Cattle & Meat Market Update. John Michael Riley - Extension Ag Economist 2015 Florida Beef Cattle Shortcourse May 13, 2015

Transcription

1 Cattle & Meat Market Update John Michael Riley - Extension Ag Economist 2015 Florida Beef Cattle Shortcourse May 13, 2015

2 2 Big Picture It s already been said, but - - WOW! 2014 was great! When the cows come home - Expansion of the beef herd Loosening of supplies Its gotten HOT at the meat cooler Competition from competing meats finally materializing Beef demand continues to excel Exports holding their own

3 3 When the Cows Come Home Expansion of the beef herd

4 4 Beef Cow Inventory Mil.%Head% 36.5% 35.5% 34.5% 33.5% 32.5% 31.5% 30.5% 29.5% Jan.%1%%Beef%Cow%Inventory% U.S.,%Annual% 2014: 29.7 mil. hd. (+2.1%) 28.5% 1985% 1988% 1991% 1994% 1997% 2000% 2003% 2006% 2009% 2012% 2015% Beef%

5 5 Heifers in Feedlots 4,500 Heifer Inventories 4, Avg. Thou. Head 3,750 3,375 3,000 January April July October

6 6 Steers in Feedlots 7,500 Steer Inventories 7, Avg. Thou. Head 6,950 6,675 6,400 January April July October

7 7 Cost of Expansion $2,600 Oklahoma City - Young Bred Replacement Female $1,950 $1,300 $650 $0 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15

8 8 Feedstuffs: Corn Bil.#Bushels# 16# 15# 14# 13# 12# 11# 10# 9# US TOTAL CORN SUPPLY AND PRICE Crop#Year# $#Per#Bushel# 8.00# 7.00# 6.00# 5.00# 4.00# 3.00# 2.00# 1.00# 8# 1990# 1992# 1994# 1996# 1998# 2000# 2002# 2004# 2006# 2008# 2010# 2012# 2014# Supply# Price# 0.00#

9 9 Feedstuffs: SB Meal Mil."Tons" 45" US TOTAL SOYBEAN MEAL SUPPLY AND PRICE Crop"Year" $"Per"Ton" 500" 40" 400" 35" 300" 30" 200" 25" 100" 20" 1989" 1991" 1993" 1995" 1997" 1999" 2001" 2003" 2005" 2007" 2009" 2011" 2013" Supply" Price" 0"

10 10 Feedstuffs: Hay Mil.%Tons% 120# US%ALL%HAY%STOCKS% December%1% 110# 100# 90# 80# 70# 1989# 1994# 1999# 2004# 2009# 2014#

11 11 Corn Futures Jul 15 Dec 15 Mar 16

12 12 On-Farm Grain Storage Corn Storage 100%# 90%# 80%# 70%# 60%# 50%# 40%# 30%# 20%# 10%# 0%# 1990#1992#1994#1996#1998#2000#2002#2004#2006#2008#2010#2012#2014# CN/Off# CN/On# 70%$ 65%$ 60%$ On Farms Off Farms Soybean Storage 55%$ 50%$ 45%$ SB/Off$ SB/On$ 40%$ 35%$ 30%$ 1990$ 1991$ 1992$ 1993$ 1994$ 1995$ 1996$ 1997$ 1998$ 1999$ 2000$ 2001$ 2002$ 2003$ 2004$ 2005$ 2006$ 2007$ 2008$ 2009$ 2010$ 2011$ 2012$ 2013$ 2014$

13 Feeding Sector 13

14 $/cwt# 105# KANSAS FEEDLOT CLOSEOUTS Feeding#Costs#per#Cwt,#Steers# 100# 95# 90# 85# 80# Jan# Feb# Mar# Apr# May# Jun# Jul# Aug# Sep# Oct# Nov# Dec# Avg.#2009/13# 2014# 2015# Pounds$ 6.5$ 6.4$ 6.3$ 6.2$ 6.1$ 6$ 5.9$ 5.8$ 5.7$ 5.6$ KANSAS FEEDLOT CLOSEOUTS Pounds$of$Feed$(Dry$Basis)$ Per$Pound$of$Gain,$Steers$ Jan$ Feb$ Mar$ Apr$ May$ Jun$ Jul$ Aug$ Sep$ Oct$ Nov$ Dec$ Avg.$2009/13$ 2014$ 2015$ Pounds" 4" 3.9" 3.8" 3.7" 3.6" 3.5" 3.4" 3.3" 3.2" 3.1" 3" KANSAS FEEDLOT CLOSEOUTS Avg."Daily"Gain,"Steers" Jan" Feb" Mar" Apr" May" Jun" Jul" Aug" Sep" Oct" Nov" Dec" Avg."2009/13" 2014" 2015"

15 15 Feedlot Placements 3, Lowest Highest ,500 Thou. Head 1,750 1,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

16 16 Feedlot Inventories 13, Yr Low 10-Yr High ,000 Thou. Head 11,000 10,000 9,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

17 17 Cattle from Mexico & Canada Thou.#Head# 190# US CATTLE IMPORTS FROM MEXICO Monthly# 170# 150# 130# 110# 90# 70# 50# 30# JAN# FEB# MAR# APR# MAY# JUN# JUL# AUG# SEP# OCT# NOV# DEC# Avg.#2009J13# 2014# 2015# Thou.#Head# 170# 150# 130# 110# 90# 70# 50# US CATTLE IMPORTS FROM CANADA Monthly# 30# JAN# FEB# MAR# APR# MAY# JUN# JUL# AUG# SEP# OCT# NOV# DEC# Avg.#2009J13# 2014# 2015#

18 18 Beef Production & Competing Meats

19 Thousands) Bil.$Pounds$ 6.8$ 6.6$ 6.4$ COMMERCIAL BEEF PRODUCTION US, Quarterly 6.2$ 6$ 5.8$ 5.6$ 5.4$ JAN+MAR$ APR+JUN$ JUL+SEP$ OCT+DEC$ Avg.$2009/13$ 2014$ 2015$ 2016$ Thousands) Bil.$Pounds$ 6.8$ 6.6$ 6.4$ 6.2$ 6.0$ COMMERCIAL PORK PRODUCTION US, Quarterly Thousands) Bil.$Pounds$ 11.0$ 10.5$ 10.0$ RTC BROILER PRODUCTION US, Quarterly 5.8$ 5.6$ 9.5$ 5.4$ 5.2$ 9.0$ 5.0$ JAN,MAR$ APR,JUN$ JUL,SEP$ OCT,DEC$ Avg.$2009/13$ 2014$ 2015$ 2016$ 8.5$ JAN+MAR$ APR+JUN$ JUL+SEP$ OCT+DEC$ Avg.$2009/13$ 2014$ 2015$ 2016$

20 Beef Demand 20

21 21 Macro Economy Bil.$Dollars$ 13500$ 13000$ 12500$ 12000$ 11500$ 11000$ 10500$ 10000$ 9500$ 9000$ 8500$ TOTAL DISPOSABLE PERSONAL INCOME Quarterly$ 2005$ 2006$ 2007$ 2008$ 2009$ 2010$ 2011$ 2012$ 2013$ 2014$ Current$Dollars$ 2009$Dollars$

22 22 Crude Oil Futures Jul 15 Dec 15

23 23 All Consumption Pounds" 100" 90" 80" 70" 60" 50" 40" 30" 20" 10" 0" US RED MEAT & POULTRY CONSUMPTION Per"Capita,"Retail"Weight,"Annual" 1991" 1993" 1995" 1997" 1999" 2001" 2003" 2005" 2007" 2009" 2011" 2013" 2015" Beef" Pork" Total"Chicken" Turkey"

24 24 Not Beef Demand! Pounds# 70# US BEEF CONSUMPTION Per#Capita,#Retail#Weight,#Annual# 65# 60# 55# 50# 1991# 1993# 1995# 1997# 1999# 2001# 2003# 2005# 2007# 2009# 2011# 2013# 2015#

25 25 Beef Demand Index#Value# 120# RETAIL ALL FRESH BEEF DEMAND INDEX Annual,#Using#CPI#1990=100# 100# 80# 100# 96# 91# 91# 86# 86# 82# 79# 75# 75# 77# 80# 81# 85# 88# 83# 85# 85# 80# 77# 75# 77# 79# 81# 86# 60# 40# 20# 0# 1990# 1992# 1994# 1996# 1998# 2000# 2002# 2004# 2006# 2008# 2010# 2012# 2014#

26 26 1st Quarter Beef Demand Index#Value# 120# RETAIL ALL FRESH BEEF DEMAND INDEX First#Quarter,#Using#CPI#1990=100# 100# 80# 100# 95# 94# 91# 93# 86#87# 83# 86# 87#85# 75#77#76# 80# 80# 83#83# 85# 82# 81# 74# 77#80# 80#80# 60# 40# 20# 0# 1990# 1992# 1994# 1996# 1998# 2000# 2002# 2004# 2006# 2008# 2010# 2012# 2014#

27 27 1st Quarter Pork Demand Index#Value# 120# RETAIL PORK DEMAND INDEX First#Quarter,#Using#CPI#1990=100# 100# 80# 100#100#100# 93# 93# 96# 102# 94#93#92# 95# 88# 89# 88#84# 87#86#85# 83#83# 86# 76# 81#81# 82# 87# 60# 40# 20# 0# 1990# 1992# 1994# 1996# 1998# 2000# 2002# 2004# 2006# 2008# 2010# 2012# 2014#

28 28 Meat Spending Nominal"Dollars" 350" 300" 250" 200" 150" 100" 50" US EXPENDITURES FOR MEAT & POULTRY Per"Capita,"By"Type"of"Meat,"Annual" 0" 1989" 1991" 1993" 1995" 1997" 1999" 2001" 2003" 2005" 2007" 2009" 2011" 2013" Beef" Pork" Broiler" Turkey"

29 29 Meat Spending Percent" 1.2" US EXPENDITURES FOR MEAT & POULTRY Percent"of"Disposable"Income" 1" 0.8" 0.6" 0.4" 0.2" 0" 1989" 1991" 1993" 1995" 1997" 1999" 2001" 2003" 2005" 2007" 2009" 2011" 2013" Beef" Pork" Broiler" Turkey"

30 Cents#Per#Pound# 650# RETAIL BEEF PRICE All#Fresh,#Monthly# 600# 550# 500# 450# 400# JAN# MAR# MAY# JUL# SEP# NOV# Avg.#2009F13# 2014# 2015# Cents$Per$Pound$ 160$ RETAIL CHICKEN PRICE Whole$Fresh,$Monthly$ Cents#Per#Pound# 440# RETAIL PORK PRICE Monthly# 155$ 420# 150$ 400# 145$ 380# 140$ 360# 135$ 340# 130$ 320# 125$ JAN$ MAR$ MAY$ JUL$ SEP$ NOV$ Avg.$2009I13$ 2014$ 2015$ 300# JAN# MAR# MAY# JUL# SEP# NOV# Avg.#2009E13# 2014# 2015#

31 31 Beef Price (retail average) Cents#Per#Pound# 650# RETAIL BEEF PRICE All#Fresh,#Monthly# 600# 550# 500# 450# 400# JAN# MAR# MAY# JUL# SEP# NOV# Avg.#2009F13# 2014# 2015#

32 32 Pork Price Cents#Per#Pound# 440# RETAIL PORK PRICE Monthly# 420# 400# 380# 360# 340# 320# 300# JAN# MAR# MAY# JUL# SEP# NOV# Avg.#2009E13# 2014# 2015#

33 33 Chicken Price Cents$Per$Pound$ 160$ RETAIL CHICKEN PRICE Whole$Fresh,$Monthly$ 155$ 150$ 145$ 140$ 135$ 130$ 125$ JAN$ MAR$ MAY$ JUL$ SEP$ NOV$ Avg.$2009I13$ 2014$ 2015$

34 Shoppers are focusing more attention on the price per package as opposed to the price per pound. AMI/FMI Power of Meat Survey 34

35 35 Beef Trade Mil.$Pounds$ 270$ US BEEF AND VEAL EXPORTS Carcass$Weight,$Monthly$ 250$ 230$ 210$ 190$ 170$ 150$ JAN$ FEB$ MAR$ APR$ MAY$ JUN$ JUL$ AUG$ SEP$ OCT$ NOV$ DEC$ Avg.$2009O13$ 2014$ 2015$

36 36 Beef Trade Bil.%Pounds% 3.5% US BEEF AND VEAL NET IMPORTS Carcass%Weight,%Annual% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%!0.5%!1.0% 1991% 1994% 1997% 2000% 2003% 2006% 2009% 2012% 2015%

37 37 Beef Trade Bil."$" 10" 9" 8" 7" 6" 5" 4" 3" 2" 1" 0" US BEEF INDUSTRY EXPORT VALUES Annual" 1988" 1991" 1994" 1997" 2000" 2003" 2006" 2009" 2012" Live"Ca9le" Beef"&"Veal" Hides"&"Skins" Variety"Meats" Tallow"&"Greases"

38 38 Prices The cure for high prices

39 39 FL Steer Calf Price vs OKC $400 $ lb steer calf $/cwt $200 $100 $0 12-May Nov May-02 9-Nov May-03 8-Nov-03 8-May-04 6-Nov-04 7-May-05 5-Nov-05 6-May-06 4-Nov-06 5-May-07 3-Nov-07 3-May-08 1-Nov-08 2-May Oct-09 1-May Oct Apr Oct Apr Oct Apr Oct Apr Oct Apr-15

40 $/cwt 40 FL vs OKC (basis) 10 FL price minus OKC price ( lb steer calf) May Nov May-02 9-Nov May-03 8-Nov-03 8-May-04 6-Nov-04 7-May-05 5-Nov-05 6-May-06 4-Nov-06 5-May-07 3-Nov-07 3-May-08 1-Nov-08 2-May Oct-09 1-May Oct Apr Oct Apr-12

41 41 FL Steer Calf Price vs OKC $260 $ lb steer calf $/cwt $130 $65 $0 12-May Nov May-02 9-Nov May-03 8-Nov-03 8-May-04 6-Nov-04 7-May-05 5-Nov-05 6-May-06 4-Nov-06 5-May-07 3-Nov-07 3-May-08 1-Nov-08 2-May Oct-09 1-May Oct Apr Oct Apr Oct Apr Oct Apr Oct Apr-15

42 42 FL vs OKC (basis) FL price minus OKC price ( lb steer calf) $/cwt May Nov May-02 9-Nov May-03 8-Nov-03 8-May-04 6-Nov-04 7-May-05 5-Nov-05 6-May-06 4-Nov-06 5-May-07 3-Nov-07 3-May-08 1-Nov-08 2-May Oct-09 1-May Oct Apr Oct Apr-12

43 43 Feeder Cattle Futures May 15 Nov 15 Aug 15 Jan 16

44 44 Fed Steer Price (major feeding region) $300 $275 $250 $/cwt $225 $200 $175 5-year Avg $ Jan 25-Jan 8-Feb 22-Feb 8-Mar 22-Mar 5-Apr 19-Apr 3-May 17-May 31-May 14-Jun 28-Jun 12-Jul 26-Jul 9-Aug 23-Aug 6-Sep 20-Sep 4-Oct 18-Oct 1-Nov 15-Nov 29-Nov 13-Dec

45 45 Live Cattle Futures Jun 15 Aug 15 Dec 15

46 46 Choice Beef Price (wholesale) $300 $275 $250 $/cwt $225 $200 $175 $ Jan 5-year Avg Jan 8-Feb 22-Feb 8-Mar 22-Mar 5-Apr 19-Apr 3-May 17-May 31-May 14-Jun 28-Jun 12-Jul 26-Jul 9-Aug 23-Aug 6-Sep 20-Sep 4-Oct 18-Oct 1-Nov 15-Nov 29-Nov 13-Dec

47 47 Beef Choice Select Spread $16 $12 $/cwt $8 $4 $0 5-year Avg Jan 25-Jan 8-Feb 22-Feb 8-Mar 22-Mar 5-Apr 19-Apr 3-May 17-May 31-May 14-Jun 28-Jun 12-Jul 26-Jul 9-Aug 23-Aug 6-Sep 20-Sep 4-Oct 18-Oct 1-Nov 15-Nov 29-Nov 13-Dec

48 48 Outlook It s tough to make predictions, especially about the future. - Yogi Berra

49 49 Breaking Point Calf Weight when sold Cost/ Cow $450 $1.13 $1.00 $0.90 $0.82 $0.75 $0.69 $0.64 $0.60 $500 $1.25 $1.11 $1.00 $0.91 $0.83 $0.77 $0.71 $0.67 $550 $1.38 $1.22 $1.10 $1.00 $0.92 $0.85 $0.79 $0.73 $600 $1.50 $1.33 $1.20 $1.09 $1.00 $0.92 $0.86 $0.80 $650 $1.63 $1.44 $1.30 $1.18 $1.08 $1.00 $0.93 $0.87 $700 $1.75 $1.56 $1.40 $1.27 $1.17 $1.08 $1.00 $0.93 $750 $1.88 $1.67 $1.50 $1.36 $1.25 $1.15 $1.07 $1.00 $800 $2.00 $1.78 $1.60 $1.45 $1.33 $1.23 $1.14 $1.07

50 49 Breaking Point Calf Weight when sold Cost/ Cow $450 $1.13 $1.00 $0.90 $0.82 $0.75 $0.69 $0.64 $0.60 $500 $1.25 $1.11 $1.00 $0.91 $0.83 $0.77 $0.71 $0.67 $550 $1.38 $1.22 $1.10 $1.00 $0.92 $0.85 $0.79 $0.73 $600 $1.50 $1.33 $1.20 $1.09 $1.00 $0.92 $0.86 $0.80 $650 $1.63 $1.44 $1.30 $1.18 $1.08 $1.00 $0.93 $0.87 $700 $1.75 $1.56 $1.40 $1.27 $1.17 $1.08 $1.00 $0.93 $750 $1.88 $1.67 $1.50 $1.36 $1.25 $1.15 $1.07 $1.00 $800 $2.00 $1.78 $1.60 $1.45 $1.33 $1.23 $1.14 $1.07

51 49 Breaking Point Calf Weight when sold Cost/ Cow $450 $1.13 $1.00 $0.90 $0.82 $0.75 $0.69 $0.64 $0.60 $500 $1.25 $1.11 $1.00 $0.91 $0.83 $0.77 $0.71 $0.67 $550 $1.38 $1.22 $1.10 $1.00 $0.92 $0.85 $0.79 $0.73 $600 $1.50 $1.33 $1.20 $1.09 $1.00 $0.92 $0.86 $0.80 $650 $1.63 $1.44 $1.30 $1.18 $1.08 $1.00 $0.93 $0.87 $700 $1.75 $1.56 $1.40 $1.27 $1.17 $1.08 $1.00 $0.93 $750 $1.88 $1.67 $1.50 $1.36 $1.25 $1.15 $1.07 $1.00 $800 $2.00 $1.78 $1.60 $1.45 $1.33 $1.23 $1.14 $1.07

52 49 Breaking Point Calf Weight when sold Cost/ Cow $450 $1.13 $1.00 $0.90 $0.82 $0.75 $0.69 $0.64 $0.60 $500 $1.25 $1.11 $1.00 $0.91 $0.83 $0.77 $0.71 $0.67 $550 $1.38 $1.22 $1.10 $1.00 $0.92 $0.85 $0.79 $0.73 $600 $1.50 $1.33 $1.20 $1.09 $1.00 $0.92 $0.86 $0.80 $650 $1.63 $1.44 $1.30 $1.18 $1.08 $1.00 $0.93 $0.87 $700 $1.75 $1.56 $1.40 $1.27 $1.17 $1.08 $1.00 $0.93 $750 $1.88 $1.67 $1.50 $1.36 $1.25 $1.15 $1.07 $1.00 $800 $2.00 $1.78 $1.60 $1.45 $1.33 $1.23 $1.14 $1.07

53 Outlook 50

54 50 Outlook How to assess 2014? Remember: Prices are still higher vs year ago Can records continue to be broken? Probably not

55 50 Outlook How to assess 2014? Remember: Prices are still higher vs year ago Can records continue to be broken? Probably not VERY tight supplies could keep prices elevated as we keep moving forward Typical line of thought is 2-3 years, but probably have one of these years in the books!

56 50 Outlook How to assess 2014? Remember: Prices are still higher vs year ago Can records continue to be broken? Probably not VERY tight supplies could keep prices elevated as we keep moving forward Typical line of thought is 2-3 years, but probably have one of these years in the books! Two critical aspects for 2015: Herd size:: Expanded, but now what? Dairy cattle in the beef supply? Beef demand is/will be critical Mostly domestic demand, thus improved US economy is a good sign

57 50 Outlook How to assess 2014? Remember: Prices are still higher vs year ago Can records continue to be broken? Probably not VERY tight supplies could keep prices elevated as we keep moving forward Typical line of thought is 2-3 years, but probably have one of these years in the books! Two critical aspects for 2015: Herd size:: Expanded, but now what? Dairy cattle in the beef supply? Beef demand is/will be critical Mostly domestic demand, thus improved US economy is a good sign Where does risk management come into play? Value of LRP or Put Option?

58 51 Ag Econ Department e-newsletter: blogs.msucares.com/agecon Price & Production Info:

59 52 Many Thanks! John Michael Riley X Data and Chart Sources: USDA- NASS, ERS, AMS, FAS; Bureau of Labor, National Bureau of Economic Analysis; US Census Bureau, CME Group; Livestock Marketing Information Center