k-state research & extension u.s. cattle sector james mintert, ph.d. professor dept. of...
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K-State Research & Extension
U.S. Cattle Sector
James Mintert, Ph.D.
Professor
Dept. of Agricultural Economics
Kansas State University
K-State Research & Extension
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K-State Research & Extension
U.S. Cattle Sector
1 Cattle Finishing Sector
2 Stocker/Backgrounder Sector
3 Cow-Calf Sector
K-State Research & Extension
United StatesFed (Slaughter) Cattle Marketed By
State
StateCattle Marketed
(Mill. Head)U.S.Rank
TexasKansas
5.985.50
12
Nebraska 4.91 3Colorado 2.47 4Iowa 1.59 5Idaho 0.73 6
K-State Research & Extension
United States# of Beef Cows By State
State
Cows(Mill.Head)
U.S.Rank
TexasMissouri
5.432.06
12
Nebraska 1.97 3Oklahoma 1.90 4S. DakotaMontana
1.731.58
56
Kansas 1.49 7
K-State Research & Extension
Long Run Issues» Demand
» Supply
Short Run Issues» Supplies
Fed Cattle Price Determination
K-State Research & Extension
PRICE
QUANTITY
SupplyDemand
P0
Q0
Fed Cattle Price Determination
K-State Research & Extension
PRICE
QUANTITY
Supply0Demand0
P1
Q1
Fed Cattle Price DeterminationLong Run
S1
D1
K-State Research & Extension
Long Run Supply Issues
Commercial Cattle Carcass Weights
575
600
625
650
675
700
725
750
775
70 73 76 79 82 85 88 91 94 97 00
Year
Actual Carcass Weights
Trend
Source: USDA & K-State Research & Extension
K-State Research & Extension
Long Run Supply Issues
Dressed Beef Production . Per Cow Per Year .
200
250
300
350
400
450
500
550
600
650
700
50 55 60 65 70 75 80 85 90 95 00
Year
Pounds
Beef Production Per Cow
Trendline
Source: USDA & KSU .
K-State Research & Extension
Long Run Supply Issues
Annual Commercial Cattle Slaughter .
31
32
33
34
35
36
37
38
39
40
41
42
43
44
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
Source: USDA & K-State Research & Extension
2003 & 2004 LMIC Forecasts
Year
K-State Research & Extension
Long Run Supply Issues
Commercial Beef Production .
20
21
22
23
24
25
26
27
28
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
YearSource: USDA & K-State Research & Extension
2003 & 2004 LMIC Forecasts
K-State Research & Extension
Beef Demand Index
Retail Choice Beef Demand Index88 86
8379 76
70 6966 65 63
59 58 56 55 53 5156 55
50
94
5452
0
10
20
30
40
50
60
70
80
90
100
81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
Year
Index Value
Source: USDA, Dept. of Commerce & K-State Research & Extension Price Deflated By CPI, 1980 =100 for Beef Demand Index
K-State Research & Extension
Beef Demand Weakened
Retail Choice Beef Demand Index88 86
8379 76
70 6966 65 63
59 58 56 55 53 5156 55
50
94
5452
0
10
20
30
40
50
60
70
80
90
100
81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
Year
Index Value
Source: USDA, Dept. of Commerce & K-State Research & Extension Price Deflated By CPI, 1980 =100 for Beef Demand Index
K-State Research & Extension
Beef Demand’s Turnaround
Retail Choice Beef Demand Index88 86
8379 76
70 6966 65 63
59 58 56 55 53 5156 55
50
94
5452
0
10
20
30
40
50
60
70
80
90
100
81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
Year
Index Value
Source: USDA, Dept. of Commerce & K-State Research & Extension Price Deflated By CPI, 1980 =100 for Beef Demand Index
K-State Research & Extension
But Demand Weakened In ‘02
Retail Choice Beef Demand Index88 86
8379 76
70 6966 65 63
59 58 56 55 53 5156 55
50
94
5452
0
10
20
30
40
50
60
70
80
90
100
81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
Year
Index Value
Source: USDA, Dept. of Commerce & K-State Research & Extension Price Deflated By CPI, 1980 =100 for Beef Demand Index
K-State Research & Extension
Will Beef Demand Rebound In ‘03?
Wholesale Beef Demand Index October - December Quarter
8377 77 78
7269 66 67 66 67
57 5653 51 50 50
45 45
52 5148 49
0
10
20
30
40
50
60
70
80
90
81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
Year
Index Value
Source: USDA, Dept. of Commerce & K-State Research & Extension Price Deflated By CPI, 1980 =100 for Beef Demand Index
K-State Research & Extension
Long Run Issues
» Demand Shifters
– Income
– Population
– Competing Meat Supplies
– Exports (Income, Population & Market Access)
– Tastes and Preferences
Fed Cattle Price DeterminationLong Run
K-State Research & Extension
Annual U.S. Poultry Production .Ready-To-Cook Weight . .
0
5
10
15
20
25
30
35
40
45
81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
Year .
Poultry Production
.
(Billion Lbs.)
.
Turkey Production
Chicken Production
Source: USDA
K-State Research & Extension
Annual U.S. Commercial Pork Production .
11
12
13
14
15
16
17
18
19
20
21
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02Year
Billion Pounds
Source: USDA, 1999 KSU Forecast
Source: USDA, 2003 LMIC Forecast
K-State Research & Extension
Long-Run Beef Export Growth Has Been Phenomenal
Annual U.S. Beef Exports .
0.0
0.5
1.0
1.5
2.0
2.5
3.0
61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01
Year
Source: USDA .
K-State Research & Extension
Net Exports Have Been Growing
U S BEEF INDUSTRY NET EXPORT VALUES
Annual
-2
-1
0
1
2
3
1976 1979 1982 1985 1988 1991 1994 1997 2000
Bil. $
Live
Cattle
Beef &
Veal
Hides
&
Skins
Other
Total
Source: LMIC & U.S. Dept. of Commerce
K-State Research & Extension
Who We Ship Beef To Changed In 2002
2001 U.S. Beef Exports Market Share By Country
CANADA10%
MEXICO24%
JAPAN44%
S. KOREA15%
OTHER6%
CARIBBEAN1%
Source: USDA & KSU, based on quantity shares
K-State Research & Extension
Who We Ship Beef To Changed In 2002
2002 U.S. Beef Exports Market Share By Country
CANADA10%
MEXICO26%
JAPAN31%
S. KOREA25%
OTHER7%
CARIBBEAN1%
Source: USDA & KSU, based on quantity shares
K-State Research & Extension
Russia’s Ban On Poultry Imports Increased Domestic Competing
Meat Supplies
Annual U.S. Broiler Exports To Russia
0.00
0.25
0.50
0.75
1.00
1.25
1.50
1.75
2.00
2.25
2.50
90 91 92 93 94 95 96 97 98 99 00 01 02
Year
Billion Pounds
Source: USDA & KSU
K-State Research & Extension
Russia’s Ban On Poultry Imports Increased Domestic Competing
Meat Supplies
Annual U.S. Broiler Exports
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
90 91 92 93 94 95 96 97 98 99 00 01 02
Year
Billion Pounds
Source: USDA & KSU
K-State Research & Extension
Forecasting Cattle Supplies
Annual Production Forecasts
» Cattle Cycle
» Annual Inventory Estimates
–USDA’s Annual Cattle Inventory Report
K-State Research & Extension
U.S. Cattle Inventory
January 1, 1925-2003
50
60
70
80
90
100
110
120
130
140
25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 00
Year
January 1, 2003 = 96.1 Million Head .
0.6% Less Than .
on Jan. 1, 2002 .
Source: USDA
K-State Research & Extension
Average Cattle Cycle Is About 10 Years
But Current Cycle Is In Its 14th Year
Cattle Inventories By Cycle .
75
85
95
105
115
125
135
1 2 3 4 5 6 7 8 9 10 11 12 13 14Year of Cycle .
Cattle Inventory (Million Head) 1949-1958
1958-1967
1967-1979
1979-1990
1/1/03
Source: USDA & KSU
K-State Research & Extension
Drought Produced Another Round of Modest Liquidation in 2002
Estimated Kansas Cow-Calf Returns .
-100
-50
0
50
100
150
200
250
300
75 77 79 81 83 85 87 89 91 93 95 97 99 01
Year
$'s Per Cow
.
Source: K-State Research & Extension Returns Above Variable Costs
2002 Estimated
K-State Research & Extension
Total Cow Slaughter Changed Little In ‘02
Most of the “Drought” Cows Did Not Go to Slaughter
Total F.I. Cow Slaughter
4
5
6
7
8
9
10
11
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02
Year
Million Head
Source: USDA
K-State Research & Extension
Cow Slaughter Up This Year But Increase Is Primarily Dairy
Cows
Average Daily F.I. Cow Slaughter
18
19
20
21
22
23
24
25
26
27
28
Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec
Month
Thousand Head Per Day
2003
2002
5 Yr Avg
Source: USDA & KSU
K-State Research & Extension
PRICE
QUANTITY
Supply0
Demand0
Fed Cattle Price DeterminationShort Run
S1 S2
P1
P0
P2
K-State Research & Extension
Short Run Issues
» Supplies
–Cattle On Feed Reports
Forecasting Cattle Prices
U.S. Cattle On Feed .Lots Over 1000 Head .
9.50
9.75
10.00
10.25
10.50
10.75
11.00
11.25
11.50
11.75
12.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Month
Million Head
2003
20025 Yr. Avg.
Source: USDA & K-State Research & Extension
K-State Research & Extension
U.S. Net Placements .Lots Over 1000 Head .
1.00
1.25
1.50
1.75
2.00
2.25
2.50
2.75
3.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Month
Million Head
2003
2002
5 Yr. Avg.
Source: USDA & K-State Research & Extension
K-State Research & Extension
Short Run Issues
» Supplies
–Cattle On Feed ReportsRole of Non-Fed Slaughter
Seasonal Variation
Forecasting Cattle Prices
K-State Research & Extension
Cyclical Peak In Slaughter Cattle Prices Still
Ahead
Annual Average Steer Prices .Kansas Slaughter Steers .
35
40
45
50
55
60
65
70
75
80
85
75 77 79 81 83 85 87 89 91 93 95 97 99 01 03Year .
Steer Price ($/Cwt.)
.
Source: USDA, 2003 Forecast
W. Kansas 11-13 Cwt. Steer Price Index .
101
103
100
97
101
96
101
102
100
9897
103
95
96
97
98
99
100
101
102
103
104
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Month
1989-1998 Index
Source: AMS-USDA & KSU
K-State Research & Extension