Cattle Market Outlook Winter C. Wilson Gray District Economist Twin Falls R & E Center wgray@uidaho.edu http://web.cals.uidaho.edu/idahoagbiz/ Thank You! Topics: Markets and Aspects of Domestic Consumer Beef Demand International Trade Comments Drought A Game Changer Markets and Outlook Feedstuffs are Key Poultry and Pork Cattle Market Drivers Cattle Prices and Profitability Economic Environment Summary US Consumer Demand and Consumption (Disappearance) USDA Data Sources NASS, AMS, FAS, and ERS All Forecasts LMIC & UI - AERS 1
Percent Change 2. 1.5 1..5. -.5-1. -1.5-2. QTRLY GROSS DOMESTIC PRODUCT (GDP) Real Dollar (25) Change from Previous Quarter -2.5 1997 1999 21 23 25 27 29 2 Dollars 4 38 36 34 32 3 28 PER CAPITA DISPOSABLE PERSONAL INCOME Quarterly 26 23 24 25 26 27 28 29 21 2 Current Dollar 25 Dollar Data Source: Dept. Commerce-BEA Data Source: Department of Commerce-BEA Index Value RETAIL ALL FRESH BEEF DEMAND INDEX Fourth Quarter, Using CPI 199= 85 87 83 83 12 94 93 87 88 89 88 87 85 81 82 8 76 74 76 75 79 8 78 78 Pounds 7 65 U S BEEF CONSUMPTION Per Capita, Retail Weight, Annual 6 4 2 6 55 199 1992 1994 1996 1998 2 22 24 26 28 21 Data Source: Bureau of Labor Statistics, USDA-ERS, Compiled & Analysis by LMIC 5 1989 1992 1995 1998 21 24 27 21, Compiled & Analysis by LMIC M-C-15 3/1/13 2
U S RED MEAT & POULTRY CONSUMPTION Per Capita, Retail Weight, Annual U S EXPENDITURES FOR MEAT & POULTRY Per Capita, By Type of Meat, Annual Pounds 2 Turkey Nominal Dollars 3 25 Beef 15 Total Chicken Pork 2 15 Pork Broiler 5 Beef 5 Turkey 1989 1992 1995 1998 21 24 27 21 1987 199 1993 1996 1999 22 25 28 2 M-C-1 3/1/13 M-C-16B 3/1/13, Compiled & Analysis by LMIC Data Source: Bureau of Economic Statistics & USDA-ERS, Compiled & Analysis by LMIC CPI - MEATS 1982-1984 Base, Monthly Index 24 235 23 225 22 215 21 25 2 195 19 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 26-1 2 International Trade Perspective Data Source: Bureau of Labor Statistics 2/1/13 3
U S BEEF AND VEAL EXPORTS Carcass Weight, Monthly U S BEEF EXPORTS TO MAJOR MARKETS Carcass Weight, Monthly Mil. Pounds 28 26 24 22 2 18 16 14 12 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 26-1 2 Mil. Pounds 9 8 7 6 5 4 3 2 1 24 25 26 27 28 29 21 2 Japan Canada Mexico South Korea I-N-16 2//13 I-N-35 2//13 Data Source: USDA-ERS & USDA-FAS Data Source: USDA-ERS & USDA-FAS Bil. Pounds 3. U S BEEF AND VEAL EXPORTS Carcass Weight, Annual Bil. Pounds 4. U S BEEF AND VEAL IMPORTS Carcass Weight, Annual 2.5 3.5 2. 1.5 3. 1. 2.5.5 2.. 1989 1992 1995 1998 21 24 27 21 1.5 1989 1992 1995 1998 21 24 27 21 Data Source: USDA-FAS and ERS, Forecasts by LMIC Data Source: USDA-FAS and ERS, Forecasts by LMIC 4
Percent 15 13 9 7 5 3 1-1 -3 U S BEEF AND VEAL NET IMPORTS As a Percentage of Production, Carcass Weight, Annual 1989 1992 1995 1998 21 24 27 21 Thou. Head 8 7 6 5 4 3 2 1 FEEDER CATTLE IMPORTS FROM MEXICO Weekly JAN APR JUL OCT 27-2 Data Source: USDA-FAS and ERS, Forecasts by LMIC Data Source: USDA-AMS & USDA-APHIS 3/4/13 Thou. Head 12 1 8 6 4 2 FEEDER CATTLE IMPORTS FROM CANADA Weekly JAN APR JUL OCT 27-2 Drought A Game Changer Data Source: USDA-AMS & USDA-APHIS 3/4/13 5
Feedstuffs are Key $ Per Bu. 8.8 7.8 6.8 5.8 4.8 3.8 2.8 CORN - MONTHLY AVERAGE PRICE Received by Farmers, U.S., Crop Year SEP NOV JAN MAR MAY JUL 6/7-1/ 2/12 /13 U S TOTAL CORN SUPPLY AND PRICE Crop Year Bil. Bushels 15 14 13 12 1 9 8 1988 1991 1994 1997 2 23 26 29 $ Per Bushel 8. 7. 6. 5. 4. 3. 2. 1. Supply Price G-P-9 2/28/13 G-NP-13 2/8/13, Compiled & Forecasts by LMIC 6
U.S. CORN DISAPPEARANCE AND STOCKS Crop Year DECEMBER 1 HAY STOCKS ( Tons) Bil. Bushels 16 14 12 1 8 6 4 2 1988 199 1992 1994 1996 1998 2 22 24 26 28 21 Stocks Exports Food, Seed & Industrial Feed & Residual 12 17 65 19 38 2 95 9 16 24 6 45 127 28 VT 2 181 18 43 NH 49 85 MA 81 17 RI 7 35 184 12 CT 52 15 9 NJ 9 795 3 23 DE 17 46 34 MD 31 27 12 29 5 44 12 to 6 1365 162 95 6 to 12 6 12 to 23 23 to 6 47 G-NP-12 2/8/13, Compiled & Forecasts by LMIC 1/15/ ALL HAY ACRES ( Acres) PERCENT CHANGE ALL HAY ACRES (-2) 78 % 155 415 22 219 13 175 VT 185 134 145 156 3 NH 52 875 97 MA 69 4 142 RI 8 257 1 CT 58 66 58 63 NJ 15 146 63 DE 16 275 135 366 238 MD 25 1765 662 295 319 285 145 25 to 285 58 75 86 285 to 662 662 to 134 5 46 134 to 22 22 to 5 32 1% -3% -8% -19% -1% -22% -13% -1% 4% 2% -12% -13% 4% 38% 15% 28% -4% -9% 16% -3% % -2% -2% 7% -6% -2% -5% -2% 3% -6% -15% 4% 7% 4% -17% -2% 8% 23% -2% -% to -8% -8% to -2% -2% to % % to 7% 7% to 39% VT 6% NH -2% MA -7% RI -% CT -3% NJ % DE 7% MD -7% 1/15/ 1/15/ 7
Mil. Tons 12 U S HAY STOCKS AND PRODUCTION Crop Year December 1 Hay Stocks $ Per Ton 24 22 2 ALFALFA HAY - MONTHLY AVERAGE PRICE Received by Farmers, U.S., Crop Year 6/7- /12 8 Alfalfa Hay Production 18 2/12 6 Other Hay Production 16 14 /13 4 28 21 12 MAY JUL SEP NOV JAN MAR 1//13 G-P-12 2/28/13, Compiled & Forecasts by LMIC Poultry and Pork BROILER EGGS SET Weekly Mil. Eggs 215 21 25 2 27-195 19 185 18 175 JAN APR JUL OCT P-S-1 3/7/13 8
SOW SLAUGHTER Federally Inspected, Weekly Cattle Market Thou. Head 7 65 6 55 27-5 45 4 35 3 JAN APR JUL OCT Data Source: USDA-AMS & USDA-NASS H-S-15 3/1/13 Mil. Head 135 125 5 15 95 85 75 65 TOTAL CATTLE INVENTORY BY CYCLE U.S., January 1 1 2 3 4 5 6 7 8 9 1 12 13 14 1938-49 1949-58 1958-67 1967-79 1979-9 199-4 24-13 4-2 -5-1 -1 41-5 CHANGE IN BEEF COWS NUMBERS JANUARY 1, TO JANUARY ( Head) -15 5 6-2 -45-44 78-79 -55-9 - -24 1 3-58 2-5 29-1 4-5 -1-4 5 22 33-38 4-1 -22 1-32 1-55 to -15-15 to -1-1 to 4 4 to 79 VT 2 NH -1 MA -1 RI CT 2 NJ 1 DE 1 MD -2, Compiled & Analysis by LMIC C-N-4 2/1/13-8 U.S. Total: -862 2/4/13 9
-49-76 -14-22 -1 CHANGE IN BEEF COWS NUMBERS JANUARY 1, 23 TO JANUARY ( Head) -36 74-12 -65 133-15 -23-43 -1368-222 -166-2 -49-328 -72-131 -55-35 15 8 VT 3 NH 28 MA 1-1 RI 28 CT -36 NJ -1 14-9 DE - MD -1-171 -38-44 -126-81 -14 to -55-55 to -14-14 to to 134-42 Mil. Head 14 13 12 9 8 JANUARY 1 TOTAL CATTLE INVENTORY U.S., Annual = 89.3 Million Head -1.6 Percent 7 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 23 28-12 U.S. Total: -3236 C-N-1 2/1/13 2/4/13 Mil. Head 7. HEIFERS HELD AS BEEF COW REPLACEMENTS January 1, U.S. Thou. Head 85 BEEF COW SLAUGHTER Federally Inspected, Weekly 6.5 6. 5.5 5. +1.9 % 8 75 7 65 6 55 27-4.5 5 4. 1983 1986 1989 1992 1995 1998 21 24 27 21 45 JAN APR JUL OCT C-N-38 2/1/13 C-S-34 3/1/13 Data Source: USDA-AMS & USDA-NASS 1
Pounds 81 CATTLE DRESSED WEIGHT Federally Inspected, Weekly Mil. Head 12 CALF PRICES AND CATTLE INVENTORY Western Kansas 5-6 Lb. Steers, Annual $ Per Cwt. 175 8 79 27-5 155 135 Cattle Inventory 78 15 5 77 76 75 JAN APR JUL OCT 95 95 75 9 55 1982 1985 1988 1991 1994 1997 2 23 26 29 Calf Price C-S-18A 3/1/13 C-N-41 2/1/13 Data Source: USDA-AMS & USDA-NASS Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC Mil. Head 4 JANUARY 1 FEEDER CATTLE SUPPLIES Residual, Outside Feedlots, U.S. Mil. Head 12..5 CATTLE ON FEED US Total, Monthly 27/ 35 3. 1.5 25 1. 2 1983 1986 1989 1992 1995 1998 21 24 27 21 9.5 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC C-N-3 2/4/13 C-N-1 2/22/13
Mil. Head 16 13 BEEF PRODUCTION vs. CATTLE INVENTORY Inventory on January 1, U.S. Bil. Pounds 28 Commercial Beef Production 27 26 Bil. Pounds 7. 6.8 6.6 6.4 COMMERCIAL BEEF PRODUCTION Quarterly 27/ 97 94 25 24 6.2 6. 91 Total Cattle Inventory 88 1988 1991 1994 1997 2 23 26 29 23 22 5.8 5.6 JAN-MAR APR-JUN JUL-SEP OCT-DEC 214, Compiled & Analysis by LMIC M-S-23 2/17/13, Forecasts by LMIC $ Per Cwt ANNUAL AVERAGE CATTLE PRICES Southern Plains WA-OR-ID 5-6 WT 175 155 135 5 95 75 55 1985 1987 1989 1991 1993 1995 1997 1999 21 23 25 27 29 2 5-6lb Steer Calves 7-8lb Feeder Steers Fed Steers Steer Price Range projection Data Source: USDA-AMS, Compiled & Analysis by LMIC C-P-6 2/14/13 12
WA-OR-ID 7-8 WT Steer Price Range projection $ Per Cwt. 135 13 125 12 5 15 95 9 SLAUGHTER STEER PRICES 5 Market Weighted Average, Weekly 85 JAN APR JUL OCT 27-3/4/13 Data Source: USDA-AMS Price 8. 75. 7. 65. 6. Commercial\Utility Cows Producers Auction, Jerome, ID $ Per Cow 18 14 6 COW-CALF RETURNS AND CATTLE INVENTORY U.S., Annual Mil. Head 12 5 15 Cow-Calf Returns 55. 2 5. 45. 5 Yr. Average -2-6 95 9 Cattle Inventory Jan 1-1984 1986 1988 199 1992 1994 1996 1998 2 22 24 26 28 21 85 AGECONGRAPHICS Data Source: Producers Auction, Jerome, ID Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC C-P-67 12/18/12 13
LMIC QUARTERLY FORECASTS Prices Adjusted to PNW by UI Ag Economics 2/8/13 1.1-PNW Comm'l % Chg. % Chg. Live Sltr. % Chg. Feeder Steer Price Year Beef from Per Capita from Steer Price from PNW Region Quarter Production Year Ago Consumption Year Ago 5-Mkt Avg Year Ago 7-8# 5-6# (Mil. Lbs.) (Retail Wt.) ($/Cwt.) ($/Cwt.) I c 615-2.8 14. -.6 126-128 1.4 141-143 163-167 II 6161-4.8 14.1-3.9 127-13 6.3 139-146 163-167 III 6331-3.8 13.9-4.1 126-13 6.9 139-145 164-172 IV 6151-6.4 13.6-3.7 128-133 4. 138-151 156-164 Year 24748-4.5 55.5-3.1 127-13 4.6 14-144 163-169 214 I c 5757-5.7 13. -6.6 132-138 6.3 139-148 17-179 II 585-5. 13.2-6.4 134-141 7. 15-16 17-182 III 646-4.5 13.3-4.2 132-14 6.3 149-16 17-183 IV 5878-4.4 13. -3.9 134-143 6.1 143-155 171-185 Year 23531-4.9 52.6-5.3 134-14 6.6 15-157 172-179 a Totals may not add due to rounding. $ Per Cwt 145 135 125 5 15 95 85 CHOICE STEER PRICE vs BREAKEVEN Cattle Feeding, S. Plains, Monthly Latest Data: January 75 25 26 27 28 29 21 2 Steer Price Breakeven Projected Breakeven b Projected/Estimated quarter Sources: Livestock Slaughter - USDA/NASS; Steer Prices - USDA/AMS Livestock Market News; Projections and Forecasts by LMIC and UI Ag Econ Ext. Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC C-P-21 2/22/13 $ Per Head AVERAGE RETURNS TO CATTLE FEEDERS Feeding 725 Lb. Steers, S. Plains, Monthly 275 225 Latest Data: January 175 125 75 25-25 -75-125 -175-225 -275-325 24 25 26 27 28 29 21 2 Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC C-P-22 2/22/13 Economic Environment. Domestic Consumer Demand has Stabilized and is Slowly Improving for Red Meats. Recession versus +3% GDP Growth? Foreign Beef Demand Strong but Slipping Price Volatility Will Continue (Globalization, Ethanol, etc.) Market Shocks Will Continue (9--21; BSE; 28 Credit Crisis) Market Segmentation Accelerating Economic Incentive to Grow U.S. Cowherd Overcome by Drought Controls Already Set to Dramatically Reduced Beef Output High Feedstuff Price Range Expected to Continue Headwind to Calf and Yearling Prices -- Compressed Margins for Cattle Feeders and Beef Packers Mistakes Are Costly, Sound Business Practices Required Agile Firms Will Benefit. Be Adaptable NOT Adapted Management is a Sequential Decision-Making Process, Especially in Drought 14
www.lmic.info 29 land Grant Universities: USDA Members: ERS APHIS GIPSA NASS WAOB AMS Associate Members: AFBF ASI NCBA NPB CME-Group Canadian Consortium Noble Foundation CoBank TCFA CWB TCU Change is inevitable; adaptation and survival are optional. -Dee Likes Kansas Livestock Association Happy Trails in THANK YOU! 15