3/25/2017. What to do today? Cattle & Beef Markets: Commodity Outlook

Transcription

1 3/25/27 Cattle & Beef Markets: Commodity Outlook Stephen R. Koontz Professor & extension economist Department of Agricultural & Resource Economics Colorado State University Greeley, Colorado March, 27 What to do today? What happened in the cattle markets the last couple of years? What s likely to happen over the next several years? Some big picture perspective. And some devil in the details. If you have questions & you don t ask them then that s your fault.

2 3/25/27 Monthly Corn Contract 2

3 3/25/ BEEF COWS THAT CALVED JANUARY, 27 ( Head) DC to 7 7 to to to US Total 32 Data Source: USDA-NASS 3/2/ CHANGE IN BEEF COWS NUMBERS 25 TO 26 ( Head) US Total DC to to 6 6 to to A Long Term Perspective Summary Huge increase in demand for corn. Weather related production short falls (i.e., below trend yields) attempting to satisfy this demand. Strong & changing, mainly through growth, world economies. For long enough things looked different (i.e., there was bad long term forecasting). The rising tide for corn floated the boats for all crop commodities & swamped the boats for protein commodities. Data Source: USDA-NASS 3/2/7 3

4 3/25/27 95/75 = So foreign buyers of U.S. commodities face a 26⅔% increase in prices before even they get a chance to buy the commodities. It s not as bad as in the early-2 s or the entire 98s. But it s worse than the Great Recession and Future interest rates? Up? Fiscal policy is talking more spending and tax cuts. (Interest rates up.) The US has the highest r-e-a-l rates on the planet. This will attract foreign currency. (Dollar up.) 4

5 3/25/27 Commodity Market Outlook Summary Cattle No more record high prices & more numbers herd expansion turned corner & demand trouble. Hogs Plentiful & potential trouble on horizon. Dairy Plentiful & surprisingly strong. Corn Several excellent crops, strong exports, & future acres? Hay Low quality & pasture are plentiful. Oilseeds Good crop & incredible demand. Wheat Great crop conditions but dry & trouble. Inputs Soft but likely to increase. GL_GR Greeley, CO Mon Mar 2, 27 USDA-CO Dept of Ag Market News CO/NE/WY Elevator Afternoon Grain Bids Cash grain bids to farmers delivered to country elevators for Corn, Wheat and Soybeans per bushel; and Sorghum, Millet, and Sunflowers per cwt. as of 3: pm. Mar 2, 27. GL_LS795 Greeley, CO Fri Mar 7, 27 USDA-CO Dept of Ag Market News Colorado Auction Feeder Cattle Summary Receipts: 822 Last Week: 6278 Last Year: 225 US Hard Red Winter Wheat Ordinary Protein: mostly 9 lower. Northcentral Colorado range Greeley 3.6 Bennett/Roggen/Byers 3.3 Northeast Colorado range Fleming/Haxtun/Holyoke/Amherst/ Julesburg/Paoli/Peetz Yuma/Wray/Brush/Akron/Otis/Anton Eastcentral Colorado range Cheyenne Wells 3.35 Limon/Seibert/Burlington/Genoa/Hugo/Arriba/ Flagler/Bethune/Stratton Southeast Colorado range Lamar/Holly/Vilas/Campo/Wiley/Springfield Southwest NE and Southeast WY range Venango/Chappell/Big Springs/Brule Kimball/Pine Bluffs/Sidney/Brownson/Potter US 2 Yellow Corn: 4 lower. Northcentral Colorado range Greeley/Eaton Roggen/Byers 3.39 Northeast Colorado range Fleming/Haxtun/Holyoke/Amherst/ Julesburg/Paoli/Peetz Yuma/Wray/Brush/Otis/Anton Eastcentral Colorado range Cheyenne Wells 3.2 Limon/Seibert/Burlington/Genoa/Hugo/Arriba/ Flagler/Bethune/Stratton Southeast Colorado range Lamar/Holly/Vilas/Campo/Wiley/Springfield Southwest NE and Southeast WY range Venango/Chappell/Big Springs/Brule/ Kimball/Pine Bluffs/Sidney/Potter US 2 Yellow Sorghum: 7 lower. Southeast Colorado range Lamar/Holly/Vilas/Campo/Wiley/Springfield But you don t sell in the futures market so Cash wheat in Colorado is trading for $3.-$3.25/bu. & cash corn is trading for $3.2-$3.6/bu. Compared to last week: Feeder steers under 6 lbs were mostly steady to 3. higher and over 6 lbs were mostly 3. to 5. higher. Feeder heifers 2. to 4. higher. Trade activity and buyer demand were moderate to good. The feeder supply consisted of approximately 52 percent steers and 48 percent heifers. Feeder cattle over 6 lbs made up approximately 57 percent of the supply. Combined weighted average report for 2 Colorado auctions this week included: Winter Livestock and La Junta Livestock. Feeder Steers: Medium and Large 4-45 lbs , thin fleshed ; lbs , fancy 9.5; lbs , thin fleshed 76.; 55-6 lbs , thin fleshed 69.; 6-65 lbs ; lbs ; 7-75 lbs , thin fleshed 43.; lbs ; lbs ; 86-9 lbs ; 9-93 lbs Medium and Large lbs ; lbs ; lbs ; 6-65 lbs ; lbs ; lbs ; lbs Feeder Heifers: Medium and Large lbs ; lbs ; lbs , fancy 7.; lbs , fancy ; 5-55 lbs , fancy 6.; lbs 4.-5., fancy ; 6-65 lbs 3.-4.; lbs ; lbs ; 75-8 lbs ; Medium and Large lbs ; 5-53 lbs ; lbs ; lbs ; 74 lbs 9.. Source: USDA-CO Dept of Ag Market News Service, Greeley, CO Lindsay Brunet, Market Reporter Greeley.LPGMN@ams.usda.gov A 5-6 cwt steer calf is $5-$75/cwt. Sunflowers Colorado/SW NE/SE WY range Source: USDA-CO Dept of Ag Market News Service, Greeley, CO Tammy Judson, Market Reporting Assistant (97) Greeley.LPGMN@ams.usda.gov 5

6 3/25/27 6

7 3/25/27 Date LMIC Cattle Price & Quantity Forecasts % Change Production % Change Consumption Fed Cattle 7 8# Feeder 5 6# Calf $48.2 $28.2 $ $2.85 $45.6 $ : I $2 22 $3 32 $ : II $5 8 $3 34 $ : III $7 $28 34 $ : VI $7 2 $26 33 $ $2 6 $29 33 $ : I $9 5 $24 32 $ : II $9 6 $27 36 $ : III $3 $23 33 $ : VI $4 3 $22 33 $ $8 2 $26 32 $

8 3/25/27 Cattle Outlook Fed cattle market has/will trend down: Domestic demand was strong & is weakening. International demand & trade are weak. Big expansion in competing meats. Feeder cattle & calf prices will weaken for the next several years if: Herd building continues. Red meat & poultry production expand. This market is looking for a bottom trading range $-35/cwt. Weekly Live Cattle Contract $7 Weekly Feeder Cattle Contract This market will drift lower trading range $-5/cwt. $24 8

9 3/25/27 Mil. Head CATTLE ON FEED US Total, Monthly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Avg. 2/ Mil. Head FED CATTLE MARKETINGS US Total, Monthly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Avg. 2/ Data Source: USDA NASS C-N- 2/24/7 Data Source: USDA NASS C-M- 2/24/7 Mil. Head FEEDLOT PLACEMENTS US Total, Monthly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Avg. 2/ Mil. Head CATTLE ON FEED OVER 2 DAYS US Total, Monthly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Avg. 2/ Data Source: USDA NASS C-N-8 2/24/7 Data Source: USDA NASS, Compiled by LMIC C-N-2 2/24/7 9

10 3/25/27 JUN 27 Live Cattle Contract MAR 27 Feeder Cattle Contract Thou. Head SATURDAY CATTLE SLAUGHTER Federally Inspected, Weekly Thou. Head STEER SLAUGHTER Federally Inspected, Weekly Data Source: USDA AMS & USDA NASS C-S-3 3/7/7 Data Source: USDA AMS & USDA NASS C-S-7 3/7/7

11 3/25/27 Thou. Head 9 HEIFER SLAUGHTER Federally Inspected, Weekly Pounds 475 STEER LIVE WEIGHT Texas/Oklahoma/New Mexico, FOB, Weekly Data Source: USDA AMS & USDA NASS C-S-3 3/7/7 Data Source: USDA AMS C-S-26 3/7/7 Thou. Head 4 TOTAL COW SLAUGHTER Federally Inspected, Weekly Thou. Head 7 BEEF COW SLAUGHTER Federally Inspected, Weekly Data Source: USDA AMS & USDA NASS C-S-4 3/7/7 Data Source: USDA AMS & USDA NASS C-S-34 3/7/7

12 3/25/27 Mil. Pounds COMMERCIAL BEEF PRODUCTION Monthly JAN MAR MAY JUL SEP NOV Mil. Pounds COMMERCIAL PORK PRODUCTION Monthly JAN MAR MAY JUL SEP NOV Data Source: USDA NASS M-S-2 2/24/7 Data Source: USDA NASS M-S-5 2/24/7 Cents Per Pound RETAIL BEEF PRICE All Fresh, Monthly JAN MAR MAY JUL SEP NOV Cents Per Pound RETAIL PORK PRICE Monthly JAN MAR MAY JUL SEP NOV Data Source: Bureau of Labor Statistics & USDA ERS M-P- 3/7/7 Data Source: Bureau of Labor Statistics & USDA ERS M-P-5 3/7/7 2

13 3/25/27 Cents Per Pound RETAIL CHICKEN PRICE Broiler Composite, Monthly JAN MAR MAY JUL SEP NOV Cents Per Pound RETAIL PRICE COMPARISON Monthly Jan 4 Jan 5 Jan 6 Jan 7 Jan 8 Jan 9 Jan Jan Jan 2 Jan 3 Jan 4 Jan 5 Jan 6 Jan 7 Pork Composite Broiler All Fresh Beef Data Source: Bureau of Labor Statistics & USDA ERS M-P-2 3/7/7 Data Source: Bureau of Labor Statistics & USDA ERS $ Per lbs LIVE TO CUTOUT BEEF PRICE SPREAD Monthly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC $ Per lbs CUTOUT TO RETAIL BEEF PRICE SPREAD Monthly Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data Source: USDA AMS & USDA ERS, Compiled & Analysis by LMIC C-P-2 3/6/7 Data Source: USDA AMS & USDA ERS, Compiled & Analysis by LMIC C-P-4 3//7 3

14 3/25/27 $ Per Steer 2 AVERAGE RETURNS TO CATTLE FEEDERS Feeding 75 Lb. Steers. S. Plains, Monthly Latest Data: February 27 $ Per Cwt. 5 4 SLAUGHTER STEER PRICES 5 Market Weighted Average, Weekly Data Source: USDA AMS & USDA NASS, Compiled & Analysis by LMIC C-P-22 3//7 Data Source: USDA AMS 3/2/7 $ Per Cwt MED. & LRG. # FEEDER STEER PRICES 7 8 Pounds, Southern Plains, Weekly $ Per Cwt MED. & LRG. # STEER CALF PRICES 5 6 Pounds, Southern Plains, Weekly Data Source: USDA AMS C-P-49 3/2/7 Data Source: USDA AMS C-P-54 3/2/7 4

15 3/25/27 $ Per Cwt. 24 MED. & LRG. # STEER CALF PRICES 4 5 Pounds, Southern Plains, Weekly $ Per Cwt. 24 BOXED BEEF CUTOUT VALUE Choice 6 9 Lbs., Carcass, Weekly Data Source: USDA AMS C-P-49A 3/2/7 Data Source: USDA AMS C-P-62 3/2/7 $ Per Cwt STEER HIDE AND OFFAL VALUE Live Animal Basis, Weekly $ Per Cwt CHOICE MINUS SELECT BEEF PRICES Carcass Cutout Value 6 9 Lbs., Weekly Data Source: USDA AMS C-P-39 3/2/7 Data Source: USDA AMS, Compiled by LMIC C-P-68 3/2/7 5

16 3/25/27 $ Per Cwt. SLAUGHTER COW PRICES Southern Plains, 85 9% Lean, Weekly Cents Per Pound WHOLESALE BEEF LOIN STRIP PRICES Boneless x, Weekly Data Source: USDA AMS C-P-35 3/2/7 Data Source: USDA AMS 3/2/7 Cents Per Pound WHOLESALE BEEF CHUCK PRICES Chuck Roll x Neck Off, Weekly WHOLESALE BEEF BOTTOM ROUND PRICES 8 33 Pounds, Weekly Cents Per Pound Data Source: USDA AMS 3/2/7 Data Source: USDA AMS M-P-22 3/2/7 6

17 3/25/27 Cents Per Pound 245 WHOLESALE BONELESS BEEF PRICES Fresh, 9% Lean, Weekly Cents Per Pound 5 WHOLESALE PORK LOIN PRICES ¼ Inch Trim, Vacuum Sealed, Weekly Data Source: USDA AMS M-P-24 3/2/7 Data Source: USDA AMS M-P-28 3/2/7 Index Value 2 RETAIL ALL FRESH BEEF DEMAND INDEX Annual, Using CPI 99= Index Value 2 RETAIL ALL FRESH BEEF DEMAND INDEX First Quarter, Using CPI 99= Data Source: Bureau of Labor Statistics, USDA ERS, Compiled & Analysis by LMIC Data Source: Bureau of Labor Statistics, USDA ERS, Compiled & Analysis by LMIC 7

18 3/25/27 Index Value RETAIL ALL FRESH BEEF DEMAND INDEX Third Quarter, Using CPI 99= Cattle & Beef Going Forward? Weak domestic demand. Strong dollar & weak trade. Herd expansion, increased future production, & normal feeding costs. Pressured by pork & poultry prices Data Source: Bureau of Labor Statistics, USDA ERS, Compiled & Analysis by LMIC MT US EXPORTS OF BEEF MUSCLE CUTS Weekly //5 7//5 /9/6 7/9/6 /7/7 Canada Japan Mexico Korean Rep. MT TOTAL U.S. EXPORTS OF BEEF MUSCLE CUTS Weekly /4/4 7/5/4 //5 7//5 /9/6 7/9/6 /7/7 Data Source: USDA AMS & USDA APHIS 3/7/7 Data Source: USDA FAS 3/7/7 8

19 3/25/27 Mil. Pounds 3 US BEEF AND VEAL IMPORTS Carcass Weight, Monthly Mil. Pounds 27 US BEEF AND VEAL EXPORTS Carcass Weight, Monthly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 5 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Data Source: USDA ERS & USDA FAS I-N-5 3/9/7 Data Source: USDA ERS & USDA FAS I-N-6 3/9/7 Mil. Pounds US NET BEEF IMPORTS Carcass Weight, Monthly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Mil. Pounds US BEEF EXPORTS TO MAJOR MARKETS Carcass Weight, Monthly Japan Canada Mexico South Korea Data Source: USDA ERS & USDA FAS, Compiled by LMIC I-N-3 3/9/7 Data Source: USDA ERS & USDA FAS I-N-35 3/9/7 9

20 3/25/27 Mil. Pounds US BEEF EXPORTS TO JAPAN Carcass Weight, Monthly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Mil. Pounds MAJOR US BEEF IMPORT SOURCES Carcass Weight, Annual Australia New Zealand Canada Mexico Avg. 2/ Data Source: USDA ERS & USDA FAS I-N-37 3/9/7 Data Source: USDA ERS & USDA FAS, Compiled by LMIC I-N-36 3/22/7 Bil. $ US BEEF INDUSTRY EXPORT VALUES Annual Live Cattle Beef & Veal Hides & Skins Variety Meats Tallow & Greases Bil. $ US BEEF INDUSTRY IMPORT VALUES Annual Live Cattle Beef & Veal Hides & Skins Variety Meats Tallow & Greases Data Source: USDA FAS, Compiled & Analysis by LMIC I-N-7 3/22/7 Data Source: USDA FAS, Compiled & Analysis by LMIC I-N-7 3/22/7 2

21 3/25/27 Bil. $ US BEEF INDUSTRY NET EXPORT VALUES Annual Live Cattle Beef & Veal Hides & Skins Tallow, Grease & Var Meat Total Percent US BEEF AND VEAL NET IMPORTS As a Percentage of Production, Carcass Weight, Annual Data Source: USDA FAS, Compiled & Analysis by LMIC I-N-72 3/22/7 Data Source: USDA ERS & USDA FAS, Compiled by LMIC I-N- 3/9/7 Percent 22 US NET PORK EXPORTS As a Percentage of Production, Carcass Weight, Annual Percent US BROILER EXPORTS As a Percentage of Broiler Production, RTC, Annual Data Source: USDA ERS & USDA FAS, Compiled by LMIC I-N-62 3/9/7 Data Source: USDA ERS & USDA FAS, Compiled by LMIC I-N-5 3/9/7 2

22 3/25/27 Pounds US RED MEAT & POULTRY CONSUMPTION Per Capita, Retail Weight, Annual Beef Pork Total Chicken Turkey Nominal Dollars US EXPENDITURES FOR MEAT & POULTRY Per Capita, By Type of Meat, Annual Beef Pork Broiler Turkey Data Source: USDA NASS, Compiled & Analysis by LMIC M-C- 3/3/7 Data Source: Bureau of Economic Analysis & USDA ERS, Compiled by LMIC M-C-6A 3/3/7 Mil. Head 46 JANUARY TOTAL COW INVENTORY U.S., Annual 4 PERCENT CHANGE IN CATTLE INVENTORY U.S., January Data Source: USDA NASS C-N-2A 2/3/7 Data Source: USDA NASS, Analysis by LMIC C-N-48 2/3/7 22

23 3/25/27 $ Per Cow 5 ESTIMATED AVERAGE COW CALF RETURNS Returns Over Cash Cost (Includes Pasture Rent), Annual $ Per Cow 6 5 COW-CALF RETURNS AND CATTLE INVENTORY U.S., Annual Mil. Head Estimated Cow Calf Returns Cattle Inventory Jan Data Source: USDA & LMIC, Compiled by LMIC C-P-66 3/3/7 Data Source: USDA AMS & USDA NASS, Compiled and Analysis by LMIC C-P-67 3/3/7 $ Per Cow ESTIMATED AVERAGE COW CALF COSTS Total Cash Cost Plus Pasture Rent, Annual Cattle Outlook Expansion this year & next? Reasonable feed costs. Worst case scenario softening demand & strong competing meat production hard fall last two years & stop? Best case scenario need to see increased trade. Data Source: USDA & LMIC, Compiled by LMIC 3/3/7 23

24 3/25/27 Percent Change QTRLY GROSS DOMESTIC PRODUCT (GDP) Real Dollar (25) Change from Previous Quarter Percent U.S. UNEMPLOYMENT RATE Seasonally Adjusted, Quarterly Data Source: Bureau of Economic Analysis, Compiled & Analysis by LMIC Data Source: Bureau of Labor Statistics, Compiled & Analysis by LMIC 2/2/6 2/2/6 Weekly S&P5 Contract Daily S&P5 Contract 24

25 3/25/27 Short Term Outlook Fed cattle increased supply & iffy demand. Trade? Feeder cattle & calves herd expansion. Feed prices inline with fundamentals. Oilseeds are the driver. This year s surprises? Forage plentiful. Inputs cheaper fuel & other inputs. Long Term Outlook For cattle & calves, it depends on demand (domestic & trade) & supply (herd expansion). And competing meats. And feed & forage costs. Corn & oilseeds acres going forward. Domestic economy v. international economies. Low interest rates & inflation. Strong dollar. Back to cost control knitting. Outlook Summary Cattle: 27 Fed: $5 25/cwt. Feeders: $2 4/cwt. Calves: $25 5/cwt. And it depends on how far out you want to go if I wanted cows I d be buying. Trade makes me the most wrong. Total up, detail, & reduce those cow costs. 25

26 3/25/27 Contact and Link Information 26