Current Market Situation For Grains and Cattle!

Current Market Situation For Grains and Cattle!

Rodney Jones OSU NW Area Extension

Economist

Start With Grains• We now have a drought that matters!!!• 55 to 60% of U.S. Ag Land under drought conditions

CORN ACREAGE

60

65

70

75

80

85

90

95

100

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Acr

es P

lant

ed (m

illio

n)

Livestock Marketing Information CenterData Source: USDA-NASS, Compiled & Analysis by LMIC

U S ANNUAL CORN PRODUCTIONCrop Year

2

4

6

8

10

12

14

16

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Bil. Bushels

G-NP-0707/11/12Livestock Marketing Information Center

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

NATIONAL AVERAGE CORN YIELDCrop Year

60

80

100

120

140

160

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Bu. Per Acre



U S ANNUAL CORN ENDING STOCKSCrop Year

0

1

2

3

4

5

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Bil. Bushels



CBT Corn, Dec. ‘2012

Corn Relevant NumbersCorn Relevant Numbers

CurrentProjections Average

Billion Bushels

U.S. Ending Stocks

World Ending Stocks

1.18 1.5

5.3 5.1

9

Feedgrain Considerations

• World ending stocks projections about average, U.S. well below average

• Yields and harvested acres keep getting trimmed

• In short crop years prices peak early

• Demand may waiver at high prices

CBT Soybeans, Nov. ‘2012

U.S. Soybean SituationU.S. Soybean Situation

(Billion Bushels)

Production ConsumptionEndingStocks

U. S.PriceYear

2005 3.1 2.9 0.50 $5.662006 3.2 3.1 0.57 $6.432007 2.7 3.1 0.21 $10.102008 3.0 3.0 0.14 $9.972009 3.4 3.4 0.15 $9.592010 3.3 3.3 0.22 $11.302011 3.1 3.1 0.21 $12.352012 3.1 3.1 0.13 $14.00

7-YR Avg. 3.1 3.13 0.29 $9.34

Production ConsumptionEndingStocksYear

World Soybean SituationWorld Soybean Situation

(Billion Bushels)

2005 8.10 7.91 1.952006 8.72 8.29 2.312007 8.13 8.44 1.892008 7.79 8.13 1.562009 9.59 8.75 2.232010 9.73 9.23 2.582011 8.67 9.31 1.932012 9.8 9.67 2.05

7-YR Avg. 8.61 8.58 2.07

Soybean Relevant NumbersSoybean Relevant Numbers


Billion Bushels

U.S. Ending Stocks

World Ending Stocks

0.13 0.29

2.05 2.07

15

Soybean Considerations

• U.S. Ending stocks projected to be well below average World ending stocks projected to be slightly below average

• Weather influence comes later than for corn• Yields projections continue to fall• South America will plant a lot of beans

KCBT Wheat, Dec ‘012

Production ConsumptionEndingStocks

U. S.PriceYear

(Billion Bushels)

U.S. Wheat SituationU.S. Wheat Situation

2005 2.10 2.16 .571 $3.422006 1.81 2.05 .456 $4.262007 2.05 2.31 .306 $6.482008 2.50 2.28 .657 $6.782009 2.22 2.02 .976 $4.872010 2.21 2.42 .862 $5.702011 2.00 2.25 .728 $7.252012 2.23 2.39 .694 $6.20

7-YR Avg. 2.13 2.19 .651 $5.54

World Wheat SituationWorld Wheat Situation

(Billion Bushels)

Production ConsumptionEndingStocksYear

2005 22.0 22.9 5.52006 21.9 22.7 4.72007 22.5 22.7 4.62008 25.1 23.6 6.12009 25.2 23.9 7.42010 23.9 24.0 7.22011 25.5 25.5 7.22012 24.5 25.0 6.7

7-YR Avg. 23.8 23.6 6.1

Wheat Relevant NumbersWheat Relevant Numbers

U.S. Ending Stocks

World Ending Stocks


Billion Bushels

.664 .653

6.7 6.1

21

Wheat Considerations• Wheat fundamentals cannot support current prices on

own• With that said, the supply situation is tightening

relative to last few years• World economic concerns may be the biggest downside

risk (remember 2008 – 2009)• Very strong incentive to pull acres out of wheat and go

to canola in areas where that is an option

Economic Output% Change (2012, 2013 projected), IMF

-8

-6

-4

-2

0

2

4

6

8

USA Canada Mexico Japan

2007

2008

2009

2010

2011

2012

2013

Economic Output% Change (2012, 2013 projected), IMF

-6-4-202468

10121416

EU Brazil China India

2007200820092010201120122013

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

135

145

155

165

175

185

195

205

JAN APR JUL OCT

$ Per Cwt.

Avg.2006-10

2011

2012

C-P-6207/10/12Livestock Marketing Information Center

Data Source: USDA-AMS

SLAUGHTER STEER PRICESSouthern Plains, Weekly

80859095

100105110115120125130135

JAN APR JUL OCT

$ Per Cwt.

Avg.2006-10

2011

2012


Data Source: USDA-AMS

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

90

100

110

120

130

140

150

160

170

JAN APR JUL OCT

$ Per Cwt.

Avg.2006-10

2011

2012


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

JANUARY 1 FEEDER CATTLE SUPPLIESResidual, Outside Feedlots, U.S.

25

27

29

31

33

35

37

39

41

43

1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011

Mil. Head

C-N-3001/28/11Livestock Marketing Information Center

Data Source: USDA-NASS

HEIFERS HELD AS BEEF COW REPLACEMENTS

January 1, U.S.

4.0

4.5

5.0

5.5

6.0

6.5

7.0

1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011

Mil. Head

C-N-3801/28/11Livestock Marketing Information Center

Data Source: USDA-NASS

+1.4%

CHOICE MINUS SELECT BEEF PRICESCarcass Cutout Value 600-900 Lbs., Weekly

02

468

10

121416

1820

JAN APR JUL OCT

$ Per Cwt.

Avg.2006-10

2011

2012



STEER DRESSED WEIGHTFederally Inspected, Weekly

800

810

820

830

840

850

860

870Pounds

Avg.2006-10

2011

2012

C-S-1806/15/12Livestock Marketing Information Center

Data Source: USDA-AMS & USDA-NASS

COMMERCIAL BEEF PRODUCTIONQuarterly

5.6

5.8

6.0

6.2

6.4

6.6

6.8

7.0

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

Bil. Pounds

Avg.2006/10

2011

2012

2013

M-S-0105/25/12Livestock Marketing Information Center

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

CATTLE SLAUGHTERFederally Inspected, Weekly

475

525

575

625

675

725

JAN

APRJU

LOCT

Thou. Head

Avg.2006-10

2011

2012



BEEF COW SLAUGHTERFederally Inspected, Weekly

4550556065707580859095Thou. Head

Avg.2006-10

2011

2012



Total Meat Supplies Down in 2012

AVERAGE RETURNS TO CATTLE FEEDERSFeeding 725 Lb. Steers, S. Plains, Monthly

-250

-150

-50

50

150

250

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

$ Per Head

Livestock Marketing Information CenterData Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC

C-P-2206/15/12

Latest Data: May 2012

KANSAS FEEDLOT CLOSEOUTSFeeding Costs per Cwt, Steers

65

75

85

95

105

115

125

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

$/cwt

Avg.2006/10

2011

2012

06/07/12Data Source: KSU Focus on Feedlots, Compiled by LMIC

Steer Price, Total Value and Value of Gain Jun 2012, Oklahoma 7-Market Ave.

Weight (lbs)

Average Price ($/cwt.)

Total Value ($/head)

Value of Gain425 lb. Beg. Weight($/lb.)



425 187.56 797.13475 189.25 898.94525 173.17 909.14575 170.41 979.86 1.22625 165.06 1031.63 1.17675 159.96 1079.73 1.13 1.14725 157.06 1138.69 1.14 1.15775 155.14 1202.34 1.16 1.17 1.14825 152.33 1256.72 1.15 1.16 1.13875 145.60 1274.00 1.06 1.04 0.97

Value of forage is high for cow-calf and a wide range

of stocker production

ANNUAL AVERAGE CATTLE PRICESSouthern Plains

55

80

105

130

155

180

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

$ Per Cwt

500-600lbSteerCalves

700-800lbFeederSteers

FedSteers



ESTIMATED AVERAGE COW CALF RETURNSReturns Over Cash Cost (Includes Pasture Rent), Annual

-100

-50

0

50

100

150

200

250

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

$ Per Cow


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

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Current Market Situation For Grains and Cattle!