Beef Cattle Market Update

Transcription

1 Beef Cattle Market Update By Anne Wasko Market Analyst November 2016 Anne Wasko Market Analyst June

2 2018 MARKET HIGHLIGHTS SO FAR April 7 turning out to calving fields

3 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec #1 Local Basis Record Strong! 15 Alberta Fed Basis Alberta/Nebraska in Cdn$ - Cash to Cash 10 5 YTD +$ yr ave (15-17)

4 Cdn $ per cwt = Record Strong Feeder Basis $5 Alberta Annual Feeder Steer Basis 850 lbs. $0 ($5) ($10) ($15) ($20) ($25) 10 yr ave ($30) Source: CanFax

5 Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec $/cw t #2 Superb Beef Demand $260 $250 $240 $230 $220 $210 $200 $190 $180 $170 US Weekly Choice Cutout Domestic & Export both! Source: USDA

6 #3 Largest Fed Slaughter in years Q2 largest since , , , , , , , ,000 0 Canadian Fed Slaughter by qtr YTD CDN +8% U.S. +3%

7 Canadian cattle numbers flat, U.S. expansion slowing BEEF SUPPLY UPDATE

8 Million Head Canadian beef cows 3.7M (8 years between 3.7 & 4M head) Canadian Beef Cow Numbers January to Source: Statistics Canada Year

9 Thousand Head 70% of the national beef cow herd holding at 2.6M ( since 2011) 4000 Alberta & Saskatchewan Beef Cows January to Source: Statistics Canada Year

10 Thousand Head No signal of change on replacement heifers either - yet 600 W Canada Beef Heifers for Replacement on Jan Year Source: Statistics Canada

11 Thousand Head YTD 2018 Heifer Marketings +8% - need to monitor 1750 Canadian Heifer Marketings 1976 to 2018P Year Source: Statistics Canada, CBGA, AAFC, CanFax

12 Thousand Head YTD 2018 Cow Marketings up slightly (cow sltr +12% but cow exports -32%) Canadian Slaughter Cow Marketings Slaughter Exports Biggest cow kill since 2010? Source: Statistics Canada, CanFax, AAFC Year

13 Jan 1 Feb 1 Mar 1 Apr 1 May 1 Jun 1 Jul 1 Aug 1 Sep 1 Oct 1 Nov 1 Dec 1 Thousand Head W Can Cattle on Feed numbers remained above YA until May Alberta and Saskatchewan Cattle on Feed 5 yr avg

14 Thousand Head YTD 2018 Feeder exports have already surpassed 2017 s (YTD +60%) Canadian Feeder Cattle Exports P Year Source: Statistics Canada

15 Thousand Head Feeder imports stepped back into the scene in Canadian Feeder Cattle & Calf Imports Year Source: Statistics Canada

16 Million Head U.S. cow herd close to peak at 31.7M U.S. Beef Cow Inventory January to Year Source: USDA, Cattlefax

17 U.S. expansion has slowed but Jan 1, 2018 will be the 4 th year of growth

18 Million Head May 1 +5%, 2 nd largest ever ( st ) US Monthly Cattle on Feed 5 yr ave Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

19 Billion Pounds U.S. Beef Production on track from record in 2018 at +5% 28 U.S. Beef Production 1990 to 2018P Year Source: USDA, Cattlefax

20 Domestic and export demand have been exceptional DEMAND

21 Demand Index (2000=100) Beef demand -5% but still 3 rd strongest historically 130 Canadian Retail Beef Demand Index Source: Statistics Canada, CanFax, US Beef Demand Study Group

22 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec $/kg April s retail beef price +2.5% from YA $21 Canadian Retail Beef Price Excellent featuring too! $20 $19 $ Source: Statistics Canada

23 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Cattle Feeders lose leverage into summer nothing new 66% 64% 62% 60% 58% 56% 54% 52% 50% Fed Steer as % of AAA Cut-Out Source: Statistics Canada

24 tonnes 2018 YTD beef exports +5% (value +10%) Canadian Beef Exports U.S. Japan Mexico China, HK P 2018P: U.S. +10% Japan +8% China/HK -6% Mexico -12%

25 P tonnes Ratified CPTPP would mean Canada more competitive in those markets Beef Exports to Japan Source: Stats Can

26 tonnes 2018 YTD beef imports +4% Canadian Beef Imports P: U.S. +1% Aust +23% N.Z. +2% Uruguay +9% U.S. Aust NZ Uruguay Brazil P

27 Bil lbs U.S. Beef exports expected to hit a record in US Beef Trade Imports 18p +10% 18p -2% Exports F Source: USDA

28 Billion Pounds 2018F U.S. Pork production +3%, Cdn +1% P Year Source: USDA, Cattlefax U.S. Pork Production - Increasing slaughter capacity - Profitable sectors - Strong exports +4% - Lower weights

29 Billion Pounds 2018F U.S. Broiler production +2% U.S. Broiler Production Source: USDA, Cattlefax P Year - Profitable as well - Low feed costs - Increasing capacity

30 Producer margins thinning CATTLE PRICE OUTLOOK

31 Gross $ per head The ever-evolving feeding margin will keep a lid on feeder prices $350 $300 $250 $200 $150 $100 $50 $0 ($50) ($100) ($150) ($200) ($250) ($300) Annual Feedlot Profit/Loss Western Canada P Year Source: CanFax Trends

32 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Thousand Head W Can placements -3% so far this year Alberta and Saskatchewan Placements Source: CanFax COF

33 # of head Smaller U.S. placements in Mar & Apr US Monthly Placements Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5 yr ave

34 US $ per cwt Good support at $110 for now do we need to check out $ this fall? $175 $165 $155 $145 $135 $125 $115 $105 $95 Weekly US Fed Steer Price Source: Cattlefax Demand will decide.

35 Pounds Cattle feeders staying very current given summer price forecast Canadian Weekly Steer Carcass Weight Source: AAFC, CBGA 5 yr avg Week

36 Cdn $ per cwt Premium fed basis for 1 st half of 2018 that s another record! $20 $15 $10 Alberta Fed Steer Basis Alberta/Nebraska (Cash to Cash) $5 $0 ($5) ($10) ($15) ($20) Source: CanFax 3 yr ave

37 Cdn $ per cwt 2018 Fed cattle prices projected -6% $200 Alberta Fed Steer Prices $180 $160 $140 $120 $100 $80 $ Year

38 Index Strong tendency for feeders to trade higher into Aug/Sept Seasonal 850 lb. Feeder Price Index J F M A M J J A S O N D index 2018 cash 2017 cash $210 $200 $190 $180 $170 $160

39 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Cdn $ per cwt Does Feeder Basis go Premium the U.S. by August? $8 Alberta 850 lb Feeder Steer Basis $4 $0 ($4) ($8) ($12) ($16) ($20) Source: CanFax 3 yr ave

40 $/cwt 2018 fall calf price still has plenty of unknowns can $200 be support? Alberta Oct/Nov avg lb Steer P Year

41 Index 2017 was contra-seasonal for fall calves only happens 2 out of 10 years Seasonal 550 lb. Steer Calf Index ( ) $255 $245 $ J F M A M J J A S O N D Index 2017 calf $225 $215 $205 $195

42 Cdn $ per cwt YTD D1,2 cow price -4% (or $4). Nonfed production +13% in Canada $155 Western Canada D1,2 Weekly Cow Price $145 $135 $125 $115 $105 $95 $85 $ Source: Canfax

43 Jan-10 July Jan-11 July Jan-12 July Jan-13 July Jan-14 July Jan-15 July Jan-16 July Jan-17 July Jan-18 July Cdn$/cwt. Local slaughter cow prices $15/cwt OVER the U.S. $20 $15 $10 $5 $0 -$5 -$10 -$15 -$20 -$25 US to Alberta Slaughter Cow Price Spread

44 Cdn $ per cwt 2018 D1,2 cow prices projected -8% $140 $130 $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 Western Canada D1,2 Cow Prices P Year Source: CanFax

45 What could send things off the track? Weather Drought shifts cattle marketings earlier Feed supply and feed prices = higher inputs Fire / natural disaster FAD Trade NAFTA Retaliation response Economy (consumers) and preferences

46 2018/19 Market Reminders Price volatility will continue use it to your advantage when planning risk management (but you need a game plan to be proactive rather than reactive) Producer margins will be thinner this is the phase of the cattle cycle when prices are lower plus now we are looking at higher inputs

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