Economic Outlook of Beef Cattle Stan Bevers Professor & Ext. Economist Texas A&M AgriLife Extension Service Vernon, Texas University of Florida Beef Cattle Short Course Gainesville, Florida May 4, 2016
Experts often possess more data than judgement. Mr. Colin Powell Former US Secretary of State Retired Four Star General, US Army Statesman and author
30,000 Foot View of the Industry
U.S. Beef Cow Inventory January 1 45 Million Head 40 35 30 25
BEEF COWS THAT HAVE CALVED JANUARY 1, 2016 (1000 Head) 223 1486 904 534 625 217 513 325 180 704 772 425 1690 1852 1488 1953 350 270 940 396 1912 893 118 110 196 284 1021 896 180 201 629 363 175 500 673 505 1,000 to 4,365 4290 500 to 1,000 Alaska 4.0 452 250 to 500 Hawaii 72.8 915 100 to 250 0 to 100 U.S. Total 30,330.8
BEEF COWS THAT HAVE CALVED JANUARY 1, 1980 (1000 Head) 383 1427 646 648 621 295 303 853 869 258 630 Alaska 2.4 Hawaii 83.0 U.S. Total 36,983 962 560 1520 248 85 131 1950 1746 175 699 515 430 241 1714 710 2270 1106 404 948 2160 1042 284 901 843 750 5585 674 1173 1,000 to 5,585 500 to 1,000 250 to 500 100 to 250 0 to 100
CHANGE IN BEEF COW INVENTORY JANUARY 1, 1980 TO JANUARY 1, 2016 (1000 Head) -160-58 -112-135 -210-244 -78-98 -806-303 -319-146 -78-205 -81-226 -207-358 -149-85 -52-81 -41-109 -401-170 -245-250k plus -1,295-100k to -250k Alaska 1.6-222 -50k to -100k Hawaii -10.2-258 -1 to -50k Increased U.S. Total -6,643
U.S. Calf Crop 50 Million Head 45 40 35 30 25
So Then, What Happened to Lower Feedlot Numbers and Being Current?
Cattle on Feed 2014 2015 2016 2011-15 12.0 11.5 11.0 Million Head 10.5 10.0 9.5 9.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
FI Slaughter Weights Pounds 1400 1390 1380 1370 1360 1350 1340 1330 1320 1310 1300 1290 1280 1270 1260 2014 2015 2016 2011-15 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Daily Livestock Report, November 12, 2015
FI Carcass Weights 860 2014 2015 2016 2011-15 840 820 Pounds 800 780 760 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
FI Carcass Weights 2014 2015 2016 2011-15 860 840 820 Pounds 800 28.7 lbs. 780 760 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cattle Slaughter/Carcass Weights
On Feed Inventories & Slaughter Weights 12.5 12.0 11.5 11.0 10.5 10.0 On Feed Slaughter Weight 1400 1375 1350 1325 1300 1275 9.5 Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct 1250 2011 2012 2013 2014 2015 2016
What Happened to Lower Feedlot Numbers and Being Current? It s not a loss until you sell Renegotiation of bank loans Cost of gains were cheap in the MW Cost to maintain a high occupancy rate
Cattle on Feed - Placements 2014 2015 2016 2011-2015 2.50 2.25 2.00 Million Head 1.75 1.50 1.25 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cattle on Feed - Marketings 2014 2015 2016 2011-15 2.25 2.00 Million Head 1.75 1.50 1.25 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Total Meat Supplies
U.S. Commercial Beef Production Billion Pounds 28 27 26 25 24 23 22 21 20 USDA-WASDE
U.S. Commercial Pork Production Billion Pounds 26 24 22 20 18 16 14 12 USDA-WASDE
U.S. F.I. Broiler Production Billion Pounds 45 40 35 30 25 20 15 10 USDA-WASDE
Red Meat and Poultry in Cold Storage Combined in Refrigerated Warehouses 2,500 5 Year Average 2015 2016 2,400 2,300 Million Pounds 2,200 2,100 2,000 1,900 1,800 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec USDA-NASS
Demand for Beef
Retail Beef Prices (Monthly) $ Per Cwt 650 625 600 575 550 525 500 475 450 425 400 375 All Fresh Choice 350 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Annual Retail All Fresh Beef Domestic Demand Index 1990-2015 100 90 80 100 97 91 87 87 84 81 77 78 81 80 81 84 83 91 88 85 85 81 76 75 76 79 81 86 93 70 60 Index 50 40 30 20 10 0
Beef Imports/Exports 4000 3500 3000 Imports Exports Million Pounds 2500 2000 1500 1000 500 0
US Dollar Index 120 110 100 90 80 70
4000 Beef Imports/Exports Since 2003 BSE Imports Exports 3500 3000 Million Pounds 2500 2000 1500 1000 500 0
Feed Costs
US Hay Stocks (on Dec. 1) Million tons 140 120 100 80 60 40 20 0
US Corn Supply & Demand Ten Year Average = 1.418; 2015/16 Projections = 1.862 Production Imports Domestic Use Exports Ending Stocks S/U Ratio 16,000 24 14,000 21 12,000 18 Million Bushels 10,000 8,000 6,000 15 12 9 Percent 4,000 6 2,000 3 0 0 As of April 12, 2016, USDA-WAOB
US Corn Supply & Demand Ten Year Average = 1.418; 2015/16 Projections = 1.862 Production Imports Domestic Use Exports Ending Stocks S/U Ratio 16,000 24 14,000 21 12,000 18 Million Bushels 10,000 8,000 6,000 15 12 9 Percent 4,000 6 2,000 3 0 0 As of April 12, 2016, USDA-WAOB
World Corn Supply & Demand Ten Year Average = 5.653; 2015/16 Projections = 8.224 Production Use Ending Stocks S/U Ratio 40,000 34 35,000 31 30,000 28 Million Bushels 25,000 20,000 15,000 25 22 19 Percent 10,000 16 5,000 13 0 10 As of April 12, 2016, USDA-WAOB
Cash Corn Price $8.50 $8.00 $7.50 $7.00 $6.50 $6.00 $5.50 $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 2011 2012 2013 2014 2015 2016
Cattle & Beef Prices
$175 Slaughter Steer Prices 2015 2016 5year 2014 From March 2015 to EOY15, slaughter steers lost $700/head in value. 109 $165 106 $155 103 $145 100 $135 97 $125 94 $115 91 Cattle Fax Data
$245 750 Lbs Steer Prices 2015 2016 5 Year From March 2015 to October 2015, feeder steers lost $600/head in value. 110 $215 105 $185 100 $155 95 $125 90 Cattle Fax Data
CME Feeder Cattle Index 650 849 pound steers $250 $200 $150 $100 2012 2013 2014 2015
450 Lbs Steer Prices 2015 2016 5 Year $330 $1,400/head 115 $300 110 $270 105 $240 100 $210 $950/head 95 $180 90 $150 85 Cattle Fax Data
$140 Utility Cow Prices 2015 2016 5 Year 115% $125 110% $110 105% $95 100% $80 95% $65 90% $50 85% Cattle Fax Data
Boxed Beef Prices 2015 2016 5 Year $265 110% $240 105% $215 100% $190 95% $165 90% Cattle Fax Data
What Does All of This Mean to You?
2016 Actual/Futures Prices 225.00 550 750 750 P Live Live P 200.00 175.00 150.00 125.00 100.00 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
$2.50 $2.25 $2.00 $1.75 $1.50 $1.25 $1.00 Cattle Price Projections USDA 2016 Agricultural Outlook Conference Long Term Projections Per Head Local Weaned Calves 600-650 OKC Steers 2016 2017 2018 2019 2020 $1,200 $1,000 $800 $600 $400 $200 $-
Summary Peak prices in 2014. Expected prices to slowly decline beginning in 2015; However, October 2015 through April 2016 was very problematic. Beef market continues to work itself out of this Feed (corn & hay) should be plentiful. Beef demand continues to be strong Beef exports being hampered by strength of the US dollar, but may be changing. Longer term, expect lower prices for the next three years; question is where is the bottom?
Stan Bevers Texas AgriLife Extension Service 940 552-9941 ext. 231 s-bevers@tamu.edu http://agrisk.tamu.edu Questions/Comments