Cattle Situation and Outlook January 2011 Tim Petry Livestock Economist www.ag.ndsu.edu/livestockeconomics Carrington-Jan2011 01/27/11
Northern Plains Calf Markets www.lmic.info In The Cattle Markets November 8, 2010 Tim Petry, Livestock Economist North Dakota State University Extension Service The fall calf marketing season started a little later than normal in the Northern Plains, but is now ramping up. Good pasture and range conditions, plenty of crop aftermath grazing, and ideal fall weather for harvesting late maturing crops limited fall calf marketing. So, unlike the relatively poor pasture conditions and short hay supplies in the Southeastern U.S. that John Michael Riley reported in the In The Cattle Markets column last week; the Northern Plains is in very good shape. Hay prices reported by NASS, USDA are lower in North Dakota than in any other state. A rain and snow storm in parts of the Dakotas and Montana on October 25-27 further limited movement of calves to market, but put producers in the mood to start weaning and marketing. Last week (Nov. 1-6) saw the biggest runs of calves at Northern Plains auction barns for the season. This week should be another big week for marketing calves. Authors: Printer Friendly Version Darrell Mark, Ph.D. University of Nebraska Lincoln Dillon Feuz, Ph.D. Utah State University Tim Petry, M.S. North Dakota State University John Michael Riley, Ph.D. Mississippi State University Calf prices in the Northern Plains have generally been declining seasonally the last couple of months as corn prices have surged. But prices have averaged about $15 per hundredweight above the last two year s depressed levels. A wide range in prices for the same weight and grade of calves at the same auction market is being reported due to the many factors that affect calf value. North Dakota auctions last week reported a $12 to $13 per cwt. range in prices as typical for a 50 pound weight range in steer prices. Some value added calves were reported to bring $15 to $16 per cwt. more than the lowest priced calves in the weight range. A 575 pound steer calf that brings $12/cwt. more returns an additional $69 per head. So, producers are encouraged to contact their market soon for tips on marketing and management practices that can help bring the highest possible prices. Several Northern Plains auctions reported contra seasonally higher calf prices in the last couple of weeks, just as the heavy runs started. There are several reasons for that. Higher corn prices have caused the spread between the lighter weight calves and the heavier feeder cattle to narrow as feedlots prefer to purchase weight. That has created an opportunity for backgrounding programs that can utilize cheaper forages, co-products, silage, and alternative feed grains such as feed barley in rations. With the ample supply of these in the Northern Plains, the demand for calves to background has picked up. Another interesting recent development is the renewed interest in Northern Plains calves from Canadian feedlots. For the first time since 2003, there are reports of U.S. feeder calves heading north into Canada. Feed barley prices in the Northern Plains and Canada have not increased as much as corn prices. I have been traveling to producer meetings with Dr. Frayne Olson, NDSU Extension crops economist. When giving the crop price outlook he has been mentioning the above average amounts of wheat and field peas in Canada that have suffered from adverse weather conditions and are feed grade. These will also cheapen rations for the Canadian livestock feeding sector. For the week ending November 5, the average price of 501-600 lb. steer prices on a $U.S. basis at cattle auctions in Saskatchewan was reported at $132.09/cwt. compared to across the border in Montana at $123.59. So the cheaper cost of gain there is evident and shows why there may be interest in Northern Plains calves.
Bear VS Bull Demand Supply
Source: National Restaurant Association National Restaurant Association s Restaurant Index Values Greater than 100 = Expansion; Values Less than 100 = Contraction 20% 15% 10% 5% 0% -5% -10% -15% 18% U.S. Meat Trade Percent Change, 2010 from 2009 Jan-Nov -12% 16% 2% -11% -2% Beef Exports Beef Imports Cattle Imports Pork Exports Hog Imports Broiler Exports Turkey Exports 7%
Livestock Price and Production Patterns 1. Seasonal 3. Long term 2. Cycle 4. Unexpected
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
Is the Cattle Cycle Dead? When will beef cow slaughter decline? When will beef herd rebuilding start?
Cattle Price Outlook or LOOK OUT!
Corn Prices New Plateau! $ Per Bu. OMAHA CORN PRICES Weekly 7.50 6.50 5.50 4.50 3.50 2.50 Avg. 2002-06 2007 2008 2009 2010 2011 1.50 G-P-02 Data Source: USDA-AMS, Compiled by LMIC
2010 Corn Prices 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Omaha Southern Plains Hunter
2009 Hay Prices 140 120 100 80 60 40 J F M A M J J A S O N D ND Other ND Alfalfa US Other US Alfalfa
MED. FRAME #1 STEER CALF PRICES 550-600 Pounds, Dakotas, Weekly 150 140 130 120 2007 2008 2009 2010 2011 110 100 90 JAN APR JUL OCT
$ Per Cwt. MED. FRAME #1 STEER CALF PRICES 550-600 Pounds, Dakotas, Weekly 150 140 2005 130 120 110 2006 100 90 2011 80 Livestock Marketing Information Center
MED. & LRG. #1 FEEDER STEER PRICES 750-800 Pounds, Dakotas, Weekly 130 125 120 115 110 105 100 95 90 85 80 JAN APR JUL OCT 2007 2008 2009 2010 2011 Fut 2011
$ Per Cwt. MED. & LRG. #1 FEEDER STEER PRICES 750-800 Pounds, Dakotas, Weekly 134 124 114 104 94 2005 2006 2011 84 74 Livestock Marketing Information Center
SF_LS796 Sioux Falls, SD Fri Jan 21, 2011 USDA-ND Dept Ag Market News North Dakota Weekly Auction Summary - For the week ending Jan 21, 2011 Receipts: 9,831 Last Week 13,705 Last Year 16,527 Combined results of 4 auctions this week: Kist, Napoleon, Stockmen s and West Fargo. Compared to last week s larger receipt numbers feeder steers 500-800 lbs 3.00 to 7.00 higher; over 800 lbs steady. Feeder heifers 400-700 lbs mostly 4.00 to 6.00 higher; 700-800 lbs 1.00 to 3.00 higher. All other weights lacked comparable sales for trending purposes. The action at the auction barns remains very good for most calves offered. Buyers remain very active in their pursuit of feeder cattle. The corn and live cattle futures continue their positive outlooks. Feeder Steers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price 26 368-398 385 162.50-165.50 164.28 47 401-445 433 156.00-167.00 159.48 48 456-488 480 150.00-163.00 154.62 226 501-546 521 143.00-158.75 152.43 339 553-596 576 137.00-149.50 144.11 5 563 563 155.00 155.00 Fancy 638 600-649 625 130.50-145.50 139.07 Calves 769 655-697 681 126.50-138.00 133.54 Calves 526 700-742 718 126.00-134.75 131.08 385 703-746 725 118.00-132.00 128.33 Calves 49 715 715 137.75 137.75 Fancy 15 718 718 137.00 137.00 Value Added 695 750-796 776 121.50-131.00 127.14 30 750-782 771 124.50-127.25 125.47 Calves 659 800-849 820 120.00-126.50 122.80 164 850-898 869 116.00-122.75 119.90 68 904-945 921 115.50-117.25 116.48
SF_LS796 Sioux Falls, SD Fri Jan 21, 2011 USDA-ND Dept Ag Market News North Dakota Weekly Auction Summary - For the week ending Jan 21, 2011 Receipts: 9,831 Last Week 13,705 Last Year 16,527 Combined results of 4 auctions this week: Kist, Napoleon, Stockmen s and West Fargo. Compared to last week s larger receipt numbers feeder steers 500-800 lbs 3.00 to 7.00 higher; over 800 lbs steady. Feeder heifers 400-700 lbs mostly 4.00 to 6.00 higher; 700-800 lbs 1.00 to 3.00 higher. All other weights lacked comparable sales for trending purposes. The action at the auction barns remains very good for most calves offered. Buyers remain very active in their pursuit of feeder cattle. The corn and live cattle futures continue their positive outlooks. Feeder Heifers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price 82 400-448 428 142.00-158.50 149.83 135 450-492 471 138.50-153.00 145.79 262 508-547 533 134.00-141.50 138.26 376 551-599 576 125.25-140.25 133.37 670 600-648 627 122.50-133.00 128.03 Calves 533 650-698 672 119.00-127.00 123.26 Calves 7 690 690 116.50 116.50 Fleshy 386 700-746 726 117.00-126.50 120.19 105 701-748 720 119.00-124.75 120.80 Calves 80 731-733 732 134.75-137.50 136.68 Replacement 107 751-790 778 113.75-120.25 118.05 33 802-829 815 106.50-115.00 112.16 6 811 811 101.50 101.50 Fleshy 12 854-859 857 109.50-110.00 109.79 5 907 907 99.25 99.25 Fleshy 28 952-985 973 110.00-114.50 111.57
CHOICE SLAUGHTER STEER PRICES 5 Market Weighted Average, Weekly 120 115 110 105 100 95 90 2007 2008 2009 2010 2011 Fut 2011 85 80 75 JAN APR JUL OCT
Billion Dollars 400 U.S. Monthly Retail and Food Sales 390 380 370 2008 2007 360 2010 350 340 330 2009 J F M A M J J A S O N D Source: U.S. Census Bureau
Livestock Marketing Information Center Data Source: USDA-AMS $ Per Cwt. 700 650 WHOLESALE BEEF LOIN STRIP PRICES Boneless 0x1, Weekly Avg. 2004-08 600 550 2009 500 450 2010 400 2011 350 01/03/11 JAN APR JUL OCT WHOLESALE BONELESS BEEF PRICES Fresh, 90% Lean, Weekly $ Per Cwt. 190 180 Avg. 2004-08 170 160 2009 150 2010 140 130 2011 120 JAN APR JUL OCT M-P-24 01/03/11
Competing Meats BARROW AND GILT PRICES Iowa - So. Minnesota, Carcass Base Price, Weekly BROILER PRICES 12-City Composite, Weekly $ Per Cwt. 90 85 80 75 70 65 60 55 50 45 40 JAN APR JUL OCT Avg. 2005-09 88 2010 2011 H-P-09 01/18/11 Cents Per Pound 93 83 78 73 68 JAN APR JUL OCT Avg. 2005-09 2010 2011 P-P-01 01/18/11 Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC $ Per Cwt. 175 165 155 145 135 125 115 105 95 85 SLAUGHTER LAMB PRICES Wooled, 110-130 lbs, Sioux Falls, Weekly JAN APR JUL OCT Avg. 2005-09 2010 2011 S-P-05 01/18/11
$ Per Cwt. SLAUGHTER COW PRICES 85-90% Lean, Weekly 68 63 58 53 48 Avg. 2002-06 2007 2008 2009 2010 2011 43 38 JAN APR JUL OCT Data Source: USDA-AMS, Compiled by LMIC C-P-35 01/05/09
Price Risk Management Tools Cash forward contract Video and internet auctions CME futures CME options Livestock Risk Protection (LRP) Livestock Gross Margin (LGM) Which one or combination fits your marketing plan?
A Pot of Gold for the Next Several Years Questions?