Situation Analysis. Kathleen R. Brooks, Ph.D. Extension Livestock Economics Specialist

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1 Situation Analysis Kathleen R. Brooks, Ph.D. Extension Livestock Economics Specialist Department of Agricultural Economics University of Nebraska-Lincoln

2 Agricultural Challenges More with less Biofuels & global food demand Environmental limitations Anti-science/commercial mentality Resource Pressure Competition among crops and with forage and hay for acres High & volatile input prices

3 Beef Industry

4 Cattle Inventory Report, January 1 All cattle & calves -2%, 89.3 mil hd NE: -2% at 6.3 mil hd Beef cow inventory -3%, 29.3 mil hd NE: -4% at 1.8 mil hd Beef replacement heifers +2%, 5.4 mil hd NE: -9%, 350 thousand hd Calf crop -2.9%, 34.3 mil hd NE: +2%, 1.7 mil hd Cattle & calves on feed for slaughter -5%, 13.4 mil hd NE: -4%, 2.6 mil hd Calves grazing small grain pasture (3 state) -16%,

5 Feedstuffs Corn Pasture conditions Hay DDGS

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7 U.S. CORN DISAPPEARANCE AND STOCKS Crop Year Bil. Bushels Stocks Exports Food, Seed & Industrial Feed & Residual Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Forecasts by LMIC G-NP-12 05/10/13

8 $ Per Bu OMAHA CORN PRICES Weekly Avg JAN APR JUL OCT Livestock Marketing Information Center Data Source: USDA-AMS G-P-02 05/30/13

9 U S TOTAL CORN SUPPLY AND PRICE Crop Year June 2, 2013: 8.76 million acres unplanted Bil. Bushels $ Per Bushel Supply Price Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Forecasts by LMIC G-NP-13 05/10/13

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12 Percent US RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly May Jul Sep Beef Cows in States with 40% Poor to Very Poor October 2011 ~ 48% May 2012 ~ 20% October 2012 ~ 70% May 2013 ~ 52% Avg Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC G-NP-30 06/03/13

13 Percent GREAT PLAINS REGION RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly CO, KS, MT, NE, ND, SD, WY January % of Cows 34.3% of Retained Hfrs Avg May Jul Sep Nebraska June 3rd: 58% Poor and Very Poor Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC G-NP-32 06/03/13

14 Percent CORNBELT REGION RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly 14.6% Cows 14.5% Retained Hfrs Percent Avg WESTERN REGION RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly 10.4% Cows 11.3% Retained Hfrs 0 May Jul Sep 15 May Jul Sep Percent SOUTHERN PLAINS REGION RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly 19.7%% Cows 16.4% Retained Hfrs May Jul Sep Percent Avg Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC SOUTHEAST REGION RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly 24.6% Cows 21.3% Retained Hfrs May Jul Sep G-NP-33 06/03/13

15 Mil. Tons U S ALL HAY STOCKS December 1 Dec. 1 US Stocks lowest since 1957 NE Dec 1 Stocks: mil tons mil tons mil tons Mil. Tons 30 U S ALL HAY STOCKS May 1 (Beginning of Crop Year) May. 1 US Stocks prior low: 15 million tons 2007 NE May 1 Stocks: thousand tons mil tons mil tons Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Forecasts by LMIC

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19 $ Per Ton ALFALFA HAY - MONTHLY AVERAGE PRICE Received by Farmers, U.S., Crop Year Avg. 07/08-11/ / / MAY JUL SEP NOV JAN MAR Livestock Marketing Information Center Data Source: USDA-NASS G-P-12 06/03/13 June 3, 2013 Alfalfa Condition: 18% Poor to Very Poor 37% Fair 49% good to excellent First cutting 9% complete $ Per Ton Alfalfa Hay - Monthly Average Price Received by Farmers, Nebraska, Crop Year May July Sep Nov Jan Mar Avg. 07/08-11/ / /14

20 OTHER HAY - MONTHLY AVERAGE PRICE Received by Farmers, U.S., Crop Year $ Per Ton Avg. 07/08-11/ / / MAY JUL SEP NOV JAN MAR Livestock Marketing Information Center Data Source: USDA-NASS G-P-13 06/03/13 June 3, 2013 Hay & Forage Supplies: 75% short to very short 24% adequate 1% surplus $ Per Ton Other Hay - Monthly Average Price Received by Farmers, Nebraska, Crop Year Avg. 07/08-11/ / /14 70 May July Sep Nov Jan Mar

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22 Thoughts High & Volatile Prices Find alternative feedstuffs Crop residues Where is beef industry headed?

23 Longer-Term Projections (as of Feb. 2013)

24 BEEF PRODUCTION PER COW (Est.), Annual Pounds Livestock Marketing Information Center M-S-08A 05/31/13 Data Source: USDA-NASS, Compiled & Analysis by LMIC

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26 NE COF May 1 st : 2.39 million head, -3% Mil. Head 12.0 CATTLE ON FEED US Total, Monthly 11.5 Avg. 2007/ JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Livestock Marketing Information Center Data Source: USDA-NASS

27 Economic Signals in the Cattle Industry

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29 Stockers Historically high Values of Gain (VOG) Also historically high Costs of Gain (COG)

30 Feedlot Cost of Gain Kansas, $/cwt Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12

31 KANSAS FEEDLOT CLOSEOUTS Feeding Costs per Cwt, Steers $/cwt Avg. 2007/ Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data Source: KSU Focus on Feedlots, Compiled by LMIC 05/06/13

32 SLAUGHTER STEER PRICES Southern Plains, Weekly $ Per Cwt Avg JAN APR JUL OCT Livestock Marketing Information Center C-P-52 06/03/13 Data Source: USDA-AMS

33 $ Per Cwt 145 CHOICE STEER PRICE vs BREAKEVEN Cattle Feeding, S. Plains, Monthly Steer Price Breakeven Projected Breakeven Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC C-P-21 06/03/13

34 Quarterly Forecasts (LMIC 4/28/13) % Chg. Average % Chg. Comm'l % Chg. Live Sltr. % Chg. Feeder Steer Price Year Comm'l From Dressed From Beef From Steer Price From Southern Plains Quarter Slaughter Year Ago Weight Year Ago Production Year Ago 5-Mkt Avg Year Ago 7-800# 5-600# 2012 I II III IV Year I II III IV Year I II III IV Year

35 Dollars per Cwt Nebraska Direct Slaughter Steer Price Monthly Average Cash Futures Thru June 2014 all cattle futures contracts are above $120 per cwt

36 Dollars Per Cwt NE # Feeder Steer Price Monthly Average Cash Futures Thru May 2014 all cattle futures contracts are above $145 per cwt

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