Cattle Markets: Situation, Outlook, and Issues Oklahoma State University Webinar September 9, 2014

Cattle Markets: Situation, Outlook, and Issues

Oklahoma State University Webinar

September 9, 2014

James G. RobbDirector

USDA Members:ERSAPHISGIPSANASSWAOBAMS

Associate Members:AFBFASINCBANPBCME-GroupCanadian ConsortiumNoble FoundationCoBankTCFACWBTCUNWFCS

28 Land Grant Universities:

Topics: Price Drivers and …

• Perspective on Cattle Prices• Beef Demand

– Domestic– Foreign Markets

• Feedstuffs Backdrop• A Few Comments on Poultry and Pork• More on Cattle Markets

– U.S. Cattle Inventory– Cost and Return Prospects

• Time to Plan is Now

USDA Data Sources – NASS, AMS, FAS, and ERS

All Forecasts – LMIC

JAN APR JUL OCT90

100

110

120

130

140

150

160

170

SLAUGHTER STEER PRICES5 Market Weighted Average, Weekly

Avg. 2008-12 2013 2014

$ Per Cwt.

Data Source: USDA-AMS

Livestock Marketing Information Center

JAN APR JUL OCT95

115

135

155

175

195

215

235

255

MED. & LRG. #1 FEEDER STEER PRICES700-800 Pounds, Southern Plains, Weekly

Avg. 2008-12 2013 2014

$ Per Cwt.

Data Source: USDA-AMS, Compiled & Analysis by LMIC


JAN APR JUL OCT5

15

25

35

45

55

65

75

FEEDER STEER vs FED STEER PRICES700-800 Lbs. Minus Slaughter Steer, S. Plains, Weekly

Avg. 2008-12 2013 2014

$ Per Cwt.



JAN APR JUL OCT110

130

150

170

190

210

230

250

270

290

MED. & LRG. #1 STEER CALF PRICES500-600 Pounds, Southern Plains, Weekly

Avg. 2008-12 2013 2014

$ Per Cwt.



JAN APR JUL OCT45

55

65

75

85

95

105

115

125

135

145

SLAUGHTER COW PRICESSouthern Plains, 85-90% Lean, Weekly

Avg. 2008-12 2013 2014

$ Per Cwt.



19861987

19881989

19901991

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20102011

20122013

20142015

201650

75

100

125

150

175

200

225

250

275

AVERAGE ANNUAL CATTLE PRICESSouthern Plains

500-600lb Steer Calves 700-800lb Feeder Steers Fed Steers

$ Per Cwt

Data Source: USDA-AMS, Compiled and Analysis by LMIC


US Consumer Demand and Consumption (Disappearance)

2005

2005.52006

2006.52007

2007.52008

2008.52009

2009.52010

2010.52011

2011.52012

2012.52013

2013.52014

28000

30000

32000

34000

36000

38000

40000

42000

PER CAPITA DISPOSABLE PERSONAL INCOMEQuarterly

Current Dollar 2005 Dollar

Dollars

Data Source: Bureau of Economic Analysis


19901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320140

20

40

60

80

100

120

10095 94

86 87 83 8675 77 76 80 80 83 83

91 87 85 85 82 8174 77 80 80 80

RETAIL ALL FRESH BEEF DEMAND INDEXFirst Quarter, Using CPI 1990=100Index Value

Data Source: Bureau of Labor Statistics, USDA-ERS, Compiled & Analysis by LMIC


19901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320140

20

40

60

80

100

120

100 9690

83 84 80 8075 73 77 77 79

86 8391 90

84 8480 76 74 75 78 80

84

RETAIL ALL FRESH BEEF DEMAND INDEXSecond Quarter, Using CPI 1990=100Index Value



19901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320140

20

40

60

80

100

120

100 99 9691 93

8780 84

8993 93 89

9791 93 89

82 8476

8277

82 7983

90

RETAIL PORK DEMAND INDEXSecond Quarter, Using CPI 1990=100Index Value



International Trade Perspective

199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520160.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

US BEEF AND VEAL EXPORTSCarcass Weight, AnnualBil. Pounds

Data Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC


2006 2007 2008 2009 2010 2011 2012 2013 20140

10000

20000

30000

40000

50000

60000

70000

80000

90000

US BEEF EXPORTS TO MAJOR MARKETSCarcass Weight, Monthly

Japan Canada Mexico South Korea

Mil. Pounds

Data Source: USDA-ERS & USDA-FAS


199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520161,500.0

2,000.0

2,500.0

3,000.0

3,500.0

4,000.0

US BEEF AND VEAL IMPORTSCarcass Weight, AnnualBil. Pounds

Data Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC


Feedstuffs -- Corn

JAN APR JUL OCT3.25

4.25

5.25

6.25

7.25

8.25

OMAHA CORN PRICESWeekly

Avg. 2008-12 2013 2014

$ Per Bu.



8000

9000

10000

11000

12000

13000

14000

15000

16000

1.25

2.00

2.75

3.50

4.25

5.00

5.75

6.50

7.25

US TOTAL CORN SUPPLY AND PRICECrop Year

Supply Price

Bil. Bushels $ Per Bushel

Data Source: USDA-NASS, Compiled & Forecasts by LMIC


0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

14,000.0

16,000.0

18,000.0

US CORN DISAPPEARANCE AND STOCKSCrop Year

Feed & Residual Food, Seed & IndustrialExports Stocks

Bil. Bushels

Data Source: USDA-NASS, Compiled & Forecasts by LMIC


May Jul Sep10

15

20

25

30

35

40

US RANGE AND PASTURE CONDITIONPercent Poor and Very Poor, Weekly

Avg. 2008-12 2013 2014

Percent

Data Source: USDA-NASS, Compiled & Analysis by LMIC


Poultry and Pork

JAN APR JUL OCT140

160

180

200

220

240

260

280

BOXED BEEF CUTOUT VALUEChoice 600-900 Lbs., Carcass, Weekly

Avg. 2008-12 2013 2014

$ Per Cwt.



JAN-MAR APR-JUN JUL-SEP OCT-DEC8,600.0

8,800.0

9,000.0

9,200.0

9,400.0

9,600.0

9,800.0

10,000.0

10,200.0

RTC BROILER PRODUCTIONQuarterly

Avg. 2009/13 2014 2015 2016

Bil. Pounds



JAN-MAR APR-JUN JUL-SEP OCT-DEC5000

5200

5400

5600

5800

6000

6200

6400

6600

COMMERCIAL PORK PRODUCTIONQuarterly

Avg. 2009/13 2014 2015 2016

Bil. Pounds



JAN APR JUL OCT65

75

85

95

105

115

125

135

145

PORK CUTOUT VALUE(Voluntary data prior to 2013), Weekly

Avg. 2008-12 2013 2014

$ Per Cwt.



JAN-MAR APR-JUN JUL-SEP OCT-DEC21,200.0

21,600.0

22,000.0

22,400.0

22,800.0

23,200.0

23,600.0

24,000.0

24,400.0

TOTAL RED MEAT & POULTRY PRODUCTIONQuarterly

Avg. 2009/13 2014 2015 2016

Bil. Pounds



Cattle

RI 2

DE 3

NH 3

CT 4

4

MA 6

NJ 8

11

VT 12

MD 38

69

105

114

170

174178

191192

209

226

240

293325

350

359

360

387

445

450

477480

516

600657

671

694

700

864

877

882

885

943

10121414

1476

1635

1797

1805

1820

3910

0 to 170170 to 387387 to 882882 to 3911

BEEF COWS THAT CALVEDJANUARY 1, 2014

(1000 Head)

U.S. Total: 29042

Data Source: USDA-NASS

-105

-65-53

-48

-40

-31

-30

-29

-25

-20

-16

-15

-12

-11

-10

-10-9

-9

-8-5

-4

-4

-3

MD -3

-3

CT -2

DE -1

-1

NJ -1

-1

MA -1NH -1

0

RI 0

0

VT 0

0

1

1

3

310

15

15

20

21

3151

6386

-110 to -11-11 to -1-1 to 33 to 87

CHANGE IN BEEF COWS NUMBERSJANUARY 1, 2013 TO JANUARY 2014

(1000 Head)

U.S. Total: -255


4500

5000

5500

6000

6500

7000

HEIFERS HELD AS BEEF COW REPLACEMENTSJanuary 1, U.S.Mil. Head

+1.7 %



JAN APR JUL OCT135

145

155

165

175

185

195

205

215

HEIFER SLAUGHTERFederally Inspected, Weekly

Avg. 2008-12 2013 2014

Thou. Head

Data Source: USDA-AMS & USDA-NASS


JAN APR JUL OCT35

40

45

50

55

60

65

70

75

80

85

BEEF COW SLAUGHTERFederally Inspected, Weekly

Avg. 2008-12 2013 2014

Thou. Head



80000

82000

84000

86000

88000

90000

92000

94000

JANUARY 1 TOTAL CATTLE INVENTORYU.S., AnnualMil. Head



88000

90000

92000

94000

96000

98000

100000

102000

104000

106000

22000

23000

24000

25000

26000

27000

28000

BEEF PRODUCTION vs. CATTLE INVENTORYInventory on January 1, U.S.

Inventory Production

Mil. Head Bil. Pounds

Commercial Beef Production

Total Cattle Inventory



JAN-MAR APR-JUN JUL-SEP OCT-DEC5300

5500

5700

5900

6100

6300

6500

6700

6900

COMMERCIAL BEEF PRODUCTIONQuarterly

Avg. 2009/13 2014 2015 2016

Bil. Pounds



JAN APR JUL OCT7

9

11

13

15

17

19

21

CALF SLAUGHTERFederally Inspected, Weekly

Avg. 2008-12 2013 2014

Thou. Head



-100

0

100

200

300

400

500

600

80000

85000

90000

95000

100000

105000

110000

115000

COW-CALF RETURNS AND CATTLE INVENTORYU.S., Annual

Cow-Calf Returns Cattle Inventory Jan 1

$ Per Cow Mil. Head

Data Source: USDA-AMS & USDA-NASS, Compiled and Analysis by LMIC


0

100

200

300

400

500

600

700

800

900

ESTIMATED AVERAGE COW CALF COSTSIncludes Pasture Rent, Annual$ Per Cow

Data Source: USDA-AMS, NASS, Analysis by LMIC


2006 0 0 0 2007 0 0 0 2008 0 0 0 2009 0 0 0 2010 0 0 0 2011 0 0 0 2012 0 0 0 2013 0 0 0 2014 0 0 075

95

115

135

155

175

CHOICE STEER PRICE vs BREAKEVENCattle Feeding, S. Plains, Monthly

Steer Price Breakeven Projected Breakeven

$ Per Cwt

Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC


Latest Data: August 2014

Economic Environment: Cow/Calf Plan Now

• Domestic Consumer Beef Demand Has Improved • Foreign Beef Demand Surprisingly Strong• Chicken and Pork Output Ramping-Up• Controls Already Set to Reduced Beef Output Throughout

2015• Cattle Price Peak on the Horizon: 2015, 2016, or 2017?• Mistakes Are Costly, Sound Business Practices Required• Feedstuff Costs Down But Still High – Forage is Valuable• Time To Plan is Now!

Estimate Income Visit with Tax Professional Develop Alternatives and Evaluate Ranch ROI

TaxesCaptive Supply

Packer Ban

CWT

QE II

OIE

Imports

Oil Price

BEV CFTC

APA

Free Trade Agreements

QSA

Farm BillRFS

Immigration Legislation

Food

PricesLRP

Risk MgmtCost of Production

EthanolExchange Rate

Foo

d Sa

fety

Horse Harvesting

GE Animals

H1N

1

Grades & Standards

Animal

Rights

GIPSA- Rule

Financial Regulation

EPA Rules

Phytosanitary

Cro

p In

sura

nce

Form

ula Pricing

GMO Seed

AB

F (A

ntib

iotic F

ree)

Issues, Issues, Issues….

LFTB

QUALITY

AMA’s i-rate

Excess Capacity Beta-agonists

TSC – The Sustainability Consortium

Price D

iscovery

PEDv

Thank You!www.lmic.info

Documents

Cattle Markets: Situation, Outlook, and Issues Oklahoma State University Webinar September 9, 2014