of Nebraska - Lincoln

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1 University of Nebraska - incoln igitalcommons@university of Nebraska - incoln Range Beef Cow Symposium Animal Science epartment ecember 21 Beef Market Outlook Randy Blach Centennial, CO Follow this and additional works at: Part of the Animal Sciences Commons Blach, Randy, "Beef Market Outlook" (21). Range Beef Cow Symposium This Article is brought to you for free and open access by the Animal Science epartment at igitalcommons@university of Nebraska - incoln. It has been accepted for inclusion in Range Beef Cow Symposium by an authorized administrator of igitalcommons@university of Nebraska - incoln.

2 Proceedings, The Range Beef Cow Symposium XVII ecember 11, 12, and 13, 21 Casper, Wyoming BF MARKT OUTOOK 14 Total Cattle Inventory By Randy Blach Centennial, CO M I H A Source: USA YARS projected Cow Slaughter M I H A Source: USA & Cattle-Fax YARS Projected Heifer Slaughter M I H A 1 9 Outlook Source: USA, Commercial YARS Projected Beef Situation &

3 39 Heifers As % Of Total Feedlot Placements Notes 36 P R C N T Source: Cattle-Fax, 21 year to date YARS 4 Monthly Percent Heifers Placed Avg. P R C N T J F M A M J J A S O N Source: Cattle-Fax MONTHS Beef Situation & Outlook

4 52 5 Total Cow Inventory Notes M I H A Projected YARS Source: USA & Cattle-Fax H A airy Cow Inventory Source: USA Projected YARS 4 Beef Cow Inventory 39 M I H A Source: USA, projected YARS Outlook Beef Situation &

5 M I H A Feeder Cattle and Calf Supply - Jan 1st Source: USA & Cattle-Fax YARS Outside of Feedyards, projected Notes H A Feeder Cattle Imports From Mexico Source: USA/APHIS YARS 2-21 projected Beef Situation & Outlook

6 Average Carcass Weights Notes P O U N S Average increase 5.9 lbs / year Source: USA, projected 7 Beef Production per Cow 65 P O U N S Source: USA, Projected YARS 27 Beef Production 26 B I B S Projected YARS Source: USA & Cattle-Fax Outlook Beef Situation &

7 Cattle Numbers, Beef and Total Meat Supply -Cattle numbers are expected to bottom out at 96.7 million head on January 1, 22. The total cattle inventory is expected to grow nearly five million head by Beef-cow numbers were at the cycle low in January 21. The beef-cow factory is expected to increase about 2. million head by 26 to 27. -Total cattle slaughter peaked in 2 at million head. Annual slaughter is expected to decline about 2. million head during the next five years. -Beef production and per-capita consumption peaked in 2. Annual beef production is expected to decline about 1.4 billion pounds during the next four years. -Cattle-on-feed numbers are expected to decline significantly as a result of sharply reduced feeder-cattle and calf supplies. -Heifer slaughter is expected to decline during the next few years as herd expansion unfolds, and reach the cycle low in 25 at about 1.3 million head. -Pork production is expected to increase 1% to 2% in 22, and poultry production should increase 2%. Total meat supplies will be about even for the year. Beef Situation & Outlook

8 Notes Per Capita Spending (dollars) Per Capita Beef Spending and Consumption Spending Consumption Per Capita Consumption Source: USA 21 projected Market Share of Meat Spending Beef Pork Chicken Turkey Outlook Beef Situation &

9 B I $ U.S. Consumer xpenditures on Beef Source: USA & Cattle-Fax YARS omestic disapperance valued at all-fresh retail price, projected Total Consumer Spending (bil $) YAR BF PORK CHICKN TURKY TOTA Beef Situation & Outlook

10 Beef xport Breakdown ( pounds carcass weight) U.S. Total Japan Mexico Korea Canada Other ,82,813 1,4,452 92,33 272, , , ,878,218 1,15, ,245 23, ,425 19, ,129,91 1,52, ,37 261, ,3 221, ,17,639 1,118,49 418, ,87 261,21 218, ,417,115 1,11, ,1 37, , , ,516,271 1,116, , , , ,281 21* 2,214, , ,8 265, , ,52 Percent of Total Japan Mexico Korea Canada Other % 5.7% 14.95% 17.13% 7.68% % 9.17% 1.85% 15.73% 1.17% % 14.67% 12.27% 13.24% 1.4% % 19.3% 7.9% 12.3% 1.6% % 19.28% 12.74% 1.32% 12.1% % 21.21% 15.85% 1.8% 8.48% 21* 45.% 25.2% 12.% 11.5% 6.3% * stimate What If xports to Japan ecline? Result Off 1 percent An additional 2.1 million pounds per week on U.S. market Off 2 percent An additional 4.2 million pounds per week on U.S. market Off 3 percent An additional 6.3 million pounds per week on U.S. market Off 5 percent An additional 1.5 million pounds per week on U.S. market Approximate Market Impact (Assumes impact last all year) Off 1 percent Off 2 percent Off 3 percent Off 5 percent $.5/cwt. $.8/cwt. $1.25/cwt. $2./cwt. Outlook Beef Situation &

11 Notes 6 2 ive Cattle, Beef, and Beef Byproduct xports vs. Imports Total Value B I O A R S XPORTS Source: ept of Commerce Bureau of Census BF VARITY MATS TAOW HIS IV CATT IMPORTS 1.5 Hide and Offal Value $ / C W T JFMAMJJASONJ FMAMJJ ASONJ FMAMJJ ASON JFMAMJ JASON JFMAMJ JASON Source: USA WKS Beef Situation & Outlook

12 xports Imports Beef Imports and xports Notes B I B S Source: USA/RS, projected 3. Net Beef Imports 2.5 Billion Pounds (cwe) Net beef imports includes beef equivalent of live cattle trade Source: USA, projected 28 Beef Production and Net Beef Supply Production Net Supply B I B S projected YARS Sour1e: USA Outlook Beef Situation &

13 $ / C W T Annual Fed Steer Price Source: Cattle-Fax projected YARS Notes $72.5 fed cattle average 21 $72 $74 fed cattle average in 22 Range $67-$8 onger-term 23 $74-$76 24 $74-$76 25 $72-$74 Beef Situation & Outlook

14 Annual 75lb Steer Price Notes $ / C W T Source: Cattle-Fax projected YARS $87.5 feeder cattle average in 21 $85-$87 22 Range $82-$9 onger-term 23 $85-$87 24 $85-$87 25 $82-$83 Outlook Beef Situation &

15 15 USA stimated 7-State Carryover Notes H A Yr Avg J F M A M J J A S O N Source: USA MONTHS H A Month-nding Adjusted Carryover 21 5-Yr Avg. 2 J F M A M J J A S O N Source: Cattle-Fax MONTHS Nov-ec 21, 22 projected 83 Steer Carcass Weights P O U N S Yr avg J F M A M J J A S O N Source: USA WKS Beef Situation & Outlook

16 H A Weekly Average Cattle Slaughter Yr Avg. 2 J F M A M J J A S O N Source: USA MONTHS Oct-ec 21, 22 projected Notes 9 Weekly Average Slaughter Increase from Mar-Apr to May-June 8 7 Thousand Head Source: USA, 22 projected YARS M I B S Weekly Average Beef Production yr avg J F M A M J J A S O N Source: USA MONTHS Oct-ec 21, 22 projected Outlook Beef Situation &

17 $ / C W T Cattle-Fax 75 lb Steer Price Weeks Notes I N X Seasonal 75 lb Steer Price J F M A M J J A S O N Source: Cattle-Fax WKS $ / C W T lb Feeder Steer Price 22 Forecast J F M A M J J A S O N Source: Cattle-Fax MONTHS Beef Situation & Outlook

18 P R C N T 75 lb Steer as Percent of Fed Steer Source: Cattle-Fax, projected YARS Notes P R C N T 75 lb Feeder Steer as a Percent of Fed Steer J F M A M J J A S O N Source: Cattle-Fax MONTHS Seasonal 55 lb Calf Prices 198-Avg. I N X J F M A M J J A S O N Source: Cattle-Fax MONTHS Outlook Beef Situation &

19 P R C N T 55 lb Steer Calf as Percent of Fed Steer Source: Cattle-Fax, 21 projected YARS Notes P R C N T lb As Percent Of Fed Steer J F M A M J J A S O N Source: Cattle-Fax MONTHS Beef Situation & Outlook

20 Breakeven Purchase Price 55 lb Steer Corn Price $/bu Fed Price Breakeven Purchase Price 75 lb Steer Corn Price $/bu Fed Price Outlook Beef Situation &

21 Structural Changes & Points to Consider Beef Situation & Outlook

22 Broilers Top 2 Hogs >2 hd airy >2 cows Beef Cattle Feedlots >1 hd Cow/Calf >2 cows Total # of Producers/ Operators Profile of ivestock & Producer Operations # of G Producers G Producers as % of Total % of Production from G Producers 85% 98,46 7,125 7% 69% 15,25 8,5 8% 48% 14,471 2,71 2% 85% 84, 28, 3.5% 33% >1 cows 72,891 9% 51% Beef Industry Structure: The Way it is volving Sharing Information Consumer Retailer Foodservice Packer Processor Feedlot Stocker Cow Calf Seed Stock Pulling Product Through Outlook Beef Situation &

23 Retailer Consolidation Smaller number of national & international heavy-weights Most efficient to work with a limited number of suppliers Retailer Consolidation-Supermarkets Top Twenty Control Top Ten Control Top Five Control 73% - food sales 59% - food sales 41% - food sales Retailers Are Shifting The Responsibility to the Supplier For: Food safety Inventory Management What does this mean for you? Beef Situation & Outlook

24 Top 5-7 Retailers may control 7-75 percent of food sales in FIV YARS What are the Implications Single source suppliers Just in time supply management Inventory management Consistency, Quality, Quantity Outlook Beef Situation &

25 United States Feedyards > 16, Head* January 1, 21 United States Packers > 1, Head* January 1, 21 Beef Situation & Outlook

26 25 Fed Marketings - Stable 2 P R C N T I S WA Source: USA State 1, hd & over 3 Fed Marketing - Growth 25 P R C N T CO OK N TX KS Source: USA 2 12-State 1, hd & over Fed Marketings- ecline 2 P R C N T IA CA I MN AZ Source: USA State 1, hd & over Outlook Beef Situation &

27 14 12 Marketing Trends: Various Size Feedlots* 1,-31,999 M I H A <1, >32, *1996- All states YARS Source: USA 6 5 Number of Feedlots Over 16, Head and % of Fed Cattle Marketings Feedlots* % Mktg* 7 6 N U M B R P R C N T Source: USA YARS *Change in USA Cattle on feed series from total mktgs, 13-States to mktgs from feedlots with >1 hd capacity 12-States M I H A U.S. Bunk Capacity stimate From 199 to 2 U.S. bunk capacity grew 16% Source: Cattle-Fax YARS Beef Situation & Outlook

28 11 Beef Cow Farms F A R M S Census of Ag 1997 CNSUS ATA Outlook Beef Situation &

29 Percent of Beef Cow Operations in Various Size Groups Census of Ag % < 1 9.9% % >5.7% Percent of Beef Cows Accounted for by Various Size Operations Census of Ag % < 1 51% % > 5 15% Beef Situation & Outlook

30 Top 25 Feeding Companies Feed 38% of the Cattle Now! By % 45 Percentage of Fed Cattle Movement from: Formula, Contract, Alliance & Packer Fed Cattle 4 P R C N T YARS Outlook Beef Situation &

31 Value iscovery Changing Premiums s 2 Additional Premiums for: -Prime -CAB or Similar Specs -Choice s PAR -1 iscounts yg1 yg2 yg3 16 yg4 yg5 New Market arger Premiums Fed Cattle Feeders Calves arger iscounts As fed cattle prices show more differentiation so will feeder and calf prices Beef Situation & Outlook

32 The Target Yield Grade 1 Yield Grade 2 Yield Grade 3 Yield Grade 4 Yield Grade 5 Prime $16.2 $13.7 $12.2 $(4.8) $(9.2) CAB $11.2 $8.7 $7.2 Choice $7.2 $4.7 $3.2 $(11.8) $(16.2) Select $(.8) $(3.3) $(4.8) $(19.8) $(24.2) Standard $(11.) $(13.5) $(15.) $(3.) $(35.) 55 Carcass Weight Range 95 *Ch/Sel Spread *6% Choice $8 G d The Target Yield Grade 1 Yield Grade 2 Yield Grade 3 Yield Grade 4 Yield Grade 5 Prime $122. $13. $92. $(21.) $(59.) CAB $84. $65. $54. $(59.) (96.) Choice $54. $35. $24. $ $(89. $(126.) Select $(6.) $(25.) $(36.) $(149.) $(186.) Standard $(83.) $(11.) $(113.) $(125.) $(263.) 55 Carcass Weight Range 95 *Ch/Sel Spread *6% Choice $8 G Outlook Beef Situation &

33 Several Commodity Industries Have Been ed by Strong Brands Beef Situation & Outlook

34 Where do You Fit? S STOCK Cow/Calf Producers COW / CAF Growing, Finishing, Processing, Marketing STOCKR FOT Branded Product Branded Product Branded Product PACKR Branded Beef Commodity Beef Opportunity Consistently eliver: Tenderness and Convenience Will ead to: More Branded Beef Consumer Satisfaction: Will Increase Sales Outlook Beef Situation &

35 Beef Business Facts: 1. The beef industry is changing rapidly 2. Competition will be tougher and margins will narrow 3. Risk is increasing 4. Approaches to marketing are changing 5. An increased percentage of beef will be sold under a brand name 6. nvironmental and food safety issues will increase 7. General observations Beef Situation & Outlook