University of Nebraska - incoln igitalcommons@university of Nebraska - incoln Range Beef Cow Symposium Animal Science epartment ecember 21 Beef Market Outlook Randy Blach Centennial, CO Follow this and additional works at: http://digitalcommons.unl.edu/rangebeefcowsymp Part of the Animal Sciences Commons Blach, Randy, "Beef Market Outlook" (21). Range Beef Cow Symposium. 14. http://digitalcommons.unl.edu/rangebeefcowsymp/14 This Article is brought to you for free and open access by the Animal Science epartment at igitalcommons@university of Nebraska - incoln. It has been accepted for inclusion in Range Beef Cow Symposium by an authorized administrator of igitalcommons@university of Nebraska - incoln.
Proceedings, The Range Beef Cow Symposium XVII ecember 11, 12, and 13, 21 Casper, Wyoming BF MARKT OUTOOK 14 Total Cattle Inventory By Randy Blach Centennial, CO M I H A 12 1 8 6 3 4 5 6 7 8 9 Source: USA YARS 22-25 projected 9. 8.5 Cow Slaughter M I H A 8. 7.5 7. 6.5 6. 5.5 5. 8 82 84 86 88 9 92 94 96 98 2 4 Source: USA & Cattle-Fax YARS Projected 21-25 13 Heifer Slaughter M I 12 11 H A 1 9 Outlook 8 8 82 84 86 88 9 92 94 96 98 2 4 Source: USA, Commercial YARS 21-25 Projected Beef Situation &
39 Heifers As % Of Total Feedlot Placements Notes 36 P R C N T 33 3 27 24 8 81 82 83 84 85 86 87 88 89 9 91 92 93 94 95 96 97 98 99 1 Source: Cattle-Fax, 21 year to date YARS 4 Monthly Percent Heifers Placed 38 1996- Avg. P R C N T 36 34 21 2 32 3 J F M A M J J A S O N Source: Cattle-Fax MONTHS Beef Situation & Outlook
52 5 Total Cow Inventory Notes M I H A 48 46 44 42 4 38 8 82 84 86 88 9 92 94 96 98 2 4 Projected 22-25 YARS Source: USA & Cattle-Fax H A 11.5 11. 1.5 1. 9.5 9. 8.5 8. 7.5 7. airy Cow Inventory 8 81 82 83 84 85 86 87 88 89 9 91 92 93 94 95 96 97 98 99 1 2 3 4 Source: USA 22-24 Projected YARS 4 Beef Cow Inventory 39 M I H A 38 37 36 35 34 33 32 31 8 81 82 83 84 85 86 87 88 89 9 91 92 93 94 95 96 97 98 99 1 2 3 4 5 Source: USA, 22-24 projected YARS Outlook Beef Situation &
M I H A 42 4 38 36 34 32 3 28 26 24 22 Feeder Cattle and Calf Supply - Jan 1st 8 82 84 86 88 9 92 94 96 98 2 Source: USA & Cattle-Fax YARS Outside of Feedyards, 22-23 projected Notes H A 18 17 16 15 14 13 12 11 1 9 8 7 6 5 4 3 2 1 Feeder Cattle Imports From Mexico 93 94 95 96 97 98 99 1 2 Source: USA/APHIS YARS 2-21 projected Beef Situation & Outlook
75 725 Average Carcass Weights Notes P O U N S 7 675 65 625 6 575 Average increase 5.9 lbs / year 55 75 77 79 81 83 85 87 89 91 93 95 97 99 1 3 5 Source: USA, 21-25 projected 7 Beef Production per Cow 65 P O U N S 6 55 5 45 4 35 3 435 485 569 626 61 6 1975 1985 1995 2 21 22 Source: USA, 21-22 Projected YARS 27 Beef Production 26 B I B S 25 24 23 22 21 8 82 84 86 88 9 92 94 96 98 2 4 21-25 Projected YARS Source: USA & Cattle-Fax Outlook Beef Situation &
Cattle Numbers, Beef and Total Meat Supply -Cattle numbers are expected to bottom out at 96.7 million head on January 1, 22. The total cattle inventory is expected to grow nearly five million head by 25-26. -Beef-cow numbers were at the cycle low in January 21. The beef-cow factory is expected to increase about 2. million head by 26 to 27. -Total cattle slaughter peaked in 2 at 36.25 million head. Annual slaughter is expected to decline about 2. million head during the next five years. -Beef production and per-capita consumption peaked in 2. Annual beef production is expected to decline about 1.4 billion pounds during the next four years. -Cattle-on-feed numbers are expected to decline significantly as a result of sharply reduced feeder-cattle and calf supplies. -Heifer slaughter is expected to decline during the next few years as herd expansion unfolds, and reach the cycle low in 25 at about 1.3 million head. -Pork production is expected to increase 1% to 2% in 22, and poultry production should increase 2%. Total meat supplies will be about even for the year. Beef Situation & Outlook
Notes Per Capita Spending (dollars) 21 25 2 195 19 185 18 175 17 Per Capita Beef Spending and Consumption Spending Consumption 171 166 182 178 178 177 178 181 175 173 173 17 192 24 95 9 85 8 75 7 Per Capita Consumption 165 16 162 16 158 65 155 85 86 87 88 89 9 91 92 93 94 95 96 97 98 99 1 6 Source: USA 21 projected Market Share of Meat Spending 198 1985 199 1998 2 21 Beef 53.9 5.3 45.4 39.8 4.2 41. Pork 26.9 26.2 27. 29.5 29.1 29.3 Chicken 16.1 19.5 23.1 26.3 26.7 25.9 Turkey 3.1 4. 4.5 4.4 4. 3.8 Outlook Beef Situation &
B I $ 58 56 54 52 5 48 46 44 42 4 38 36 U.S. Consumer xpenditures on Beef 87 88 89 9 91 92 93 94 95 96 97 98 99 1 2 Source: USA & Cattle-Fax YARS omestic disapperance valued at all-fresh retail price, 21-22 projected Total Consumer Spending (bil $) YAR BF PORK CHICKN TURKY TOTA 1987 38.2 22.52 17.44 3.76 81.91 1988 4.54 23.6 19.11 3.76 87.1 1989 42.16 23.52 21.64 4.22 91.53 199 44.16 26.45 22.65 4.36 97.61 1991 45.76 26.97 23.1 4.53 1.36 1992 45.31 26.85 24.46 4.46 11.8 1993 45.62 26.71 26.3 4.61 12.98 1994 46.27 27.39 26.81 4.65 15.13 1995 46.4 26.88 26.59 4.82 14.33 1996 45.7 28.79 28.32 5.12 17.93 1997 45.49 3.22 29.4 4.97 11.8 1998 46.64 34.48 3.8 5.13 117.13 1999 49.35 36.2 33.59 5.15 124.11 2 52.82 38.32 35.18 5.2 131.53 21 56.65 4.47 35.82 5.2 138.14 Beef Situation & Outlook
Beef xport Breakdown ( pounds carcass weight) U.S. Total Japan Mexico Korea Canada Other 1995 1,82,813 1,4,452 92,33 272,175 311,982 139,91 1996 1,878,218 1,15,779 172,245 23,795 295,425 19,974 1997 2,129,91 1,52,659 312,37 261,433 282,3 221,49 1998 2,17,639 1,118,49 418,857 153,87 261,21 218,275 1999 2,417,115 1,11,166 466,1 37,957 249,463 292,528 2 2,516,271 1,116,855 533,616 398,825 253,694 213,281 21* 2,214,318 996,443 558,8 265,718 254,647 139,52 Percent of Total Japan Mexico Korea Canada Other 1995 55.17% 5.7% 14.95% 17.13% 7.68% 1996 54.8% 9.17% 1.85% 15.73% 1.17% 1997 49.42% 14.67% 12.27% 13.24% 1.4% 1998 51.53% 19.3% 7.9% 12.3% 1.6% 1999 45.56% 19.28% 12.74% 1.32% 12.1% 2 44.39% 21.21% 15.85% 1.8% 8.48% 21* 45.% 25.2% 12.% 11.5% 6.3% * stimate What If xports to Japan ecline? Result Off 1 percent An additional 2.1 million pounds per week on U.S. market Off 2 percent An additional 4.2 million pounds per week on U.S. market Off 3 percent An additional 6.3 million pounds per week on U.S. market Off 5 percent An additional 1.5 million pounds per week on U.S. market Approximate Market Impact (Assumes impact last all year) Off 1 percent Off 2 percent Off 3 percent Off 5 percent $.5/cwt. $.8/cwt. $1.25/cwt. $2./cwt. Outlook Beef Situation &
Notes 6 2 ive Cattle, Beef, and Beef Byproduct xports vs. Imports Total Value B I O A R S 5 4 3 2 1 4.41 3.59 XPORTS Source: ept of Commerce Bureau of Census BF VARITY MATS TAOW HIS IV CATT IMPORTS 1.5 Hide and Offal Value 1. 9.5 $ / C W T 9. 8.5 8. 7.5 7. 6.5 6. JFMAMJJASONJ FMAMJJ ASONJ FMAMJJ ASON JFMAMJ JASON JFMAMJ JASON 97 98 99 1 Source: USA WKS Beef Situation & Outlook
3.5 3. xports Imports Beef Imports and xports Notes B I B S 2.5 2. 1.5 1..5. 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 Source: USA/RS, 21-22 projected 3. Net Beef Imports 2.5 Billion Pounds (cwe) 2. 1.5 1..5. 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 Net beef imports includes beef equivalent of live cattle trade Source: USA, 21-22 projected 28 Beef Production and Net Beef Supply Production Net Supply B I B S 26 24 22 2 8 82 84 86 88 9 92 94 96 98 2 4 21-25 projected YARS Sour1e: USA Outlook Beef Situation &
$ / C W T 8 78 76 74 72 7 68 66 64 62 6 Annual Fed Steer Price 58 8 81 82 83 84 85 86 87 88 89 9 91 92 93 94 95 96 97 98 99 1 2 Source: Cattle-Fax 21-22 projected YARS Notes $72.5 fed cattle average 21 $72 $74 fed cattle average in 22 Range $67-$8 onger-term 23 $74-$76 24 $74-$76 25 $72-$74 Beef Situation & Outlook
92 88 84 Annual 75lb Steer Price Notes $ / C W T 8 76 72 68 64 6 56 8 81 82 83 84 85 86 87 88 89 9 91 92 93 94 95 96 97 98 99 1 2 Source: Cattle-Fax 21-22 projected YARS $87.5 feeder cattle average in 21 $85-$87 22 Range $82-$9 onger-term 23 $85-$87 24 $85-$87 25 $82-$83 Outlook Beef Situation &
15 USA stimated 7-State Carryover Notes H A 1375 125 1125 1 875 75 5-Yr Avg 21 2 625 J F M A M J J A S O N Source: USA MONTHS H A 55 525 5 475 45 425 4 375 35 325 3 275 25 225 22 Month-nding Adjusted Carryover 21 5-Yr Avg. 2 J F M A M J J A S O N Source: Cattle-Fax MONTHS Nov-ec 21, 22 projected 83 Steer Carcass Weights P O U N S 82 81 8 79 78 77 2 21 5-Yr avg. 76 75 J F M A M J J A S O N Source: USA WKS Beef Situation & Outlook
H A 75 74 73 72 71 7 69 68 67 66 65 64 63 62 61 6 Weekly Average Cattle Slaughter 22 21 5-Yr Avg. 2 J F M A M J J A S O N Source: USA MONTHS Oct-ec 21, 22 projected Notes 9 Weekly Average Slaughter Increase from Mar-Apr to May-June 8 7 Thousand Head 6 5 4 3 2 1 9 91 92 93 94 95 96 97 98 99 1 2 Source: USA, 22 projected YARS M I B S 56 55 54 53 52 51 5 49 48 47 46 Weekly Average Beef Production 21 2 5-yr avg 22 45 J F M A M J J A S O N Source: USA MONTHS Oct-ec 21, 22 projected Outlook Beef Situation &
$ / C W T Cattle-Fax 75 lb Steer Price 94 92 9 88 86 84 82 8 78 76 74 72 7 68 66 64 62 6 1998 1999 2 21 Weeks Notes I N X 15 14 13 12 198-2 Seasonal 75 lb Steer Price 11 1 99 98 97 96 95 J F M A M J J A S O N Source: Cattle-Fax WKS $ / C W T 93 75 lb Feeder Steer Price 22 Forecast 92 91 9 89 88 87 86 85 84 83 82 J F M A M J J A S O N Source: Cattle-Fax MONTHS Beef Situation & Outlook
P R C N T 75 lb Steer as Percent of Fed Steer 126 124 122 12 118 116 114 112 11 18 16 14 12 1 98 96 94 92 79 8 81 82 83 84 85 86 87 88 89 9 91 92 93 94 95 96 97 98 99 1 2 Source: Cattle-Fax, 21-22 projected YARS Notes P R C N T 75 lb Feeder Steer as a Percent of Fed Steer 1.34 1.32 1.3 2 1.28 1.26 1.24 1.22 1991 1.2 1.18 1.16 1.14 1.12 1.1 1979 1.8 1.6 21 1.4 1.2 1. J F M A M J J A S O N Source: Cattle-Fax MONTHS 14 13 12 Seasonal 55 lb Calf Prices 198-Avg. I N X 11 1 99 98 97 96 J F M A M J J A S O N Source: Cattle-Fax MONTHS Outlook Beef Situation &
P R C N T 55 lb Steer Calf as Percent of Fed Steer 155 15 145 14 135 13 125 12 115 11 15 1 95 9 85 8 8 81 82 83 84 85 86 87 88 89 9 91 92 93 94 95 96 97 98 99 1 Source: Cattle-Fax, 21 projected YARS Notes P R C N T 1.55 1.53 1.51 1.49 1.47 1.45 1.43 1.41 1.39 1.37 1.35 1.33 1.31 1.29 1.27 1.25 1.23 1.21 1.19 1.17 1.15 55 lb As Percent Of Fed Steer 2 21 1979 1991 J F M A M J J A S O N Source: Cattle-Fax MONTHS Beef Situation & Outlook
Breakeven Purchase Price 55 lb Steer Corn Price $/bu Fed 2. 2.2 2.4 2.6 2.8 3. 3.2 3.4 3.6 3.8 4. 4.2 4.4 Price 54. 62.2 59. 55.98 52.96 49.94 46.92 43.9 4.88 37.86 34.84 31.82 28.8 25.78 56. 65.77 62.75 59.73 56.71 53.69 5.67 47.65 44.63 41.61 38.59 35.57 32.55 29.53 58. 69.52 66.5 63.48 6.46 57.44 54.42 51.4 48.38 45.36 42.34 39.32 36.3 33.28 6. 73.27 7.25 67.23 64.21 61.19 58.17 55.15 52.13 49.11 46.9 43.7 4.5 37.3 62. 77.2 74. 7.98 67.96 64.94 61.92 58.9 55.88 52.86 49.84 46.82 43.8 4.78 64. 8.77 77.75 74.73 71.71 68.69 65.67 62.65 59.63 56.61 53.59 5.57 47.55 44.53 66. 84.52 81.5 78.48 75.46 72.44 69.42 66.4 63.38 6.36 57.34 54.32 51.3 48.28 68. 88.27 85.25 82.23 79.21 76.19 73.17 7.15 67.13 64.11 61.9 58.7 55.5 52.3 7. 92.2 89. 85.98 82.96 79.94 76.92 73.9 7.88 67.86 64.84 61.82 58.8 55.78 72. 95.77 92.75 89.73 86.71 83.69 8.67 77.65 74.63 71.61 68.59 65.57 62.55 59.53 74. 99.52 96.5 93.48 9.46 87.44 84.42 81.4 78.38 75.36 72.34 69.32 66.3 63.28 76. 13.27 1.25 97.23 94.21 91.19 88.17 85.15 82.13 79.11 76.9 73.7 7.5 67.3 78. 17.2 14. 1.98 97.96 94.94 91.92 88.9 85.88 82.86 79.84 76.82 73.8 7.78 8. 11.77 17.75 14.73 11.71 98.69 95.67 92.65 89.63 86.61 83.59 8.57 77.55 74.53 Breakeven Purchase Price 75 lb Steer Corn Price $/bu Fed 2. 2.2 2.4 2.6 2.8 3. 3.2 3.4 3.6 3.8 4. 4.2 4.4 Price 54. 57.48 55.83 54.18 52.53 5.88 49.23 47.58 45.93 44.28 42.63 4.98 39.33 37.68 56. 6.43 58.78 57.13 55.48 53.83 52.18 5.53 48.88 47.23 45.58 43.93 42.28 4.63 58. 63.38 61.73 6.8 58.43 56.78 55.13 53.48 51.83 5.18 48.53 46.88 45.23 43.58 6. 66.33 64.68 63.3 61.38 59.73 58.8 56.43 54.78 53.13 51.48 49.83 48.18 46.53 62. 69.28 67.63 65.98 64.33 62.68 61.3 59.38 57.73 56.8 54.43 52.78 51.13 49.48 64. 72.23 7.58 68.93 67.28 65.63 63.98 62.33 6.68 59.3 57.38 55.73 54.8 52.43 66. 75.18 73.53 71.88 7.23 68.58 66.93 65.28 63.63 61.98 6.33 58.68 57.3 55.38 68. 78.13 76.48 74.83 73.18 71.53 69.88 68.23 66.58 64.93 63.28 61.63 59.98 58.33 7. 81.8 79.43 77.78 76.13 74.48 72.83 71.18 69.53 67.88 66.23 64.58 62.93 61.28 72. 84.3 82.38 8.73 79.8 77.43 75.78 74.13 72.48 7.83 69.18 67.53 65.88 64.23 74. 86.98 85.33 83.68 82.3 8.38 78.73 77.8 75.43 73.78 72.13 7.48 68.83 67.18 76. 89.93 88.28 86.63 84.98 83.33 81.68 8.3 78.38 76.73 75.8 73.43 71.78 7.13 78. 92.88 91.23 89.58 87.93 86.28 84.63 82.98 81.33 79.68 78.3 76.38 74.73 73.8 8. 95.83 94.18 92.53 9.88 89.23 87.58 85.93 84.28 82.63 8.98 79.33 77.68 76.3 Outlook Beef Situation &
Structural Changes & Points to Consider Beef Situation & Outlook
Broilers Top 2 Hogs >2 hd airy >2 cows Beef Cattle Feedlots >1 hd Cow/Calf >2 cows Total # of Producers/ Operators Profile of ivestock & Producer Operations # of G Producers G Producers as % of Total % of Production from G Producers 85% 98,46 7,125 7% 69% 15,25 8,5 8% 48% 14,471 2,71 2% 85% 84, 28, 3.5% 33% >1 cows 72,891 9% 51% Beef Industry Structure: The Way it is volving Sharing Information Consumer Retailer Foodservice Packer Processor Feedlot Stocker Cow Calf Seed Stock Pulling Product Through Outlook Beef Situation &
Retailer Consolidation Smaller number of national & international heavy-weights Most efficient to work with a limited number of suppliers Retailer Consolidation-Supermarkets Top Twenty Control Top Ten Control Top Five Control 73% - food sales 59% - food sales 41% - food sales Retailers Are Shifting The Responsibility to the Supplier For: Food safety Inventory Management What does this mean for you? Beef Situation & Outlook
Top 5-7 Retailers may control 7-75 percent of food sales in FIV YARS What are the Implications Single source suppliers Just in time supply management Inventory management Consistency, Quality, Quantity Outlook Beef Situation &
United States Feedyards > 16, Head* January 1, 21 United States Packers > 1, Head* January 1, 21 Beef Situation & Outlook
25 Fed Marketings - Stable 2 P R C N T 15 1 5 I S WA Source: USA 197 198 2 2 12-State 1, hd & over 3 Fed Marketing - Growth 25 P R C N T 2 15 1 5 CO OK N TX KS Source: USA 2 12-State 1, hd & over 197 198 2 25 Fed Marketings- ecline 2 P R C N T 15 1 5 IA CA I MN AZ Source: USA 197 198 2 2 12-State 1, hd & over Outlook Beef Situation &
14 12 Marketing Trends: Various Size Feedlots* 1,-31,999 M I H A 1 8 6 4 2 <1, >32, 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 *1996- All states YARS Source: USA 6 5 Number of Feedlots Over 16, Head and % of Fed Cattle Marketings Feedlots* % Mktg* 7 6 N U M B R 4 3 2 5 4 3 2 P R C N T 1 1 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 Source: USA YARS *Change in USA Cattle on feed series from total mktgs, 13-States to mktgs from feedlots with >1 hd capacity 12-States M I H A 14. 13.5 13. 12.5 12. 11.5 U.S. Bunk Capacity stimate From 199 to 2 U.S. bunk capacity grew 16% 11. 9 91 92 93 94 95 96 97 98 99 Source: Cattle-Fax YARS Beef Situation & Outlook
11 Beef Cow Farms F A R M S 1 9 8 7 1974 1978 1982 1987 1992 1997 Census of Ag 1997 CNSUS ATA Outlook Beef Situation &
Percent of Beef Cow Operations in Various Size Groups - 1997 Census of Ag 1-199 5.6% < 1 9.9% 2-499 2.8% >5.7% Percent of Beef Cows Accounted for by Various Size Operations - 1997 Census of Ag 1-199 17% < 1 51% 2-499 17% > 5 15% Beef Situation & Outlook
Top 25 Feeding Companies Feed 38% of the Cattle Now! By 25 45-5% 45 Percentage of Fed Cattle Movement from: Formula, Contract, Alliance & Packer Fed Cattle 4 P R C N T 35 3 25 2 15 1 5 1995 1996 1997 1998 1999 2 YARS Outlook Beef Situation &
Value iscovery Changing Premiums +2 +6 199 s 2 Additional Premiums for: -Prime -CAB or Similar Specs -Choice +1 198 s PAR -1 iscounts -12 - yg1 yg2 yg3 16 yg4 yg5 New Market arger Premiums Fed Cattle Feeders Calves arger iscounts As fed cattle prices show more differentiation so will feeder and calf prices Beef Situation & Outlook
The Target Yield Grade 1 Yield Grade 2 Yield Grade 3 Yield Grade 4 Yield Grade 5 Prime $16.2 $13.7 $12.2 $(4.8) $(9.2) CAB $11.2 $8.7 $7.2 Choice $7.2 $4.7 $3.2 $(11.8) $(16.2) Select $(.8) $(3.3) $(4.8) $(19.8) $(24.2) Standard $(11.) $(13.5) $(15.) $(3.) $(35.) 55 Carcass Weight Range 95 *Ch/Sel Spread *6% Choice $8 G d The Target Yield Grade 1 Yield Grade 2 Yield Grade 3 Yield Grade 4 Yield Grade 5 Prime $122. $13. $92. $(21.) $(59.) CAB $84. $65. $54. $(59.) (96.) Choice $54. $35. $24. $ $(89. $(126.) Select $(6.) $(25.) $(36.) $(149.) $(186.) Standard $(83.) $(11.) $(113.) $(125.) $(263.) 55 Carcass Weight Range 95 *Ch/Sel Spread *6% Choice $8 G Outlook Beef Situation &
Several Commodity Industries Have Been ed by Strong Brands Beef Situation & Outlook
Where do You Fit? S STOCK Cow/Calf Producers COW / CAF Growing, Finishing, Processing, Marketing STOCKR FOT Branded Product Branded Product Branded Product PACKR Branded Beef Commodity Beef Opportunity Consistently eliver: Tenderness and Convenience Will ead to: More Branded Beef Consumer Satisfaction: Will Increase Sales Outlook Beef Situation &
Beef Business Facts: 1. The beef industry is changing rapidly 2. Competition will be tougher and margins will narrow 3. Risk is increasing 4. Approaches to marketing are changing 5. An increased percentage of beef will be sold under a brand name 6. nvironmental and food safety issues will increase 7. General observations Beef Situation & Outlook