Livestock and Feedgrain Outlook 2017 Range Beef Cow Symposium James G. Robb Director, LMIC Website: www.lmic.info November 28-30, 2017 28 US Land Grant Universities: USDA Data Sources -- NASS, AMS, FAS, and ERS Forecasts By -- LMIC 7 USDA Agencies: AMS (Market News), APIS, ERS, GIPSA (Packers & Stock.), NASS, FAS, and WAOB 12 Associate Members: AFBF ASI NCBA NPB CME-Group Canadian Consortium Noble Research Institute CoBank TCFA TCU NWFCS DLR Topics: Outlook and Economic Drivers. Cattle Prices and LMIC s Forecasts Through 2019 Corn Price Outlook Total U.S. Red Meat and Poultry Production Dimensions of Demand and The Marketing Chain Beef International Trade Cattle -- Cyclical Aspects and Returns Marketing, Managing, and Financing Some Really Long Term Stuff SLAUGHTER STEER PRICES 5 Market Weighted Average, Weekly Data Source: USDA-AMS 220 210 1 1 1 1 MED. & LRG. #1 STEER CALF PRICES 0-0 Pounds, Southern Plains, Weekly Data Source: USDA-AMS Data Source: USDA-AMS SLAUGHTER COW PRICES Southern Plains, 85-% Lean, Weekly Cheyenne, Wyo. 1
Pounds 9 920 0 8 8 8 820 STEER DRESSED WEIGHT Federally Inspected, Weekly $ Per Cwt 275 2 225 175 125 75 AVERAGE ANNUAL CATTLE PRICES Southern Plains 19 1992 1994 1996 1998 0 2 4 6 8 2010 2012 2014 2016 2018 0-0lb Steer Calves 0-0lb Feeder Steers Fed Steers Data Source: USDA-AMS & USDA-NASS Data Source: USDA-AMS, Compiled and Forecasts by LMIC Year S. Plains Quarter 5-0# ($/Cwt) AVERAGE CALF PRICES 2016 0-0lb Steer Calves, Southern Plains $ Per Cwt I 195.73 300 II 173.86 III 157.12 275 IV 138.44 2 Year 166.29 2017 225 I 157.38 II 1.49 III 165.47 IV b 166-168 175 Year 164-166 2018 I c 161-165 125 II 161-166 III 154-1 IV 147-154 Year 155-161 2019 75 3 4 5 6 7 8 9 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 I -158 II 151-1 Annual Average III 148-158 Data IV 143-154 USDA-AMS, and Forecasts by LMIC Source: Compiled Year 149-157 4th Quarter Domestic Consumer Demand and... Index Domestic U.S. Consumer Confidence Monthly, Index year 1966 = Pounds US BEEF CONSUMPTION Per Capita, Retail Weight, Annual 65 55 1978 1981 1984 1987 19 1993 1996 1999 2 5 8 2011 2014 2017 1994 1996 1998 0 2 4 6 8 2010 2012 2014 2016 2018 Data Source: Thomson Reuters/University of Michigan Data Source: USDA-NASS, Compiled & Analysis by LMIC Cheyenne, Wyo. 2
Index Value 20 0 RETAIL ALL FRESH BEEF DEMAND INDEX Third Quarter, Using CPI 19= 99 91 89 86 84 75 73 75 77 82 82 83 85 92 87 83 86 93 88 89 83 78 74 75 76 78 79 19 1992 1994 1996 1998 0 2 4 6 8 2010 2012 2014 2016 Data Source: Bureau of Labor Statistics, USDA-ERS, Compiled & Analysis by LMIC $ Per 0 lbs 4 3 3 2 2 1 LIVE TO CUTOUT BEEF PRICE SPREAD Monthly Data Source: USDA-AMS & USDA-ERS, Compiled & Analysis by LMIC $ Per 0 lbs 0 13 0 12 0 1 1 10 0 9 0 CUTOUT TO RETAIL BEEF PRICE SPREAD Monthly Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Pork, Chicken, Etc. Data Source: USDA-AMS & USDA-ERS, Compiled & Analysis by LMIC 7.5 7.0 6.5 6.0 5.5 5.0 COMMERCIAL PORK PRODUCTION Mil. Pounds 5 525 0 475 4 425 0 375 3 US PORK EXPORTS Carcass Weight, Monthly Cheyenne, Wyo. 3
11.5 11.0 10.5 10.0 9.5 9.0 8.5 RTC BROILER PRODUCTION Mil. Pounds 6 630 610 5 5 5 530 510 4 4 4 US BROILER EXPORTS RTC Weight, Monthly 27.5 27.0 26.5 26.0 25.5 25.0 24.5 24.0 23.5 23.0 22.5 22.0 21.5 TOTAL RED MEAT & POULTRY PRODUCTION 2018 Annual Per Person Dis. 218.7 Lb. Retail. Largest Since 7 Beef Exports and Imports 41/57 = 72% since19 Mil. Pounds 275 US BEEF AND VEAL EXPORTS Carcass Weight, Monthly 3.5 US BEEF AND VEAL EXPORTS Carcass Weight, Annual 2 3.0 225 2.5 2.0 1.5 175 1.0 0.5 0.0 1994 1997 0 3 6 9 2012 2015 2018 Cheyenne, Wyo. 4
4.0 3.5 US BEEF AND VEAL IMPORTS Carcass Weight, Annual Feedgrains -- Corn 3.0 2.5 2.0 1.5 1994 1997 0 3 6 9 2012 2015 2018 Bil. Bushels 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 US CORN DISAPPEARANCE AND STOCKS Crop Year 1993 1995 1997 1999 1 3 5 7 9 2011 2013 2015 2017 Feed & Residual Food, Seed & Industrial Exports Stocks Bil. Bushels 18 16 14 12 10 8 6 4 US TOTAL CORN SUPPLY AND PRICE Crop Year 1993 1995 1997 1999 1 3 5 7 9 2011 2013 2015 2017 Supply Price $ Per Bushel 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 Data Source: USDA-NASS and ERS, Forecasts by LMIC Data Source: USDA-NASS, Compiled & Forecasts by LMIC Bu. Per Acre 1 1 1 NATIONAL AVERAGE CORN YIELD Crop Year 1993 1995 1997 1999 1 3 5 7 9 2011 2013 2015 2017 Cattle 155 Bu Per Acre $4./Bu Cheyenne, Wyo. 5
Mil. Head TOTAL CATTLE INVENTORY BY CYCLE U.S., January 1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1938-49 1949-58 1958-67 1967-79 1979-19-04 4-14 2014-17 Data Source: USDA-NASS Mil. Head 41 39 38 37 36 35 34 33 CALF CROP July Es`mates, U.S., Annual 1987 19 1993 1996 1999 2 5 8 2011 2014 2017 Data Source: USDA-NASS 2017 = 36.3 Million Head +3.5 Percent Thou. Head 65 55 45 35 30 BEEF COW SLAUGHTER Federally Inspected, Weekly Thou. Head 1 1 1 1 HEIFER SLAUGHTER Federally Inspected, Weekly Data Source: USDA-AMS & USDA-NASS Data Source: USDA-AMS & USDA-NASS Mil. Head JANUARY 1 TOTAL CATTLE INVENTORY U.S., Annual 1957 1962 1967 1972 1977 1982 1987 1992 1997 2 7 2012 2017 Data Source: USDA-NASS; Forecasts by LMIC 7.5 7.3 7.1 6.9 6.7 6.5 6.3 6.1 5.9 5.7 5.5 2018 Annual Per Person Dis. 57.8 Lb. Retail. Largest Since 2010 COMMERCIAL BEEF PRODUCTION 2017 = 26.2 Billion 2018 = 27.3 Billion 2019 = 27.9 Billion Cheyenne, Wyo. 6
$ Per Cow 0 0 ESTIMATED AVERAGE COW CALF RETURNS Returns Over Cash Cost (Includes Pasture Rent), Annual 175 CHOICE STEER PRICE vs BREAKEVEN Cadle Feeding, S. Plains, Monthly Latest Data: October 2017 300 125 0-19 1992 1994 1996 1998 0 2 4 6 8 2010 2012 2014 2016 2018 75 2010 2011 2012 2013 2014 2015 2016 2017 2018 Steer Price Breakeven Projected Breakeven Data Source: USDA & LMIC, Compiled by LMIC Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC Economic Environment and Managing. Cents Per Pound RETAIL PRICE COMPARISON Monthly 6 Cattle Feeding One of Best Years Ever in 2014, 0 to Worst in 2015, to Great First 8 Months of 2017 5 0 Cyclically Lower Annual Average Cattle Prices 4 throughout 2018 0 Marketing Calves Against Larger Supplies 3 Sequential Decision-Making 300 2 Annual Marketing Plan Tied To Monthly Cash Flow Statement What If????? Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Pork Composite Broiler All Fresh Beef Data Source: Bureau of Labor Statistics & USDA-ERS Product Markets In Transition: Segmentation Subdivision Separation Breakdown Differentiation www.lmic.info Thank You! Cheyenne, Wyo. 7