Cattle and Hay Outlook

Transcription

1 Cattle and Hay Outlook Stephen R. Koontz Associate professor & extension economist Department of Agricultural & Resource Economics Colorado State University October, Outlook Summary Weather drives it all everyone needs rain. Corn drives all feed markets corn market nervous and showing it in price hay will not weaken until corn does. Consumer markets are soft international especially. Cattle markets have had trouble because of early calf marketings last year & holding high break even cattle this year. 1

2 Commodity Market Outlook Summary Corn Needs two enormous crops. Hay Impacted by drought and corn. Cattle Current demand & long term supply. Oilseeds Depends on acres, exports to China & South American weather. Wheat Reduced world supplies & drought. Dairy Strong liquidation & coming volatility. Inputs Modest increases except land. 2

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5 U S ALL HAY SUPPLY & DISAPPEARANCE Crop Year U S ALL HAY STOCKS May 1 (Beginning of Crop Year) Mil. Tons Mil. Tons Hay Supply Disap G-NP-2 G-NP-21 11/9/12 11/9/12 Data Source: USDA-NASS, Compiled & Forecasts by LMIC Data Source: USDA-NASS, Compiled & Forecasts by LMIC 5

6 Mil. Tons U S ALL HAY STOCKS December Data Source: USDA-NASS, Compiled & Forecasts by LMIC G-NP-22 11/9/12 5% -34% -2% 417% Data Source: USDA-NASS PERCENT CHANGE MAY 1 HAY STOCKS (-) 15% 143% -13% 19% 1% -49% 2% U.S. hay stocks down >1%. 36% 3% -2% -62% -35% -58% 11% -18% 2% -14% -18% 32% -21% -6% -27% 5% 124% -23% -3% -4% 46% -11% -27% 83% -1% 44% -36% -7% 52% VT -6% NH 117% MA 5% RI % CT % NJ -29% DE 33% MD 23% -% to -18% -18% to 2% 2% to 44% 44% to 517% 5/1/ ALL HAY ACRES ( Acres) PERCENT CHANGE ALL HAY ACRES (-21) 7-7% VT 175 NH 53 MA 74 RI 9 CT 6 NJ 15 DE 15 MD 22 to 2 2 to to to to % -1% -8% -6% -4% -6% 9% 1% -11% -1% U.S. hay acres down >5%. -3% -1% -8% -29% -6% -22% -4% -4% -3% % -5% -3% 1% -1% % 3% 3% -2% -9% -4% -1% -5% -4% 3% -17% -9% 3% -19% -4% -% to -9% -9% to -5% -5% to -3% -3% to 2% 2% to 14% VT -1% NH -5% MA -4% RI 13% CT 2% NJ % DE % MD 2% Data Source: USDA-NASS 5/1/ Data Source: USDA-NASS 5/1/ 6

7 Percent US RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly Percent WESTERN REGION RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly May Jul Sep 15 May Jul Sep G-NP-3 G-NP-31 1/31/12 1/31/12 Data Source: USDA-NASS, Compiled & Analysis by LMIC Data Source: USDA-NASS, Compiled & Analysis by LMIC Percent 9 GREAT PLAINS REGION RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly Percent SOUTHERN PLAINS REGION RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly May Jul Sep 1 May Jul Sep G-NP-32 G-NP-33 1/31/12 1/31/12 Data Source: USDA-NASS, Compiled & Analysis by LMIC Data Source: USDA-NASS, Compiled & Analysis by LMIC 7

8 Percent CORNBELT REGION RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly Percent 4 NORTHEAST REGION RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly May Jul Sep May Jul Sep G-NP-34 G-NP-35 1/31/12 1/31/12 Data Source: USDA-NASS, Compiled & Analysis by LMIC Data Source: USDA-NASS, Compiled & Analysis by LMIC GL_GR31 Percent 45 SOUTHEAST REGION RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly May Jul Sep Data Source: USDA-NASS, Compiled & Analysis by LMIC G-NP-36 1/31/12 8

9 Forage Outlook Weekly Live Cattle Contract Hay price to follow corn. Anticipated weaker hay price through the year but Strong demand from beef price outlook. Little beef herd liquidation. Weak demand from dairy. Winter will bring some very bad stories $2/T poor hay will be a good buy. The top is not in this market yet trading range of $15-13/cwt. But it will take continued strong demand. $13 Monthly Live Cattle Contract Weekly Feeder Cattle Contract The top is not in this market yet trading range of $ /cwt. What? $8.5/bu corn only causes feeders to drop to $135/cwt. How is that possible? $16 9

10 Monthly Feeder Cattle Contract Cattle Outlook Fed cattle market is strong (than you think): International demand and trade are the reason. Domestic demand is unique. Corn & feeders? Feeder cattle and calf prices will be strong for the foreseeable future: Continued beef cow liquidation. But evidence of herd rebuilding. $ Per Cwt CHOICE STEER PRICE vs BREAKEVEN Cattle Feeding, S. Plains, Monthly Latest Data: October Steer Price Breakeven Projected Breakeven $ Per Head AVERAGE RETURNS TO CATTLE FEEDERS Feeding 725 Lb. Steers, S. Plains, Monthly Latest Data: October C-P-21 11/15/12 C-P-22 11/15/12 & USDA-NASS, Compiled & Analysis by LMIC & USDA-NASS, Compiled & Analysis by LMIC 1

11 $ Per Head 21 LIVE TO CUTOUT BEEF PRICE SPREAD Monthly Index Value 12 RETAIL ALL FRESH BEEF DEMAND INDEX Annual, Using CPI 199= JAN MAR MAY JUL SEP NOV & USDA-ERS, Compiled & Analysis by LMIC C-P-2 11/15/12 Data Source: Bureau of Labor Statistics, USDA-ERS, Compiled & Analysis by LMIC Index Value 12 RETAIL ALL FRESH BEEF DEMAND INDEX First Quarter, Using CPI 199= Index Value 12 RETAIL ALL FRESH BEEF DEMAND INDEX Second Quarter, Using CPI 199= Data Source: Bureau of Labor Statistics, USDA-ERS, Compiled & Analysis by LMIC Data Source: Bureau of Labor Statistics, USDA-ERS, Compiled & Analysis by LMIC 11

12 Index Value 12 RETAIL ALL FRESH BEEF DEMAND INDEX Third Quarter, Using CPI 199= Index Value 12 RETAIL ALL FRESH BEEF DEMAND INDEX Fourth Quarter, Using CPI 199= Data Source: Bureau of Labor Statistics, USDA-ERS, Compiled & Analysis by LMIC Data Source: Bureau of Labor Statistics, USDA-ERS, Compiled & Analysis by LMIC JAN WHOLESALE BEEF LOIN STRIP PRICES Boneless x1, Weekly APR JUL OCT JAN WHOLESALE BEEF RIBEYE PRICES Boneless, Light, Weekly APR JUL OCT M-P-21 12

13 WHOLESALE BEEF FULL TENDER PRICES Musl-On, 5 Pounds and Up, Weekly WHOLESALE BEEF CHUCK PRICES Boneless 2 Piece, Weekly JAN APR JUL OCT JAN APR JUL OCT M-P-23 WHOLESALE BEEF BOTTOM ROUND PRICES Pounds, Weekly JAN APR JUL OCT JAN WHOLESALE BONELESS BEEF PRICES Fresh, 9% Lean, Weekly APR JUL OCT M-P-22 M-P-24 13

14 JAN WHOLESALE BONELESS BEEF PRICES Fresh, 5% Lean, Weekly APR JUL OCT M-P-25 Why the focus on demand? Strength of domestic & international demand is the cause of strong cattle prices. Two years of drought impacting supplies & market dynamics. It s not all demand but it s pretty close. What happens with herd expansion & when corn returns to below $5/bu.? Thou. Head 25 SLAUGHTER STEERS & HEIFERS IMPORTS FROM CANADA Weekly Thou. Head 9.5 SLAUGHTER COWS & BULLS IMPORTS FROM CANADA Weekly JAN APR JUL OCT 1.5 JAN APR JUL OCT 11/29/12 11/29/12 & USDA-APHIS & USDA-APHIS 14

15 MT 7 U.S. EXPORTS OF BEEF MUSCLE CUTS Weekly MT 29 TOTAL U.S. EXPORTS OF BEEF MUSCLE CUTS Weekly Canada Japan Mexico Korean Rep Jan-7 Jul-7 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11 Jan-12 Jul-12 4 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11 Jan-12 Jul-12 11/29/12 11/29/12 Data Source: USDA-FAS Data Source: USDA-FAS Bil. $ U S BEEF INDUSTRY EXPORT VALUES Annual Extent of the world-wide recession & financial crisis Who wants to forecast this growth? Tallow & Greases Variety Meats Hides & Skins Beef & Veal Live Cattle Bil. $ U S BEEF INDUSTRY IMPORT VALUES Annual Tallow & Greases Variety Meats Hides & Skins Beef & Veal Live Cattle I-N-7 11/8/12 I-N-71 5/2/12 Data Source: USDA-FAS, Compiled & Analysis by LMIC Data Source: USDA-FAS, Compiled & Analysis by LMIC 15

16 Bil. $ U S BEEF INDUSTRY NET EXPORT VALUES Annual Live Cattle Beef & Veal Hides & Skins BOXED BEEF CUTOUT VALUE Choice 6-9 Lbs. Carcass, Weekly Tallow, Grease & Var Meat Total JAN APR JUL OCT I-N-72 11/9/12 C-P-62 Data Source: USDA-FAS, Compiled & Analysis by LMIC 25 CHOICE MINUS SELECT BEEF PRICES Carcass Cutout Value 6-9 Lbs., Weekly 15. STEER HIDE AND OFFAL VALUE Live Animal Basis, Weekly JAN APR JUL OCT 8. JAN APR JUL OCT C-P-68 C-P-39, Compiled & Analysis by LMIC 16

17 SLAUGHTER STEER PRICES Southern Plains, Weekly SLAUGHTER STEER PRICES 5 Market Weighted Average, Weekly JAN APR JUL OCT JAN APR JUL OCT C-P-52 MED. & LRG. #1 FEEDER STEER PRICES 7- Pounds, Southern Plains, Weekly MED. & LRG. #1 STEER CALF PRICES 5-6 Pounds, Southern Plains, Weekly JAN APR JUL OCT JAN APR JUL OCT C-P-49 C-P-54, Compiled & Analysis by LMIC, Compiled & Analysis by LMIC 17

18 MED. & LRG. #1 STEER CALF PRICES 4-5 Pounds, Southern Plains, Weekly 9 SLAUGHTER COW PRICES Southern Plains, 85-9% Lean, Weekly JAN APR JUL OCT 4 JAN APR JUL OCT C-P-49A C-P-35, Compiled & Analysis by LMIC BOXED COW-BEEF CUTOUT VALUE Cutter Cow, Weekly Thou. Head TOTAL COW SLAUGHTER Federally Inspected, Weekly JAN APR JUL OCT JAN APR JUL OCT C-S-14 11/3/12 & USDA-NASS 18

19 Thou. Head JAN APR BEEF COW SLAUGHTER Federally Inspected, Weekly JUL OCT 26-1 Thou. Head JAN APR DAIRY COW SLAUGHTER Federally Inspected, Weekly JUL OCT 26-1 C-S-34 11/3/12 C-S-35 11/3/12 & USDA-NASS & USDA-NASS Thou. Head JAN APR CALF SLAUGHTER Federally Inspected, Weekly JUL OCT Mil. Head HEIFERS HELD AS BEEF COW REPLACEMENTS July 1, U.S % C-S-32 11/3/12 C-N-37 7/2/12 & USDA-NASS Data Source: USDA-NASS 19

20 Mil. Head 7. HEIFERS HELD AS BEEF COW REPLACEMENTS January 1, U.S. 3 PERCENT CHANGE IN CATTLE INVENTORY U.S., January % C-N-38 C-N-48 7/2/12 7/2/12 Data Source: USDA-NASS Data Source: USDA-NASS, Compiled & Analysis by LMIC ESTIMATED AVERAGE COW CALF RETURNS Returns Over Cash Cost (Includes Pasture Rent), Annual ANNUAL AVERAGE CATTLE PRICES Southern Plains $ Per Cow $ Per Cwt lb Steer Calves 7-lb Feeder Steers Fed Steers C-P-66 C-P-6 9/2/12 9/23/12 & USDA-NASS, Compiled & Analysis by LMIC, Compiled & Analysis by LMIC 2

21 Mil. Head CATTLE ON FEED US Total, Monthly Mil. Head CATTLE ON FEED OVER 9 DAYS US Total, Monthly / / C-N-1 C-N-11 11/16/12 11/16/12 Data Source: USDA-NASS Data Source: USDA-NASS, Compiled & Analysis by LMIC FED CATTLE MARKETINGS US Total, Monthly FED CATTLE MARKETINGS As a Percent of Cattle on Feed, Monthly Mil. Head Percent / / C-M-11 C-M-23 11/16/12 11/16/12 Data Source: USDA-NASS Data Source: USDA-NASS, Compiled & Analysis by LMIC 21

22 Percent 41 FED CATTLE MARKETINGS As a Percent of Cattle on Feed > 9 Days, Monthly Mil. Head 2.7 FEEDLOT PLACEMENTS US Total, Monthly / / C-M-24 11/16/12 C-N-8 11/16/12 Data Source: USDA-NASS, Compiled & Analysis by LMIC Data Source: USDA-NASS Mil. Head 1.6 CATTLE PLACED WEIGHING LESS THAN 7 POUNDS 1, Plus Capacity Feedlots, U.S., Monthly Mil. Pounds 265 U S BEEF AND VEAL IMPORTS Carcass Weight, Monthly / C-N-8A 11/16/12 I-N-15 11/9/12 Data Source: USDA-NASS, Compiled & Analysis by LMIC Data Source: USDA-ERS & USDA-FAS 22

23 U S CATTLE IMPORTS FROM CANADA Monthly U S BEEF IMPORTS FROM CANADA Carcass Weight, Monthly Thou. Head Mil. Pounds I-N-4 11/9/12 I-N-26 11/9/12 Data Source: USDA-ERS & USDA-FAS Data Source: USDA-ERS & USDA-FAS U S BEEF AND VEAL EXPORTS Carcass Weight, Monthly U S BEEF EXPORTS TO MAJOR MARKETS Carcass Weight, Monthly Mil. Pounds Mil. Pounds Japan Canada Mexico South Korea I-N-16 11/9/12 I-N-35 11/9/12 Data Source: USDA-ERS & USDA-FAS Data Source: USDA-ERS & USDA-FAS 23

24 U S BEEF EXPORTS TO JAPAN Carcass Weight, Monthly U S NET BEEF IMPORTS Carcass Weight, Monthly Mil. Pounds Mil. Pounds I-N-37 11/9/12 I-N-31 11/9/12 Data Source: USDA-ERS & USDA-FAS Data Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC APR 213 Live Cattle Contract MAR 213 Feeder Cattle Contract 24

25 Short Term Outlook Fed cattle excellent domestic and international demand persist & grow? Feeder cattle & calves dry weather feed prices persistent supplies. Beef herd expansion It all depends on next year s weather Long Term Outlook Demand domestic& trade. Supply herd expansion. Competing meats are planning on high beef prices but are impacted worse by high corn prices. Really need a solid domestic & world economy. Contact and Link Information Stephen.Koontz@ColoState.Edu 25