whats the cattle price outlook for 2006? dr. walter prevatt dr. deacue fields extension economists...
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What’s The What’s The Cattle Price Cattle Price
Outlook Outlook For 2006?For 2006?
Dr. Walter Prevatt Dr. Walter Prevatt
Dr. Deacue FieldsDr. Deacue Fields
Extension EconomistsExtension Economists
Auburn University Auburn University
Cattle Situation and Cattle Situation and OutlookOutlook
SupplySituation
U.S. Cattle and Calves Inventory, 1949-U.S. Cattle and Calves Inventory, 1949-20062006
0
20
40
60
80
100
120
140
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Cattle & Calves Inventory
Year
Million Head
U.S. Cattle and Calves Inventory, 1949-U.S. Cattle and Calves Inventory, 1949-20062006
0
20
40
60
80
100
120
140
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Cattle & Calves Inventory
Year
Million Head
1949-58 1958-67 1967-79 1979-90 1990-04
Length of U.S. Cattle Length of U.S. Cattle Cycles Cycles
70
80
90
100
110
120
130
140
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
1949-58
1958-67
Million Head
Number of Years
1967-79
1979-901990-04
2004-?
U.S. Cattle Inventory & Average Calf U.S. Cattle Inventory & Average Calf Price 1949-2006Price 1949-2006
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
50 55 60 65 70 75 80 85 90 95 '00 '05
$15
$25
$35
$45
$55
$65
$75
$85
$95
$105
$115
$125
$135
U.S. Cattle Inventory U.S. Avg. Calf Price
Year
Million Head
U.S. Cattle and Calves Inventory,U.S. Cattle and Calves Inventory,97.1 Million Head, Jan. 1, 200697.1 Million Head, Jan. 1, 2006
33.3
9.15.9 4.3
9.8
16.9
2.3
15.6
37.8
28.2
0
5
10
15
20
25
30
35
40
45
BeefCows
MilkCows
BeefCowRepl.
MilkCowRepl.
OtherHfrs.500+Lbs.
Steers500+lbs.
Bulls500 +Lbs.
Calves< 500Lbs.
CalfCrop
FCOF*
Mill
ion H
ead
U.S. Cattle & Calves, Jan. 1, 2005 & U.S. Cattle & Calves, Jan. 1, 2005 & 20062006
ClassClass 20052005 20062006 Change from 2005Change from 2005
Cattle & CalvesCattle & Calves 95.495.4 97.197.1 1.664 +1%1.664 +1%
Cows & Heifers That Have Cows & Heifers That Have CalvedCalved
41.941.9 42.342.3 0.391 +1%0.391 +1%
Beef CowsBeef Cows 32.932.9 33.333.3 0.341 +1%0.341 +1%
Milk CowsMilk Cows 9.09.0 9.19.1 0.053 +1%0.053 +1%
Heifers 500 Pounds and overHeifers 500 Pounds and over 19.619.6 20.020.0 0.405 +2%0.405 +2%
For Beef Cow ReplacementFor Beef Cow Replacement 5.75.7 5.95.9 0.214 +4%0.214 +4%
For Milk Cow ReplacementFor Milk Cow Replacement 4.14.1 4.34.3 0.160 +4%0.160 +4%
Other HeifersOther Heifers 9.89.8 9.89.8 0.032 0%0.032 0%
Steers 500 Pounds and Over Steers 500 Pounds and Over 16.516.5 16.916.9 0.447 +3%0.447 +3%
Bulls 500 Pounds and OverBulls 500 Pounds and Over 2.22.2 2.32.3 0.044 +2%0.044 +2%
Under 500 Pounds Under 500 Pounds 15.315.3 15.615.6 0.376 +2%0.376 +2%
Cattle on FeedCattle on Feed 13.713.7 14.114.1 0.387 +3%0.387 +3%
FC Outside FeedlotsFC Outside Feedlots 27.727.7 28.228.2 0.468 +2%0.468 +2%
Percent Change From A Year Ago Percent Change From A Year Ago In U.S. Inventory, Jan. 1, 2006In U.S. Inventory, Jan. 1, 2006
1.04%
1.69%
0.41%
2.47%1.98%
0.27%0.33%
3.89%3.76%
0.59%
-6%
-4%
-2%
0%
2%
4%
6%
BeefCows
MilkCows
BeefCowRepl.
MilkCowRepl.
OtherHfrs.500+Lbs.
Steers500+lbs.
Bulls500 +Lbs.
Calves< 500Lbs.
CalfCrop
FCOF*
Per
cent
Chan
ge
from
a y
ear
ago
Beef Replacement Beef Replacement Heifers Jan 1, 1985-Heifers Jan 1, 1985-
20062006
6.46.2
6.0
5.8
5.5 5.6 5.5
5.75.9
5.65.65.5
6.5
6.1
5.6
5.45.35.35.2
5.25.1
5.5
4.04.24.44.64.85.05.25.45.65.86.06.26.46.66.8
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06
Million H
ead
Heifers As A Percent Of Heifers As A Percent Of Total Feedlot Placements, 1980-Total Feedlot Placements, 1980-
20052005
36%35%
32%32%
38%
35%35%
35%
36%
33%
37%
31%
30%
29%
31%
32%32%
32%
31%
33%
31%31%29%
32%
29%
25%
27%
29%
31%
33%
35%
37%
39%
41%
80 81 82 83 84 85 86 87 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04'05?
Year
Per
cent
U. S. Beef Production, 1975-2006U. S. Beef Production, 1975-2006
25.7
24.0
21.3
22.2
23.123.4
24.2
23.423.0
22.623.0
24.3
25.125.4
26.426.8
26.1
27.1
26.2
24.524.7
25.925.725.4
22.922.8
23.423.6
22.4
21.5
23.7
25.0
20
21
22
23
24
25
26
27
28
75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00'01'02'03'04'0506
Year
Bill
ion
Poun
ds
* Estimated
U.S. Average Cattle Carcass U.S. Average Cattle Carcass Weights, 1975-2005Weights, 1975-2005
602
631624 623
649657
668677681
698688
710705695700
723730738
758
739750
757
579
597607
635636 629
649
699
740
550
600
650
700
750
800
75 77 79 81 83 85 87 89 91 93 95 97 99 '01 '03 '05*
Year
Pounds
Factors affect carcass weights include genetics, marketing technology, corn prices, grid pricing, fed cattle prices, breakeven prices, etc.
U.S. Cattle Operations, U.S. Cattle Operations, Number by Year, 1975-Number by Year, 1975-
200520051.91.8
1.81.7
1.61.61.61.61.61.51.51.41.41.41.31.31.21.21.21.21.21.21.21.11.11.11.01.01.01.01.0
0
0.5
1
1.5
2
75 77 79 81 83 85 87 89 91 93 95 97 99 '01 '03 '05
Year
Cat
tler
Oper
atio
ns
(Millions)
U.S. Cattle Operations, U.S. Cattle Operations, Number by Size Group, Number by Size Group,
20052005
163,780 177,510
29,120
612,100
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
1-49 Hd 50-99 Hd 100-499 Hd 500+ Hd
Num
ber
of O
pera
tions
982,510 U.S. cattle operations, 2005
U.S. Cattle Operations & U.S. Cattle Operations & Inventory, Percent by Size Inventory, Percent by Size
Group, 2005Group, 2005
79%
21%
1-99 Hd 100+ Hd
23%
77%
1-99 Hd 100+ Hd
Cattle Operations Cattle Inventory
Cattle Situation and Cattle Situation and OutlookOutlook
Demand
Situation
U.S. Per Capita Meat U.S. Per Capita Meat Consumption,Consumption,
Retail Weight Basis, 1976-200Retail Weight Basis, 1976-20066
40
50
60
70
80
90
100
76 78 80 82 84 86 88 90 92 94 96 98 '00 '02 '04 '06
Year
Pounds
Per
Pers
on
Beef Pork Chicken
U.S. Per Capita Meat U.S. Per Capita Meat Consumption,Consumption,
Retail Weight Basis, 1976-200Retail Weight Basis, 1976-20066
150
160
170
180
190
200
210
76 78 80 82 84 86 88 90 92 94 96 98 '00 '02 '04 '06
Year
Pounds
Per
Pers
on
Total Pounds of Beef, Pork, & Chicken
U.S. Beef Imports and U.S. Beef Imports and Exports, Exports,
Billion Pounds, 1970-0Billion Pounds, 1970-066
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 '00 '02 '04 '06
Year
Billion P
ounds
Beef Imports Beef Exports
U.S. Beef Imports and U.S. Beef Imports and Exports, Exports,
Billion Dollars, 1976-0Billion Dollars, 1976-066
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
76 78 80 82 84 86 88 90 92 94 96 98 '00 '02 '04 '06
Year
Billion D
ollars
Beef Imports Beef Exports
Cattle Situation and Cattle Situation and OutlookOutlook
Cost of Productio
n
U.S. Cow-Calf Cash Expenses, U.S. Cow-Calf Cash Expenses, 1972-991972-99
$114
$162 $164$189
$231$252
$411
$488
$446
$254$265 $269 $265
$277
$267
$173
$137$148
$266$286$287
$456$479
$388$402 $383$412
$415
$0
$100
$200
$300
$400
$500
$600
72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 8990* 91 92 93 94 95 96 97 98 99
Year
Dollar
Per
Bre
d C
ow
*1990-99 estimates were based on a revised methodology.
Southeast Ammonium Nitrate Prices, Southeast Ammonium Nitrate Prices, 1970-01970-066
$65$74
$155$171
$130
$165
$187 $185$196
$172$158
$192
$236 $242
$222$210
$224
$280
$222
$277$294
$61$64
$269
$189$193
$144$138
$143
$249
$211
$182
$164 $180$178
$183
$0
$50
$100
$150
$200
$250
$300
$350
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 '00 '02 '04 '06*
Year
Dolla
r Per
Ton
Stocker Gross Margin, Alabama, Stocker Gross Margin, Alabama, October-April, 400# -750#, 1979-October-April, 400# -750#, 1979-
20020066
$83
$155
$194
$219
$199
$101
$206
$135
$197
$223
$133
$221
$159
$117
$91
$261
$160$174
$210
$107
$197
$248
$176
$194$188$199$196
$50
$100
$150
$200
$250
$300
79-80
81-82
83-84
85-86
87-88
89-90
91-92
93-94
95-96
97-98
99-00
01-02*
'03-04
'05-06
Avg.
Year
Dollar
Per
Head
Gross margin is feeder sale value minus stocker purchase value.Based on steers, med. & lrg., No. 1, Oct. to Apr., 400 to 750 pounds.
$40
$45
$50
$55
$60
$65
$70
$75
Jan-94
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
'Jan-01
'Jan-02
'Jan-03
'Jan-04
Jan-05
Year
Dollar
Per
Cw
t.
Source: KSU Cattle Return Series
Monthly Feeding Cost of GainMonthly Feeding Cost of Gain700 to 800 Lb. Steers in 700 to 800 Lb. Steers in
KansasKansas
Cattle Situation and Cattle Situation and OutlookOutlook
Market Prices
Alabama Feeder Calf Prices,Alabama Feeder Calf Prices,Steers, Med. & Lg., #1, 1990-Steers, Med. & Lg., #1, 1990-
20020066
$40
$60
$80
$100
$120
$140
$160
$180
J90 J91 J92 J93 J94 J95 J96 J97 J98 J99 J00 J01 J02 J03 J04 J05 J06
Year
Dollar
Per
Cw
t.
325# 425# 525# 625# 725#
Annual U. S. Beef Production, 2000-Annual U. S. Beef Production, 2000-0606
26.826.1
27.126.2
24.5 24.7
25.9
20
21
22
23
24
25
26
27
28
29
30
'2000 '2001 '2002 '2003 '2004 '2005 '2006*
Year
Billion P
ounds
*Estimated
Annual U.S. Beef Production &Annual U.S. Beef Production &Average Fed Beef Price, 2000-Average Fed Beef Price, 2000-
20062006
20
21
22
23
24
25
26
27
28
29
30
2000 2001 2002 2003 2004 2005 2006*
Year
Bill
ion
Po
un
ds
$60
$65
$70
$75
$80
$85
$90
Do
llars
Pe
r C
wt.
U.S. Beef Production Avg. Fed Beef Price
Quarterly U. S. Beef Production, Quarterly U. S. Beef Production, 2004-062004-06
5.8
6.36.4
6.1
5.7
6.2
6.6
6.2
6.1
6.76.8
6.3
5.0
5.2
5.4
5.6
5.8
6.0
6.2
6.4
6.6
6.8
7.0
'04-1 '04-2 '04-3 '04-4 '05-1 '05-2 '05-3 '05-4 '06-1* '06-2* '06-3* '06-4*
Year-Quarter
Bill
ion
Pou
nds
*Estimated (2004 -> 24.5B, 2005 -> 24.7B, 2006 -> 25.9B*)
Quarterly U. S. Beef Production Quarterly U. S. Beef Production & Average Fed Beef Price, & Average Fed Beef Price,
2004-20062004-2006
5.0
5.2
5.4
5.6
5.8
6.0
6.2
6.4
6.6
6.8
7.0
'04-1 '04-2 '04-3 '04-4 '05-1 '05-2 '05-3 '05-4 '06-1* '06-2* '06-3* '06-4*
Year-Quarter
Bill
ion
Po
un
ds
$76
$78
$80
$82
$84
$86
$88
$90
$92
Do
llar
Pe
r C
wt.
U.S. Beef Production Avg. Fed Beef Price
*Estimated
2006 Cattle Price Projections, 2006 Cattle Price Projections, $/Cwt.$/Cwt.
ItemItem First First Quarter Quarter
20062006
Second Second Quarter Quarter
20062006
Third Third Quarter Quarter
20062006
Fourth Fourth Quarter Quarter
20062006
KansasKansas
Fed CattleFed Cattle
Slaughter Wt.Slaughter Wt.$88-$91$88-$91 $83-$87$83-$87 $78-$82$78-$82 $79-$84$79-$84
AlabamaAlabama
725# Fdr. Cattle,725# Fdr. Cattle,
Med. & Lg., #1Med. & Lg., #1$100-$100-$103$103
$94-$99$94-$99 $92-$97$92-$97 $90-$95$90-$95
AlabamaAlabama
525# Fdr. Calves,525# Fdr. Calves,
Med. & Lg., #1Med. & Lg., #1$124-$124-$127$127
$118-$118-$123$123
$115-$121$115-$121 $114-$118$114-$118
These projections will be revised as new economic information is received and processed.
Cattle Situation and Cattle Situation and OutlookOutlook
Profit Potential
U.S. Cow - Calf Returns U.S. Cow - Calf Returns Over Cash Expenses, 1972-Over Cash Expenses, 1972-
9999
26
38
-22-43-39
-17
56
121
55
-5 -12-22
-18-11
12
5773
85
40 5031
15
-23
-79
-160
-72-51
-14
-$200
-$150
-$100
-$50
$0
$50
$100
$150
Dollars
Per
Bre
d C
ow
72 74 76 78 80 82 84 86 88 90 92 94 96 98 '00
Year
Source: USDA
Average Annual Cow-Calf Average Annual Cow-Calf ReturnsReturns
Over Cash Expenses, 1980-Over Cash Expenses, 1980-20042004
31
-45-42-71
-63-43
-24
51 4434
59 60
3342
-12
-59
-88
1710
45
8380
23
105
145
17
-$150
-$100
-$50
$0
$50
$100
$150
$200
Dollars
Per
Head
80 82 84 86 88 90 92 94 96 98 '00 '02 '04Avg.
Year
Source: Cattle-Fax
Average Annual Stocker CattleAverage Annual Stocker CattleReturns Over Cash Expenses, 1980-Returns Over Cash Expenses, 1980-
20020066
-12 -3
34
8
38
8 9
7243
2949
2826
49
-21-22
10
74
-30
4744
19
-20
170165
95
33
-$150
-$100
-$50
$0
$50
$100
$150
$200
Dolla
rs P
er H
ead
80 82 84 86 88 90 92 94 96 98 '00 '02 '04 '06* Avg.
YearSource: Cattle-FaxIncludes winter and summer grazing programs.
Monthly Returns for FinishingMonthly Returns for Finishing 700 to 800 Lb. Steers in Kansas 700 to 800 Lb. Steers in Kansas
Source: KSU Cattle Return Sales
-300
-200
-100
0
100
200
300
400
500
Jan-94
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
'Jan-01
'Jan-02
'Jan-03
'Jan-04
'Jan-05
Dollars
Per
Head
Average Annual Cattle Average Annual Cattle Feeding Returns, 1980-2004Feeding Returns, 1980-2004
Source: Cattle-Fax
-28
-75
2012 4
-48
28
99
34
3
40
-42
32 39
-49
17
-13
5
-84
49
10
-13-23
140
257
-100
-50
0
50
100
150
200
Dollars
Per
Head
80 82 84 86 88 90 92 94 96 98 '00 '02 04* Avg.
Cattle Situation and Cattle Situation and OutlookOutlook
Summary
Remarks
Cattle Situation and Cattle Situation and OutlookOutlook
Greed,Greed,
Fear, andFear, and
WeatherWeather
Alabama Feeder Calf Prices,Alabama Feeder Calf Prices,Steers, Med. & Lg., #1, 1990-Steers, Med. & Lg., #1, 1990-
20062006
$40
$60
$80
$100
$120
$140
$160
$180
J90 J91 J92 J93 J94 J95 J96 J97 J98 J99 J00 J01 J02 J03 J04 J05 J06
Year
Dollar
Per
Cw
t.
325# 425# 525# 625# 725#
Projected Profit/Loss By Cattle Industry SegmentsProjected Profit/Loss By Cattle Industry SegmentsDuring The Four Price Phases Of The Cattle Cycle*During The Four Price Phases Of The Cattle Cycle*
Price Phase*Price Phase* Cow- CalfCow- Calf StockerStocker FeedlotFeedlotUp CycleUp Cycle
(2000 thru 2006?)(2000 thru 2006?)Moderate-Moderate-
SignificantSignificant
ProfitsProfitsProfits/lossesProfits/losses Profits/LossesProfits/Losses
Downward TransitionDownward Transition
(2007 thru 2008?)(2007 thru 2008?)DecliningDeclining
Profitability,Profitability,
Profits/LossesProfits/Losses
Minor-Minor-SignificantSignificant
LossesLosses
Minor-Minor-
Significant Significant LossesLosses
Down CycleDown Cycle
(2009 thru 2010?)(2009 thru 2010?)SignificantSignificant
LossesLossesMarginal Marginal Profits/LossesProfits/Losses
Marginal Marginal Profits/LossesProfits/Losses
Upward TransitionUpward Transition
(2011 thru 2012?)(2011 thru 2012?)ImprovingImproving
Profitability,Profitability,
Profits/LossesProfits/LossesProfits/LossesProfits/Losses Profits/LossesProfits/Losses
The information in this chart is generalized based on the price phase of the cattle cycle. These projections will be revised as new economic information is received and processed.
What’s The What’s The Cattle Price Cattle Price
OutlookOutlookFor 2006For 2006
Dr. Walter Prevatt Dr. Walter Prevatt
Dr. Deacue FieldsDr. Deacue Fields
Extension EconomistsExtension Economists
Auburn University Auburn University
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