Cattle Outlook. January, 2018

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1 Cattle Outlook January, 2018

2 Cattle Outlook January 2018 In This Issue: Supply Fundamentals Demand Fundamentals Summary 2

3 Historical Price Reference Where are Cattle Prices Currently, And Where are they Historically? 3

4 Historical Price Reference 4

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7 January 2017 Cattle Inventory Report

8 ,000,000 January Cattle Inventory Cattle Inventory ,000, ,000,000 80,000,000 60,000,000 40,000,000 20,000,000 0 Total cattle and calves in the United States as of January 1, 2017 was estimated to be 93.6 million head. According to NASS this is 2% more than the 91.9 million head on January 1, 2016

9 Cattle Inventory by Class and Calf Crop - United States: January 1, 2016 and 2017 Class Percent of previous year (1,000 head) (1,000 head) Cattle and calves 91, , % Cows and heifers that have calved 39, , % Beef cows 30, , % Milk cows 9, , % Heifers 500 pounds and over 19, , % For beef cow replacement 6, , % Expected to calve 3, , % For milk cow replacement 4, , % Expected to calve 3, , % Other heifers 8, , % Steers 500 pounds and over 16, , % Bulls 500 pounds and over 2, , % Calves under 500 pounds 14, , % Cattle on feed 13, , % Percent of previous year Calf crop 34, , % 9

10 July 2017 Cattle Inventory Report

11 ,000,000 July Cattle Inventory Cattle Inventory 140,000, ,000, ,000,000 80,000,000 60,000,000 40,000,000 20,000,000 0 Total cattle and calves in the United States as of July 1, 2017 was estimated to be million head. According to NASS this is 4.5% more than the 98.2 million head recorded as of July 1, The July survey was not conducted in 2013 or

12 Cattle Inventory by Class and Calf Crop - United States: July 1, 2015 and 2017 Class Percent of previous year (1,000 head) (1,000 head) Cattle and calves 98, , % Cows and heifers that have calved 39,800 41, % Beef cows 30,500 32, % Milk cows 9,300 9, % Heifers 500 pounds and over 15,700 16, % For beef cow replacement 4,800 4, % For milk cow replacement 4,200 4, % Other heifers 6,700 7, % Steers 500 pounds and over 14,100 14, % Bulls 500 pounds and over 1,900 2, % Calves under 500 pounds 26,700 28, % Cattle on feed 12,100 12, % Percent of ,017 previous year Calf crop 34,087 36, % 12

13 December 2017 Cattle on Feed

14 December 2017 Cattle on Feed Estimates On-feed December 1 Placed in November Marketed in November Average of Range of Estimates Estimates

15 December Cattle on Feed Number of Cattle on Feed, Placements, Marketings, and Other Disappearance on 1,000+ Capacity Feedlots - United States: December 1, 2016 and 2017 Item Number Percent of previous year (1,000 head) (1,000 head) (percent) On feed November 1 10,665 11, % Placed on feed during November. 1,843 2, % Fed cattle marketed during November... 1,787 1, % Other disappearance during November % On feed December ,652 11, %

16 December Cattle on Feed Number of Cattle Placed on Feed by Weight Group on 1,000+ Capacity Feedlots by Month - States and Untied States: 2016 and 2017 During November 2016 State Under 600 lbs lbs lbs lbs 900+ lbs lbs 1,000+ lbs Total (1,000 head) (1,000 head) (1,000 head) (1,000 head) (1,000 head) (1,000 head) (1,000 head) (1,000 head) Colorado (D) (D) 140 Kansas (D) (D) 370 Nebraska (D) (D) 510 Texas (D) (D) 390 Other States (D) (D) 433 United States (X) ,843 During November 2017 State Under 600 lbs lbs lbs lbs 900+ lbs lbs 1,000+ lbs Total (1,000 head) (1,000 head) (1,000 head) (1,000 head) (1,000 head) (1,000 head) (1,000 head) (1,000 head) Colorado (D) (D) 150 Kansas (D) (D) 420 Nebraska (D) (D) 545 Texas (D) (D) 480 Other States (D) (D) 504 United States (X) ,099 (D) Withheld to avoid disclosing data for individual operations (X) Not applicable 1 The 900+ weight group is the sum of and 1,000+ pound weight group

17 Current Supply Side

18 1,000 Head Fundamental Backdrop 700 Weekly Beef Slaughter Current Vs. Previous Vs. 5 Year Average Year Avg Jan 27-Jan 16-Feb 7-Mar 27-Mar 16-Apr 6-May 26-May 15-Jun 5-Jul 25-Jul 14-Aug 3-Sep 23-Sep 13-Oct 2-Nov 22-Nov 12-Dec 2016

19 Dressed Weight Pounds Fundamental Backdrop 880 Cattle Dressed Weights January Present Plotted Seasonally Prod. Sold (Totals/Wtd Avg) Dressed Wgt YTD Poly. (Prod. Sold (Totals/Wtd Avg) Dressed Wgt.) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

20 Million Pounds Fundamental Backdrop 550 Weekly Beef Production Current Vs. Previous Vs. 5 Year Average Year Avg Jan 27-Jan 16-Feb 8-Mar 28-Mar 17-Apr 7-May 27-May 16-Jun 6-Jul 26-Jul 15-Aug 4-Sep 24-Sep 14-Oct 3-Nov 23-Nov 13-Dec 2-Jan

21 Current Demand Side

22 1,000 Pounds Fundamental Backdrop Annual Beef and Veal Exports Annual Exports Export Projection 2018 Export Projection The December 2017 WASDE Report had Annual Beef & Veal Exports estimated to be 2,875 million pounds in 2017, up 20 million from November, and project 2018 to be 2,985 million pounds, up 15 million from last month.

23 Thousand Pounds Fundamental Backdrop Total Beef & Veal Exports October 2017 (Carcass weight in thousands) 10-Yr Avg 10-Yr Max 10-Yr Min Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec U.S. Beef & Veal Exports for October were million pounds, an increase of 17.0 million pounds, or 7.0% more than September, and were 30.1 million pounds or 13.1% greater than October of (November ERS exports will be updated January 8 th )

24 Fundamental Backdrop Cold Storage Total Beef November 30, Year Avg Year Max 10-Year Min Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Beef in Cold Storage as of November 30, 2017 was reported to be million pounds, a decrease of 20.1 million pounds or 4.0% less than October and compares to the average 2.1% build from October to November over the past ten years. Year over year inventories also decreased, lower by 44.0 million pounds or 8.3% less than November of 2016.

25 Other Studies

26 $ per CWT Fundamental Backdrop Choice - Select Boxed Beef Spread January Present 300 Choice Select Spread /5/2004 1/5/2006 1/5/2008 1/5/2010 1/5/2012 1/5/2014 1/5/ $ per CWT

27 $/CWT Fundamental Backdrop Choice-Select Spread 10-Yr Avg 10-Yr Max 10-Yr Min Jan 27-Jan 16-Feb 7-Mar 27-Mar 16-Apr 6-May 26-May 15-Jun 5-Jul 25-Jul 14-Aug 3-Sep 23-Sep 13-Oct 2-Nov 22-Nov 12-Dec

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31 Summary The USDA s monthly Cattle-On-Feed report revealed December 1 on feed supplies of million head, 108.1% of last year s levels, 1.4% greater than average expectations. Placements in November totaled million head or 113.9% of last year and well above pre-report expectations of 105.8%. Fed cattle marketed during November were million head or 103.2% of 2016, right on expectations. Total beef in cold storage as of November 30 was reported to be million pounds, a decrease of 20.1 million pounds or 4.0% less than October and compares to the average 2.1% build from October to November over the past ten years. Year over year inventories were down by 44.0 million pounds or 8.3% less than November of Beef and Veal exports for October were reported at million pounds, an increase of 17.0 million pounds or 7.0% more than September, and were 30.1 million pounds or 13.1% greater than October of (November Beef & Veal export data will be released on January 8, 2018)

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