Cattle & Meat Market Update. John Michael Riley - Extension Ag Economist 2015 Florida Beef Cattle Shortcourse May 13, PDF Free Download

Cattle & Meat Market Update John Michael Riley - Extension Ag Economist 2015 Florida Beef Cattle Shortcourse May 13, 2015

2 Big Picture It s already been said, but - - WOW! 2014 was great! When the cows come home - Expansion of the beef herd Loosening of supplies Its gotten HOT at the meat cooler Competition from competing meats finally materializing Beef demand continues to excel Exports holding their own

3 When the Cows Come Home Expansion of the beef herd

4 Beef Cow Inventory Mil.%Head% 36.5% 35.5% 34.5% 33.5% 32.5% 31.5% 30.5% 29.5% Jan.%1%%Beef%Cow%Inventory% U.S.,%Annual% 2014: 29.7 mil. hd. (+2.1%) 28.5% 1985% 1988% 1991% 1994% 1997% 2000% 2003% 2006% 2009% 2012% 2015% Beef%

5 Heifers in Feedlots 4,500 Heifer Inventories 4,125 2014 2015 2010-14 Avg. Thou. Head 3,750 3,375 3,000 January April July October

6 Steers in Feedlots 7,500 Steer Inventories 7,225 2014 2015 2010-14 Avg. Thou. Head 6,950 6,675 6,400 January April July October

7 Cost of Expansion $2,600 Oklahoma City - Young Bred Replacement Female $1,950 $1,300 $650 $0 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15

8 Feedstuffs: Corn Bil.#Bushels# 16# 15# 14# 13# 12# 11# 10# 9# US TOTAL CORN SUPPLY AND PRICE Crop#Year# $#Per#Bushel# 8.00# 7.00# 6.00# 5.00# 4.00# 3.00# 2.00# 1.00# 8# 1990# 1992# 1994# 1996# 1998# 2000# 2002# 2004# 2006# 2008# 2010# 2012# 2014# Supply# Price# 0.00#

9 Feedstuffs: SB Meal Mil."Tons" 45" US TOTAL SOYBEAN MEAL SUPPLY AND PRICE Crop"Year" $"Per"Ton" 500" 40" 400" 35" 300" 30" 200" 25" 100" 20" 1989" 1991" 1993" 1995" 1997" 1999" 2001" 2003" 2005" 2007" 2009" 2011" 2013" Supply" Price" 0"

10 Feedstuffs: Hay Mil.%Tons% 120# US%ALL%HAY%STOCKS% December%1% 110# 100# 90# 80# 70# 1989# 1994# 1999# 2004# 2009# 2014#

11 Corn Futures Jul 15 Dec 15 Mar 16

12 On-Farm Grain Storage Corn Storage 100%# 90%# 80%# 70%# 60%# 50%# 40%# 30%# 20%# 10%# 0%# 1990#1992#1994#1996#1998#2000#2002#2004#2006#2008#2010#2012#2014# CN/Off# CN/On# 70%$ 65%$ 60%$ On Farms Off Farms Soybean Storage 55%$ 50%$ 45%$ SB/Off$ SB/On$ 40%$ 35%$ 30%$ 1990$ 1991$ 1992$ 1993$ 1994$ 1995$ 1996$ 1997$ 1998$ 1999$ 2000$ 2001$ 2002$ 2003$ 2004$ 2005$ 2006$ 2007$ 2008$ 2009$ 2010$ 2011$ 2012$ 2013$ 2014$

Feeding Sector 13

$/cwt# 105# KANSAS FEEDLOT CLOSEOUTS Feeding#Costs#per#Cwt,#Steers# 100# 95# 90# 85# 80# Jan# Feb# Mar# Apr# May# Jun# Jul# Aug# Sep# Oct# Nov# Dec# Avg.#2009/13# 2014# 2015# Pounds$ 6.5$ 6.4$ 6.3$ 6.2$ 6.1$ 6$ 5.9$ 5.8$ 5.7$ 5.6$ KANSAS FEEDLOT CLOSEOUTS Pounds$of$Feed$(Dry$Basis)$ Per$Pound$of$Gain,$Steers$ Jan$ Feb$ Mar$ Apr$ May$ Jun$ Jul$ Aug$ Sep$ Oct$ Nov$ Dec$ Avg.$2009/13$ 2014$ 2015$ Pounds" 4" 3.9" 3.8" 3.7" 3.6" 3.5" 3.4" 3.3" 3.2" 3.1" 3" KANSAS FEEDLOT CLOSEOUTS Avg."Daily"Gain,"Steers" Jan" Feb" Mar" Apr" May" Jun" Jul" Aug" Sep" Oct" Nov" Dec" Avg."2009/13" 2014" 2015"

15 Feedlot Placements 3,250 2010-14 Lowest Highest 2014 2015 2,500 Thou. Head 1,750 1,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

16 Feedlot Inventories 13,000 2010-14 10-Yr Low 10-Yr High 2014 2015 12,000 Thou. Head 11,000 10,000 9,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

17 Cattle from Mexico & Canada Thou.#Head# 190# US CATTLE IMPORTS FROM MEXICO Monthly# 170# 150# 130# 110# 90# 70# 50# 30# JAN# FEB# MAR# APR# MAY# JUN# JUL# AUG# SEP# OCT# NOV# DEC# Avg.#2009J13# 2014# 2015# Thou.#Head# 170# 150# 130# 110# 90# 70# 50# US CATTLE IMPORTS FROM CANADA Monthly# 30# JAN# FEB# MAR# APR# MAY# JUN# JUL# AUG# SEP# OCT# NOV# DEC# Avg.#2009J13# 2014# 2015#

18 Beef Production & Competing Meats

Thousands) Bil.$Pounds$ 6.8$ 6.6$ 6.4$ COMMERCIAL BEEF PRODUCTION US, Quarterly 6.2$ 6$ 5.8$ 5.6$ 5.4$ JAN+MAR$ APR+JUN$ JUL+SEP$ OCT+DEC$ Avg.$2009/13$ 2014$ 2015$ 2016$ Thousands) Bil.$Pounds$ 6.8$ 6.6$ 6.4$ 6.2$ 6.0$ COMMERCIAL PORK PRODUCTION US, Quarterly Thousands) Bil.$Pounds$ 11.0$ 10.5$ 10.0$ RTC BROILER PRODUCTION US, Quarterly 5.8$ 5.6$ 9.5$ 5.4$ 5.2$ 9.0$ 5.0$ JAN,MAR$ APR,JUN$ JUL,SEP$ OCT,DEC$ Avg.$2009/13$ 2014$ 2015$ 2016$ 8.5$ JAN+MAR$ APR+JUN$ JUL+SEP$ OCT+DEC$ Avg.$2009/13$ 2014$ 2015$ 2016$

Beef Demand 20

21 Macro Economy Bil.$Dollars$ 13500$ 13000$ 12500$ 12000$ 11500$ 11000$ 10500$ 10000$ 9500$ 9000$ 8500$ TOTAL DISPOSABLE PERSONAL INCOME Quarterly$ 2005$ 2006$ 2007$ 2008$ 2009$ 2010$ 2011$ 2012$ 2013$ 2014$ Current$Dollars$ 2009$Dollars$

22 Crude Oil Futures Jul 15 Dec 15

23 All Consumption Pounds" 100" 90" 80" 70" 60" 50" 40" 30" 20" 10" 0" US RED MEAT & POULTRY CONSUMPTION Per"Capita,"Retail"Weight,"Annual" 1991" 1993" 1995" 1997" 1999" 2001" 2003" 2005" 2007" 2009" 2011" 2013" 2015" Beef" Pork" Total"Chicken" Turkey"

24 Not Beef Demand! Pounds# 70# US BEEF CONSUMPTION Per#Capita,#Retail#Weight,#Annual# 65# 60# 55# 50# 1991# 1993# 1995# 1997# 1999# 2001# 2003# 2005# 2007# 2009# 2011# 2013# 2015#

25 Beef Demand Index#Value# 120# RETAIL ALL FRESH BEEF DEMAND INDEX Annual,#Using#CPI#1990=100# 100# 80# 100# 96# 91# 91# 86# 86# 82# 79# 75# 75# 77# 80# 81# 85# 88# 83# 85# 85# 80# 77# 75# 77# 79# 81# 86# 60# 40# 20# 0# 1990# 1992# 1994# 1996# 1998# 2000# 2002# 2004# 2006# 2008# 2010# 2012# 2014#

26 1st Quarter Beef Demand Index#Value# 120# RETAIL ALL FRESH BEEF DEMAND INDEX First#Quarter,#Using#CPI#1990=100# 100# 80# 100# 95# 94# 91# 93# 86#87# 83# 86# 87#85# 75#77#76# 80# 80# 83#83# 85# 82# 81# 74# 77#80# 80#80# 60# 40# 20# 0# 1990# 1992# 1994# 1996# 1998# 2000# 2002# 2004# 2006# 2008# 2010# 2012# 2014#

27 1st Quarter Pork Demand Index#Value# 120# RETAIL PORK DEMAND INDEX First#Quarter,#Using#CPI#1990=100# 100# 80# 100#100#100# 93# 93# 96# 102# 94#93#92# 95# 88# 89# 88#84# 87#86#85# 83#83# 86# 76# 81#81# 82# 87# 60# 40# 20# 0# 1990# 1992# 1994# 1996# 1998# 2000# 2002# 2004# 2006# 2008# 2010# 2012# 2014#

28 Meat Spending Nominal"Dollars" 350" 300" 250" 200" 150" 100" 50" US EXPENDITURES FOR MEAT & POULTRY Per"Capita,"By"Type"of"Meat,"Annual" 0" 1989" 1991" 1993" 1995" 1997" 1999" 2001" 2003" 2005" 2007" 2009" 2011" 2013" Beef" Pork" Broiler" Turkey"

29 Meat Spending Percent" 1.2" US EXPENDITURES FOR MEAT & POULTRY Percent"of"Disposable"Income" 1" 0.8" 0.6" 0.4" 0.2" 0" 1989" 1991" 1993" 1995" 1997" 1999" 2001" 2003" 2005" 2007" 2009" 2011" 2013" Beef" Pork" Broiler" Turkey"

Cents#Per#Pound# 650# RETAIL BEEF PRICE All#Fresh,#Monthly# 600# 550# 500# 450# 400# JAN# MAR# MAY# JUL# SEP# NOV# Avg.#2009F13# 2014# 2015# Cents$Per$Pound$ 160$ RETAIL CHICKEN PRICE Whole$Fresh,$Monthly$ Cents#Per#Pound# 440# RETAIL PORK PRICE Monthly# 155$ 420# 150$ 400# 145$ 380# 140$ 360# 135$ 340# 130$ 320# 125$ JAN$ MAR$ MAY$ JUL$ SEP$ NOV$ Avg.$2009I13$ 2014$ 2015$ 300# JAN# MAR# MAY# JUL# SEP# NOV# Avg.#2009E13# 2014# 2015#

31 Beef Price (retail average) Cents#Per#Pound# 650# RETAIL BEEF PRICE All#Fresh,#Monthly# 600# 550# 500# 450# 400# JAN# MAR# MAY# JUL# SEP# NOV# Avg.#2009F13# 2014# 2015#

32 Pork Price Cents#Per#Pound# 440# RETAIL PORK PRICE Monthly# 420# 400# 380# 360# 340# 320# 300# JAN# MAR# MAY# JUL# SEP# NOV# Avg.#2009E13# 2014# 2015#

33 Chicken Price Cents$Per$Pound$ 160$ RETAIL CHICKEN PRICE Whole$Fresh,$Monthly$ 155$ 150$ 145$ 140$ 135$ 130$ 125$ JAN$ MAR$ MAY$ JUL$ SEP$ NOV$ Avg.$2009I13$ 2014$ 2015$

Shoppers are focusing more attention on the price per package as opposed to the price per pound. AMI/FMI Power of Meat Survey 34

35 Beef Trade Mil.$Pounds$ 270$ US BEEF AND VEAL EXPORTS Carcass$Weight,$Monthly$ 250$ 230$ 210$ 190$ 170$ 150$ JAN$ FEB$ MAR$ APR$ MAY$ JUN$ JUL$ AUG$ SEP$ OCT$ NOV$ DEC$ Avg.$2009O13$ 2014$ 2015$

36 Beef Trade Bil.%Pounds% 3.5% US BEEF AND VEAL NET IMPORTS Carcass%Weight,%Annual% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%!0.5%!1.0% 1991% 1994% 1997% 2000% 2003% 2006% 2009% 2012% 2015%

37 Beef Trade Bil."$" 10" 9" 8" 7" 6" 5" 4" 3" 2" 1" 0" US BEEF INDUSTRY EXPORT VALUES Annual" 1988" 1991" 1994" 1997" 2000" 2003" 2006" 2009" 2012" Live"Ca9le" Beef"&"Veal" Hides"&"Skins" Variety"Meats" Tallow"&"Greases"

38 Prices The cure for high prices

39 FL Steer Calf Price vs OKC $400 $300 450-550 lb steer calf $/cwt $200 $100 $0 12-May-01 10-Nov-01 11-May-02 9-Nov-02 10-May-03 8-Nov-03 8-May-04 6-Nov-04 7-May-05 5-Nov-05 6-May-06 4-Nov-06 5-May-07 3-Nov-07 3-May-08 1-Nov-08 2-May-09 31-Oct-09 1-May-10 30-Oct-10 30-Apr-11 29-Oct-11 28-Apr-12 27-Oct-12 27-Apr-13 26-Oct-13 26-Apr-14 25-Oct-14 25-Apr-15

$/cwt 40 FL vs OKC (basis) 10 FL price minus OKC price (450-550 lb steer calf) 0-10 -20-30 -40 12-May-01 10-Nov-01 11-May-02 9-Nov-02 10-May-03 8-Nov-03 8-May-04 6-Nov-04 7-May-05 5-Nov-05 6-May-06 4-Nov-06 5-May-07 3-Nov-07 3-May-08 1-Nov-08 2-May-09 31-Oct-09 1-May-10 30-Oct-10 30-Apr-11 29-Oct-11 28-Apr-12

41 FL Steer Calf Price vs OKC $260 $195 650-750 lb steer calf $/cwt $130 $65 $0 12-May-01 10-Nov-01 11-May-02 9-Nov-02 10-May-03 8-Nov-03 8-May-04 6-Nov-04 7-May-05 5-Nov-05 6-May-06 4-Nov-06 5-May-07 3-Nov-07 3-May-08 1-Nov-08 2-May-09 31-Oct-09 1-May-10 30-Oct-10 30-Apr-11 29-Oct-11 28-Apr-12 27-Oct-12 27-Apr-13 26-Oct-13 26-Apr-14 25-Oct-14 25-Apr-15

42 FL vs OKC (basis) 30 22.5 FL price minus OKC price (650-750 lb steer calf) 15 7.5 $/cwt 0-7.5-15 -22.5-30 12-May-01 10-Nov-01 11-May-02 9-Nov-02 10-May-03 8-Nov-03 8-May-04 6-Nov-04 7-May-05 5-Nov-05 6-May-06 4-Nov-06 5-May-07 3-Nov-07 3-May-08 1-Nov-08 2-May-09 31-Oct-09 1-May-10 30-Oct-10 30-Apr-11 29-Oct-11 28-Apr-12

43 Feeder Cattle Futures May 15 Nov 15 Aug 15 Jan 16

44 Fed Steer Price (major feeding region) $300 $275 $250 $/cwt $225 $200 $175 5-year Avg 2014 2015 $150 11-Jan 25-Jan 8-Feb 22-Feb 8-Mar 22-Mar 5-Apr 19-Apr 3-May 17-May 31-May 14-Jun 28-Jun 12-Jul 26-Jul 9-Aug 23-Aug 6-Sep 20-Sep 4-Oct 18-Oct 1-Nov 15-Nov 29-Nov 13-Dec

45 Live Cattle Futures Jun 15 Aug 15 Dec 15

46 Choice Beef Price (wholesale) $300 $275 $250 $/cwt $225 $200 $175 $150 11-Jan 5-year Avg 2014 2015 25-Jan 8-Feb 22-Feb 8-Mar 22-Mar 5-Apr 19-Apr 3-May 17-May 31-May 14-Jun 28-Jun 12-Jul 26-Jul 9-Aug 23-Aug 6-Sep 20-Sep 4-Oct 18-Oct 1-Nov 15-Nov 29-Nov 13-Dec

47 Beef Choice Select Spread $16 $12 $/cwt $8 $4 $0 5-year Avg 2014 2015 11-Jan 25-Jan 8-Feb 22-Feb 8-Mar 22-Mar 5-Apr 19-Apr 3-May 17-May 31-May 14-Jun 28-Jun 12-Jul 26-Jul 9-Aug 23-Aug 6-Sep 20-Sep 4-Oct 18-Oct 1-Nov 15-Nov 29-Nov 13-Dec

48 Outlook It s tough to make predictions, especially about the future. - Yogi Berra

49 Breaking Point Calf Weight when sold Cost/ Cow 400 450 500 550 600 650 700 750 $450 $1.13 $1.00 $0.90 $0.82 $0.75 $0.69 $0.64 $0.60 $500 $1.25 $1.11 $1.00 $0.91 $0.83 $0.77 $0.71 $0.67 $550 $1.38 $1.22 $1.10 $1.00 $0.92 $0.85 $0.79 $0.73 $600 $1.50 $1.33 $1.20 $1.09 $1.00 $0.92 $0.86 $0.80 $650 $1.63 $1.44 $1.30 $1.18 $1.08 $1.00 $0.93 $0.87 $700 $1.75 $1.56 $1.40 $1.27 $1.17 $1.08 $1.00 $0.93 $750 $1.88 $1.67 $1.50 $1.36 $1.25 $1.15 $1.07 $1.00 $800 $2.00 $1.78 $1.60 $1.45 $1.33 $1.23 $1.14 $1.07

Outlook 50

50 Outlook How to assess 2014? - - - Remember: Prices are still higher vs year ago Can records continue to be broken? Probably not

50 Outlook How to assess 2014? - - - Remember: Prices are still higher vs year ago Can records continue to be broken? Probably not VERY tight supplies could keep prices elevated as we keep moving forward Typical line of thought is 2-3 years, but probably have one of these years in the books! Two critical aspects for 2015: Herd size:: - - - Expanded, but now what? - - - Dairy cattle in the beef supply? Beef demand is/will be critical Mostly domestic demand, thus improved US economy is a good sign

51 Ag Econ Department e-newsletter: blogs.msucares.com/agecon www.agecon.msstate.edu Price & Production Info: http://goo.gl/jqmywx

52 Many Thanks! John Michael Riley 662-325-7986 X j.m.riley@msstate.edu @JMRiley79 Data and Chart Sources: USDA- NASS, ERS, AMS, FAS; Bureau of Labor, National Bureau of Economic Analysis; US Census Bureau, CME Group; Livestock Marketing Information Center

Cattle & Meat Market Update. John Michael Riley - Extension Ag Economist 2015 Florida Beef Cattle Shortcourse May 13, 2015