cattle and beef markets: short and long run challenges and
TRANSCRIPT
Cattle and Beef Markets: Short and Long Run Challenges and Opportunities
Derrell S. Peel Breedlove Professor of Agribusiness and Extension Livestock Marketing Specialist
Oklahoma State University
Major Beef Market Factors
• Cattle Inventory and Beef Production • Beef Demand • International Trade • Feed and Input Markets • Forage Conditions
BOXED BEEF CUTOUT VALUEChoice 600-900 Lbs. Carcass, Weekly
140
150
160
170
180
190
200
210
JAN APR JUL OCT
$ Per Cwt.
Avg.2007-11
2012
2013
C-P-6204/29/13Livestock Marketing Information Center
Data Source: USDA-AMS
SLAUGHTER STEER PRICESSouthern Plains, Weekly
859095
100105110115120125130135
JAN APR JUL OCT
$ Per Cwt.
Avg.2007-11
2012
2013
C-P-5204/29/13Livestock Marketing Information Center
Data Source: USDA-AMS
MED. & LRG. #1 FEEDER STEER PRICES700-800 Pounds, Southern Plains, Weekly
95
105
115
125
135
145
155
165
JAN APR JUL OCT
$ Per Cwt.
Avg.2007-11
2012
2013
C-P-4904/29/13Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
FEEDER STEER vs FED STEER PRICES700-800 Lbs. Minus Slaughter Steer, S. Plains, Weekly
5
10
15
20
25
30
35
40
JAN APR JUL OCT
$ Per Cwt.
Avg.2007-11
2012
2013
C-P-5304/29/13Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
MED. & LRG. #1 STEER CALF PRICES400-500 Pounds, Southern Plains, Weekly
120130140150160170180190200210220
JAN APR JUL OCT
$ Per Cwt.
Avg.2007-11
2012
2013
C-P-49A04/29/13Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
SLAUGHTER COW PRICESSouthern Plains, 85-90% Lean, Weekly
45
55
65
75
85
95
JAN APR JUL OCT
$ Per Cwt.
Avg.2007-11
2012
2013
C-P-3504/29/13Livestock Marketing Information Center
Data Source: USDA-AMS
JANUARY 1 TOTAL CATTLE INVENTORYU.S., Annual
80
90
100
110
120
130
140
1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 2013
Mil. Head
C-N-0102/04/13
-1.6 Percent2013 = 89.3 Million Head
Livestock Marketing Information Center Data Source: USDA-NASS
JANUARY 1 BEEF COW INVENTORYU.S., Annual
28
30
32
34
36
38
40
1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012
Mil. Head
C-N-0201/29/12Livestock Marketing Information Center
Data Source: USDA-NASS
Cycl
ical
Ex
pans
ion
Cycl
ical
Li
quid
atio
n
Drou
ght
Liqu
idat
ion
Cycl
ical
Ex
pans
ion
Inpu
t Sho
ck-
Rece
ssio
n Li
quid
atio
n Dr
ough
t Li
quid
atio
n
-2.9 Percent2013 = 29.3 Million Head
JANUARY 1 FEEDER CATTLE SUPPLIESResidual, Outside Feedlots, U.S.
20
25
30
35
40
1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
Mil. Head
C-N-3002/04/13Livestock Marketing Information Center
Data Source: USDA-NASS
HEIFERS HELD AS BEEF COW REPLACEMENTS
January 1, U.S.
4.5
5.0
5.5
6.0
6.5
7.0
1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
Mil. Head
C-N-3802/04/13
+1.9 %
Livestock Marketing Information Center Data Source: USDA-NASS
BEEF PRODUCTION vs. CATTLE INVENTORY
Inventory on January 1, U.S.
88
93
98
103
108
113
118
1987 1990 1993 1996 1999 2002 2005 2008 2011 2014
Mil. Head
22
23
24
25
26
27
28Bil. Pounds
Commercial Beef Production
Total Cattle Inventory
M-S-2308/10/12Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
Cattle Slaughter, Annual
28
2930
31
3233
34
3536
37
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Million Head
M-S-03A01/29/13Livestock Marketing Information Center
Data Source: USDA-NASS, Compiled & Analysis by LMIC
U S ALL HAY STOCKSDecember 1
70
80
90
100
110
120
1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Mil. Tons
G-NP-2201/11/13Livestock Marketing Information Center
Data Source: USDA-NASS, Compiled & Forecasts by LMIC
Hay Price, $/ton
$50.00$70.00$90.00
$110.00$130.00$150.00$170.00$190.00$210.00
1982 1987 1992 1997 2002 2007 2012
All Hay Alfalfa Other Hay
US RANGE AND PASTURE CONDITIONPercent Poor and Very Poor, Weekly
10
20
30
40
50
60
70
May Jul Sep
Percent
Avg.2007-112012
2013
G-NP-3005/06/13
Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC
SOUTHEAST REGIONRANGE AND PASTURE CONDITION
Percent Poor and Very Poor, Weekly
0
5
10
15
20
25
30
35
40
45
May Jul Sep
Percent
Avg.2007-112012
2013
G-NP-3605/06/13
Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC
CORNBELT REGIONRANGE AND PASTURE CONDITION
Percent Poor and Very Poor, Weekly
0
10
20
30
40
50
60
70
80
May Jul Sep
Percent
Avg.2007-112012
2013
G-NP-3405/06/13
Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC
GREAT PLAINS REGIONRANGE AND PASTURE CONDITION
Percent Poor and Very Poor, Weekly
0
10
20
30
40
50
60
70
80
90
May Jul Sep
Percent
Avg.2007-112012
2013
G-NP-3205/06/13
Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC
SOUTHERN PLAINS REGIONRANGE AND PASTURE CONDITION
Percent Poor and Very Poor, Weekly
10
20
30
40
50
60
70
80
May Jul Sep
Percent
Avg.2007-112012
2013
G-NP-3305/06/13
Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC
WESTERN REGIONRANGE AND PASTURE CONDITION
Percent Poor and Very Poor, Weekly
15
25
35
45
55
65
75
May Jul Sep
Percent
Avg.2007-112012
2013
G-NP-3105/06/13
Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC
BEEF PRODUCTIONFederally Inspected, Weekly
375
400
425
450
475
500
525
550
JAN
APRJU
LOCT
Mil. Pounds
Avg.2007-11
2012
2013
M-S-1804/29/13Livestock Marketing Information Center
Data Source: USDA-AMS & USDA-NASS
CATTLE SLAUGHTERFederally Inspected, Weekly
470
520
570
620
670
720
JAN
APRJU
LOCT
Thou. Head
Avg.2007-11
2012
2013
C-S-0805/03/13Livestock Marketing Information Center
Data Source: USDA-AMS & USDA-NASS
STEER DRESSED WEIGHTFederally Inspected, Weekly
800810
820830
840850
860870
880890
JAN
APRJU
LOCT
Pounds
Avg.2007-11
2012
2013
C-S-1805/03/13Livestock Marketing Information Center
Data Source: USDA-AMS & USDA-NASS
BEEF COW SLAUGHTERFederally Inspected, Weekly
45
50
55
60
65
70
75
80
85
JAN
APRJU
LOCT
Thou. Head
Avg.2007-11
2012
2013
C-S-3405/03/13Livestock Marketing Information Center
Data Source: USDA-AMS & USDA-NASS
TOTAL COW SLAUGHTERFederally Inspected, Weekly
85
95
105
115
125
135
145
155
JAN
APRJU
LOCT
Thou. Head
Avg.2007-11
2012
2013
C-S-1405/03/13Livestock Marketing Information Center
Data Source: USDA-AMS & USDA-NASS
U S BEEF AND VEAL EXPORTSCarcass Weight, Annual
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1989 1992 1995 1998 2001 2004 2007 2010 2013
Bil. Pounds
I-N-0604/28/13Livestock Marketing Information Center
Data Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC
MAJOR U S BEEF EXPORT MARKETSCarcass Weight, Annual
0
100
200
300
400
500
600
700
Japan Canada Mexico Korea
Mil. Pounds
Avg.2006/10
2011
2012
I-N-1805/01/13Livestock Marketing Information Center
Data Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC
MAJOR U S BEEF IMPORT SOURCESCarcass Weight, Annual
0
100
200
300
400
500
600
700
800
900
Australia New Zealand Canada Mexico
Mil. Pounds
Avg.2006/10
2011
2012
I-N-3605/01/13Livestock Marketing Information Center
Data Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC
U S BEEF AND VEAL IMPORTSCarcass Weight, Annual
1.5
2.0
2.5
3.0
3.5
4.0
1989 1992 1995 1998 2001 2004 2007 2010 2013
Bil. Pounds
I-N-1204/28/13Livestock Marketing Information Center
Data Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC
United States: Beef Trade 2013-2014 Projected
0200400600800
10001200140016001800
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
1,00
0 M
ET
RIC
TO
NS
Exports Imports
CATTLE IMPORTS FROM MEXICOAnnual
400
600
800
1000
1200
1400
1600
1800
1987 1990 1993 1996 1999 2002 2005 2008 2011
Thou. Head
I-N-1705/01/13Livestock Marketing Information Center
Data Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC
U S CATTLE IMPORTS FROM MEXICOMonthly
2545
6585
105
125145165
185205
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Thou. Head
Avg.2007-11
2012
2013
I-N-0305/03/13Livestock Marketing Information Center
Data Source: USDA-ERS & USDA-FAS
CORN ACREAGE
60
65
70
75
80
85
90
95
100
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Acr
es P
lant
ed (m
illio
n)
Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC
NATIONAL AVERAGE CORN YIELDCrop Year
60
80
100
120
140
160
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Bu. Per Acre
G-NP-0403/28/13Livestock Marketing Information Center
Data Source: USDA-NASS, Compiled & Forecasts by LMIC
U S ANNUAL CORN PRODUCTIONCrop Year
2
4
6
8
10
12
14
16
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Bil. Bushels
G-NP-0703/28/13Livestock Marketing Information Center
Data Source: USDA-NASS, Compiled & Forecasts by LMIC
NATIONAL AVERAGE CORN PRICECrop Year, Received by Farmers
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
$ Per Bushel
G-NP-0303/28/13Livestock Marketing Information Center
Data Source: USDA-NASS, Compiled & Forecasts by LMIC
CATTLE ON FEEDUS Total, Monthly
9.5
10.0
10.5
11.0
11.5
12.0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Mil. Head
Avg.2007/11
2012
2013
C-N-1004/19/13Livestock Marketing Information Center
Data Source: USDA-NASS
CHOICE STEER PRICE vs BREAKEVENCattle Feeding, S. Plains, Monthly
75
85
95
105
115
125
135
145
2005 2006 2007 2008 2009 2010 2011 2012 2013
$ Per Cwt
SteerPrice
Breakeven
ProjectedBreakeven
Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC
C-P-2105/06/13
Latest Data: April 2013
AVERAGE RETURNS TO CATTLE FEEDERSFeeding 725 Lb. Steers, S. Plains, Monthly
-325-275-225-175-125-75-252575
125175225275
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
$ Per Head
Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC
C-P-2205/06/13
Latest Data: April 2013
2013 Cattle Market Expectations
• Cattle and beef prices pushed higher by limited supplies – Beef production down by 4.0-4.5%
• Beef demand will limit price increases • Question is “How much higher?” • Moderation in feed prices • Higher cow and heifer prices (if no drought)
– Breeding cow and heifer demand
2012, 2013 Projected
Corn PriceCrop year average, 1960-2013
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
“The Beef Industry Can Survive High Corn Prices Better Than the
Pork and Poultry Industries”
• True statement? • What are the implications for the beef industry?
It is often said:
Feedlot Cost of Gain Kansas, $/cwt.
40.0050.0060.0070.0080.0090.00
100.00110.00120.00130.00140.00
Cost per Pound of TDN, Cents/lb.
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
$18.00
1982 1987 1992 1997 2002 2007 2012
Corn Hay
Source: Nevil Speer. Based on corn at 88% and hay at 55% TDN
Permanently Higher Grain Prices is a Game Changer for the Beef Industry
• Change from grain intensive to forage intensive to maintain competitiveness – Must emphasize ruminant advantages – Enhanced role for stocker production
• Influence on production systems – Animal genetics (change animal size?) – Type and use of technology? – Better forage management – New forages? – New forage systems?
• Industry infrastructure (location and capacity) – Different feeding industry? – Regional shifts in cattle feeding, cow-calf and stocker production
ANNUAL AVERAGE CATTLE PRICESSouthern Plains
55
75
95
115
135
155
175
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
$ Per Cwt
500-600lbSteerCalves
700-800lbFeederSteers
FedSteers
C-P-0605/01/13Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
Cattle Sector Implications
• Cow-calf – Good profit potential; cost management key – Rebuilding strategy and costs – Producer transition
• Stocker – Good value of gain
• Feedlots and packers will continue to struggle – Loss of capacity likely
• Production challenges bigger than marketing challenges
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