Cattle Situation and Outlook Midwest/Great Plains/Western Outlook Conference August 2010 Tim Petry Livestock Economist www.ag.ndsu.edu/livestockeconomics mwgpw.ppt 8/12/10
TO ALL OUTLOOK CONFERENCE ATTENDEES
Bear VS Bull Demand Supply Domestic Export Unexpected
DEMAND DEPENDS ON MACROECONOMICS
Source: National Restaurant Association National Restaurant Association s Restaurant Index Values Greater than 100 = Expansion; Values Less than 100 = Contraction
U.S. Meat Trade Percent Change, 2010 from 2009 Jan-May 20% 15% 10% 5% 0% -5% -10% -15% -20% 16% -13% 15% 8% -15% -7% 5% Beef Exports Beef Imports Cattle Imports Pork Exports Hog Imports Broiler Exports Turkey Exports
Livestock Price and Production Patterns 1. Seasonal 3. Long term 2. Cycle 4. Unexpected
Livestock Marketing Information Center Data Source: USDA/NASS Mil. Head 130 JULY 1 CATTLE INVENTORY U.S. 120 110-1.2% 100 90 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 C-N-45 07/23/10 Mil. Head 55 JULY 1 COW INVENTORY U.S., Annual 50 45 40 35 30 Dairy Cows -1.1% 25 Beef Cows 20 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010-1.6% C-N-46 07/23/10
Livestock Marketing Information Center Data Source: USDA/NASS Mil. Head 7 HEIFERS HELD AS BEEF COW REPLACEMENTS July 1, U.S. 6 5-2.2 % 4 3 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 C-N-37 07/23/10 Mil. Head 55 JULY 1 FEEDER CATTLE SUPPLIES Residual, Outside Feedlots, U.S. 50 45 40 35 30 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010-3% C-N-32 07/23/10
COMMERCIAL BEEF PRODUCTION Quarterly Bil. Pounds 6.8 6.6 6.4 Avg. 2004/08 2009 6.2 6.0 2010 5.8 5.6 JAN-MAR APR-JUN JUL-SEP OCT-DEC 2011 Data Source: USDA-NASS, Compiled and Forecasts by LMIC M-S-01 08/02/10
Feeder Cattle Prices A Pot of Gold at the Market?
Weekly Nearby Corn and Feeder Cattle Futures $125 $8.00 $120 Corn Futures $7.50 $7.00 Feeder Cattle $/cwt $115 $110 $105 $100 $95 $90 Feeder Cattle Futures $6.50 $6.00 $5.50 $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 Corn $/bu $85 $2.00 Weeks Source: CME Group
Corn Prices New Plateau! $ Per Bu. 7.50 6.50 5.50 4.50 3.50 OMAHA CORN PRICES Weekly Avg. 2002-06 2007 2008 2009 2.50 2010 1.50 JAN APR JUL OCT G-P-02 Data Source: USDA-AMS, Compiled by LMIC
MED. FRAME #1 STEER CALF PRICES 550-600 Pounds, Dakotas, Weekly 135 130 125 120 115 110 105 100 95 90 JAN APR JUL OCT 2007 2008 2009 2010 Forecast
MED. & LRG. #1 FEEDER STEER PRICES 700-800 Pounds, Dakotas, Weekly 120 115 110 105 100 95 90 85 80 JAN APR JUL OCT 2007 2008 2009 2010 Fut 2010 Fut 2011 Forecast
125 120 115 110 105 100 95 90 85 9/1/05 11/1/05 1/1/06 3/1/06 5/1/06 16% 7/1/06 CME Feeder Cattle Index 9/1/06 11/1/06 1/1/07 3/1/07 21% 19% 5/1/07 7/1/07 9/1/07 11/1/07 1/1/08 3/1/08 5/1/08 7/1/08 9/1/08 11/1/08 1/1/09 22% 10% 3/1/09 5/1/09 7/1/09 9/1/09 11/1/09 1/1/10 3/1/10 5/1/10 7/1/10
AM_LS753 Amarillo, TX Mon Aug 09, 2010 USDA-TX Dept of Ag Market News Superior Video Auction Monday August 2, 2010 thru Friday August 6, 2010 Feeder Cattle Weighted Average Report for 08/09/2010 Offerings: 198,000 Trade active with good demand. Supply includes 48 percent feeder steers and heifers over 600 lbs, 64 percent of supply steers and 36 percent heifers. Receipts included 16 percent from South Central, 24 from North Central, 2 percent from East and 58 percent from West. Prices FOB based on net weights after a 2-3 percent pencil shrink or equivalent, with a 3-6 cent slide on yearlings and 4-10 on calves. Deliveries current through February 2011. *************************************************************** Northcentral States: Colorado, Wyoming, Nebraska Montana, North and South Dakota and Iowa. *************************************************************** Feeder Steers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price Delivery 126 425-435 428 125.00-139.00 129.96 Oct Part Loads 1121 450-485 477 130.00-142.25 132.96 Oct 2122 500-540 523 122.00-135.00 129.80 Oct 123 500-530 517 122.00-128.50 125.81 Oct Part Loads 2603 550-590 572 117.00-130.00 123.38 Oct 98 560-590 573 115.00-119.00 117.19 Oct Part Loads 1745 600-625 606 114.50-127.00 121.25 Oct Calves 90 610-630 620 117.75-119.50 118.64 Oct Part Loads 480 650-695 669 115.50-125.00 119.20 Oct Calves 155 650-685 671 109.00-117.00 112.22 Oct Part Loads 132 725 725 115.00 115.00 Oct Calves 263 750-760 757 116.50-117.50 117.24 Oct 200 770 770 115.00 115.00 Oct Calves 733 800 800 112.85 112.85 Oct 173 850-875 858 107.75-109.60 108.98 Oct
Average Net Return to Labor and Management Per Beef Cow N.D. Farm Business Mgmt., Excluding Red River Valley 400 300 200 100 0-100 -200 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Average Projected High 20% Low 20%
CHOICE SLAUGHTER STEER PRICES 5 Market Weighted Average, Weekly 105 100 95 90 85 80 2007 2008 2009 2010 Forecast Fut 2010 Fut 2011 75 JAN APR JUL OCT
400 U.S. Monthly Retail and Food Sales 390 Billion Dollars 380 370 360 2008 2010 2007 350 340 330 2009 J F M A M J J A S O N D Source: U.S. Census Bureau
$ Per Cwt. 11.50 STEER HIDE AND OFFAL VALUE Live Animal Basis, Weekly 10.50 9.50 8.50 Avg. 2004-08 2009 7.50 6.50 5.50 JAN APR JUL OCT 2010 C-P-39 08/02/10 STEER DRESSED WEIGHT Federally Inspected, Weekly Pounds 880 870 860 850 840 830 820 810 800 790 780 Data Source: USDA-AMS, Compiled by LMIC JAN APR JUL OCT Avg. 2004-08 2009 2010 C-S-18 08/06/10
Livestock Marketing Information Center Data Source: USDA/AMS $ Per Cwt. 700 WHOLESALE BEEF LOIN STRIP PRICES Boneless 0x1, Weekly 650 600 550 500 Avg. 2004-08 2009 450 400 350 JAN $ Per Cwt. 180 170 160 150 APR JUL WHOLESALE BONELESS BEEF PRICES Fresh, 90% Lean, Weekly OCT 2010 08/02/10 Avg. 2004-08 2009 140 130 2010 120 JAN APR JUL OCT M-P-24 08/02/10
Competing Meats Ron and Shayle/Joel will discuss $ Per Cwt. 90 85 80 75 70 65 60 55 50 45 40 JAN BARROW AND GILT PRICES Iowa - So. Minnesota, Carcass Base Price, Weekly APR JUL OCT Avg. 2004-08 2009 2010 H-P-09 08/09/10 Cents Per Pound 93 88 83 78 73 68 JAN APR BROILER PRICES 12-City Composite, Weekly JUL OCT Avg. 2004-08 2009 2010 P-P-01 08/09/10
Price Forecasts, $/cwt USDA LMIC AAEA FUTURES FED-5 AREA 2010 Q3 94-96 90-92 92.71 A 94.00 Q4 92-98 91-94 94.43 D 97.50 2011 Q1 93-101 89-94 94.85 F 99.00 Q2 96-104 94-99 96.73 A 100.00 Q3 89-95 93.82 A 97.00 Q4 92-100 96.24 D 99.50 7-800 STEERS 2010 Q3 107-111 110-113 110.91 S 111.25 Q4 105-111 103-108 107.98 N 112.00 2011 Q1 101-109 99-107 104.60 M 111.00 Q2 106-114 105-115 109.64 M 112.00 Q3 108-119 111.83 Q4 104-114 108.90
SLAUGHTER COW PRICES 85-90% Lean, Weekly $ Per Cwt. 68 63 68 63 Forecast 58 53 48 43 38 JAN APR JUL OCT 58 53 48 43 38 Avg. 2002-06 2007 2008 2009 2010 Data Source: USDA-AMS, Compiled by LMIC C-P-35 01/05/09
BEEF COW SLAUGHTER Federally Inspected, Weekly Thou. Head 90 85 80 75 70 65 60 55 50 45 40 Avg. 2004-08 2009 2010 JAN APR JUL OCT Data Source: USDA-NASS, Compiled by LMIC C-S-34 08/06/10
Is the Cattle Cycle Dead? When will beef cow slaughter decline? When will beef herd rebuilding start?
Drought Monitor 8/3/2010 8/5/2008 8/1/2006 8/3/2004 8/6/2002 8/1/2000
Crisis Management 2000-2008 : Drought 9-11-01 : Terrorist Attack 2003 : BSE 2006-now : Corn Based Ethanol 2006 : Avian Influenza 2008 : Extreme Price Volatility 2009 : Economic Crisis, H1N1
HAPPIER TIMES ARE AHEAD FOR CATTLE PRICES Questions?