. Much of the Western United States, as well as the southern Plains, have experienced or are continuing to experience drought conditions. When this happens, it is not uncommon for ranchers in the Southern plains to move grazing cattle off wheat early. It is also a possibility that heifers previously listed as replacements are being placed into feedlots. Adjustments to Jan. 1 inventory numbers are not uncommon and may better reflect the situation as 2022 continues.

Demand

USDA Economic Research Service (ERS) forecasted 2022 total red meat and poultry consumption at 222.7 lbs. per capita, down from 224.2 lbs. in 2021. The per capita red meat and poultry disappearance is forecast to decrease. ERS defines per capita meat disappearance as the measure of the supply available for use in domestic markets including fresh and processed meats sold. When supply drops, beef prices may rise. If beef prices rise, consumer demand for beef may fall.

The spread between beef graded “USDA choice” and “USDA select” has narrowed in recent days. This spread is important because it can often illustrate consumer willingness to pay for choice beef, a product that costs a premium above beef products graded select.  All primal (wholesale cut) values have seen a decline in 2022. This can be interpreted as a consumer response to inflation; consumers looking to save money.

Imports

Domestic imports are an important factor in evaluating U.S. demand for beef. USDA ERS reports U.S. beef and veal imports were 353.77 million lbs. in March 2022, 29% higher than this time in 2021.

The greatest increase in U.S. imports is from Brazil. Record high U.S. beef prices, and drought conditions in traditional import countries such as Australia are the key motivators for this increase. Another reason the U.S. has been importing from Brazil is because China, one of the world’s largest importers of beef, placed an embargo on Brazilian beef imports in September of 2021. This embargo was lifted in December 2021. However, Brazilian beef continues to be directed to other markets including the U.S.

There are other factors contributing to the increase in imported beef. One of these factors is the strengthening of the U.S. dollar. When the U.S. dollar strengthens, it makes it cheaper for the U.S. to purchase products from other countries. In addition, the decrease in consumer willingness to pay higher prices for beef makes other, less expensive, sources more appealing.

Exports

Exports fall on the other side of the supply/demand spectrum from imports. USDA forecasts beef exports to decline 1.8% from 2021. This estimate might seem negative at first glance, but it’s important to note that 2022 beef and veal exports are still well above the five-year average. The strengthening U.S. dollar’s impact on imports –making U.S. purchases of foreign products cheaper – has the opposite effect on exports; it makes it more expensive for other countries to buy products from the U.S.

China, the world’s largest importer of beef as mentioned earlier, has been implementing its COVID-zero policy which included a nationwide lockdown that has continued for six weeks. The effects of this policy on the food industry vary by region. Hong Kong, for example, home to some of the world’s stringent COVID-19 restrictions, has begun to ease restrictions. Overall, beef markets are watching closely and waiting for China to relax restrictions, leading to increased demand for meat products.

Despite these obstacles, March trade data has indicated record U.S. beef exports totaling 303.7 million pounds, 1.2% above 2021. This is the greatest quantity of beef exported for any month of March. Even more impressive is record first quarter 2022 overall meat trade coming in at a whopping 845.8 million pounds, 6.2% ahead of 2021. China, South Korea, and Japan continue to lead the pack, being the top three destinations for U.S. beef. China posted a record 145.4 million pounds, 61.8% above 2021.

Input Costs & The Bottom Line

One of the greatest concerns faced by cattle farmers and ranchers in 2022 is rising input costs, more specifically feed. Iowa State University estimates total feed costs per head for finishing a 760 lb. yearling steer, in March of 2022, are $1,802.58. Feed costs account for 24% of the total cost of production for 2022 at $436.15, up 22% from 2021. The price of corn was estimated to increase 30.4% and hay up 45%. Non-feed costs were estimated to be record high at $144.19 per head in March up, 8% from 2021. This brings the break-even price to $138.66 cwt, up 12.8% from 2021. These rising costs will make profitability an uphill battle.

Conclusions

The 2022 cattle outlook is a mixed bag. On one hand, 2022 cattle prices are higher than 2021. On the other hand, cattle farmers and ranchers face rising input expenses, and uncertainty in the U.S. economy and the economies of key beef importers.

A strengthening U.S. dollar will make it more expensive for other countries to buy U.S. beef while at the same time making it more affordable for the U.S. to import beef from other countries. Yet, first quarter beef exports were reported at record levels, primarily to the Asian markets with China leading the way.

Supply is forecast to decrease; the industry is in the contraction phase of the cattle cycle while USDA has also forecasted a small decrease in consumer demand for meat. If we use history as a guide, then the cattle industry should be in the last couple years of contraction in inventory before beginning the expansion phase of the next cattle cycle.

Cattle farmers and ranchers are facing increases in both feed and non-feed input costs resulting in increased break-even prices. Whether cattle prices will increase enough to offset the increase in costs and provide profitability remains in question. All these factors create a complex cattle market outlook complete with many peaks and valleys for 2022.

Tyler Durden Tue, 05/24/2022 - 18:05

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