cattle market and outlook 28 us land grant universities · npb cme-group canadian consortium noble...

Jim Robb, Senior Economist, Livestock Marketing Information Center

Nov. 19, 2019

2019 Range Beef Cow Symposium, Mitchell, Neb. 1

Cattle Market and Outlook Range Beef Cow Symposium XXVI

November 18-20, 2019Mitchell, NE

James G. RobbSenior Economist

8 USDA Agencies:AMS (Market News), APHIS,ERS, GIPSA (Packers & Stock.),NASS, FAS, FCA, and WAOB

13 Associate Members:AFBFASINCBANPBCME-GroupCanadian ConsortiumNoble Research InstituteCoBankTCFATCUNWFCSDLRAgri-Food and Ag. Canada

28 US Land Grant Universities:

Topics: Economic Drivers, Outlook, and …• The Macro Economic Environment • Demand and ....

– Domestic U.S. Consumer Beef Demand

– Beef Exports and Imports

– Competing Meats -- Chicken and Pork

– Finney County Plant Fire

• Forage and Crops• Cattle Cycle Has Turned• More on Cattle Markets and Prices

– Where We Are

– Outlook

• Comments -- Marketing, Managing, and Financing

USDA Data Sources – NASS, AMS, FAS, and ERS

Forecasts by – LMIC

50

60

70

80

90

100

110

120

1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020

Index

DOMESTIC U.S. CONSUMER SENTIMENT Monthly, Index year 1966 = 100

Data Source: Thomson Reuters/University of Michigan

The early November reading on consumer sentiment was nearly

identical to last month's and the average 2019 level (95.6).

Consumers did voice a slightly more positive outlook for the

economy, which was offset by a slightly less favorable outlook for

their own personal finances. Spontaneous negative references to

tariffs were still mentioned by one-in-four consumers in early

November. References to the impact of impeachment on economic

prospects were virtually non-existent …

The strongest aspect of the current economy has been job and

wage gains. Although consumers have become somewhat more

cautious spenders, they see no reason to engage in the type of

retrenchment that causes recessions.

Demand and The Marketing Chain

50

55

60

65

70

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Pounds

US BEEF CONSUMPTIONPer Capita, Retail Weight, Annual

Data Source: USDA-NASS, Compiled & Analysis by LMIC


Nov. 19, 2019


100 99 101 103

111106

101 10094

88 90 90 92 94

102

110104 106 102 103

0

20

40

60

80

100

120

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Index Value

RETAIL ALL FRESH BEEF DEMAND INDEXThird Quarter, Using CPI 2000=100

Data Source: Bureau of Labor Statistics, USDA-ERS, Compiled & Analysis by LMIC

Exports and Imports

170

190

210

230

250

270

290

310

JAN FEB MAR APR MAY JUN JUL AUG SEP OC T NOV DEC

Mil. Pounds

US BEEF AND VEAL EXPORTSCarcass Weight, Monthly

Avg. 2013-17 2018 2019

Data Source: USDA-ERS & USDA-FAS

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1996 1999 2002 2005 2008 2011 2014 2017 2020

Bil. Pounds

US BEEF AND VEAL EXPORTSCarcass Weight, Annual


1.5

2.0

2.5

3.0

3.5

4.0

1996 1999 2002 2005 2008 2011 2014 2017 2020

Bil. Pounds

US BEEF AND VEAL IMPORTSCarcass Weight, Annual


-4

-2

0

2

4

6

8

10

12

14

1996 1999 2002 2005 2008 2011 2014 2017 2020

Percent

US BEEF AND VEAL NET IMPORTSAs a Percentage of Production, Carcass Weight, Annual

Data Source: USDA-ERS & USDA-FAS, Compiled and Forecasts by LMIC


Nov. 19, 2019


-4

-3

-2

-1

0

1

2

3

4

1992 1995 1998 2001 2004 2007 2010 2013 2016

Bil. $

US BEEF INDUSTRY NET EXPORT VALUESAnnual

Live Cattle Beef & Veal Hides & Skins Tal low, Grease & Var Meat Total

Data Source: USDA-FAS, Compiled & Analysis by LMIC

The Potential Headwind: Competition from Chicken and Pork

9.0

9.5

10.0

10.5

11.0

11.5

12.0

JAN-MAR APR-J UN JUL-SEP OC T-D EC

Bil. Pounds

Thousands

RTC BROILER PRODUCTIONUS, Quarterly

Avg. 2014/18 2019 2020 2021

Data Source: USDA-NASS, Forecasts by LMIC

500

525

550

575

600

625

650

675

700


Mil. Pounds

US BROILER EXPORTSRTC Weight, Monthly

Avg. 2013-17 2018 2019


70

90

110

130

150

170

190

JAN APR JUL OC T

Cents Per Pound

WHOLESALE CHICKEN BREAST PRICESSkinless/Boneless, Northeast, Truckload, Weekly

Avg. 2013-17 2018 2019

Data Source: USDA-AMS

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

1994 1997 2000 2003 2006 2009 2012 2015 2018

Head

PIGS PER LITTERQuarterly

Data Source: USDA-NASS


Nov. 19, 2019


350

375

400

425

450

475

500

525

550

575


Mil. Pounds

US PORK EXPORTSCarcass Weight, Monthly

Avg. 2013-17 2018 2019


-1250

-250

750

1750

2750

3750

4750

5750

6750

7750

1996 1999 2002 2005 2008 2011 2014 2017 2020

Mil. Pounds

US PORK NET EXPORTSCarcass Weight, Annual


0

5

10

15

20

25

1996 1999 2002 2005 2008 2011 2014 2017 2020

Percent

US NET PORK EXPORTSAs a Percentage of Production, Carcass Weight, Annual


55

65

75

85

95

105

115

JAN APR JUL OC T

$ Per Cwt.

PORK CUTOUT VALUE(Voluntary data prior to 2013), Weekly

Avg. 2013-17 2018 2019

Data Source: USDA-AMS, Compiled by LMIC

21.522.022.523.023.524.024.525.025.526.026.527.027.528.0


Bil. Pounds

Thousands

TOTAL RED MEAT & POULTRY PRODUCTIONUS, Quarterly

Avg. 2014/18 2019 2020 2021


2019 Annual Per Person Dis. 221.8Lb. Retail.

Plus 2.5 Lb. Y/O/Y

Largest 2004


Plus 2.4 Lb. Y/O/Y

Largest Since 2007’s


Plus 3.1 Lb. Y/O/Y

Largest Ever

August 9, 2019 – Finney County, Kansas: Beef Packing Plant


Nov. 19, 2019


195200205210215220225230235240245

JAN APR JUL OC T

$ Per Cwt.

BOXED BEEF CUTOUT VALUEChoice 600-900 Lbs., Carcass, Negotiated, Weekly

Avg. 2013-17 2018 2019


95

100

105

110

115

120

125

130

135

140

145

JAN APR JUL OC T

$ Per Cwt.

SLAUGHTER STEER PRICESSouthern Plains, Weekly

Avg. 2013-17 2018 2019


50

100

150

200

250

300

350

400

450

500

550


$ Per 1000 lbs

LIVE TO CUTOUT BEEF PRICE SPREADMonthly

Avg. 2013-17 2018 2019

Data Source: USDA-AMS & USDA-ERS, Compiled & Analysis by LMIC

0

20

40

60

80

100

120

JAN APR JUL OC T

Thou. Head

SATURDAY CATTLE SLAUGHTERFederally Inspected, Weekly

Avg. 2013-17 2018 2019

Data Source: USDA-AMS & USDA-NASS

425450475500525550575600625650675700

JAN APR JUL OC T

Thou. Head

CATTLE SLAUGHTERFederally Inspected, Weekly

Avg. 2013-17 2018 2019


130

140

150

160

170

180

190

JAN APR JUL OC T

$ Per Cwt.

MED. & LRG. #1 FEEDER STEER PRICES700-800 Pounds, Southern Plains, Weekly

Avg. 2013-17 2018 2019



Nov. 19, 2019


Forage and Crops

0

5

10

15

20

25

30

35

May Jul Sep

Percent

US RANGE AND PASTURE CONDITIONPercent Poor and Very Poor, Weekly

Avg. 2013-17 2018 2019

Data Source: USDA-NASS, Compiled & Analysis by LMIC

3.25

3.50

3.75

4.00

4.25

4.50

4.75

5.00

JAN APR JUL OC T

$ Per Bu.

SOUTHERN PLAINS CORN PRICESWeekly

Avg. 2013-17 2018 2019


1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

4

6

8

10

12

14

16

18

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

$ Per BushelBil. Bushels

US TOTAL CORN SUPPLY AND PRICECrop Year

Supply Price

Data Source: USDA-NASS, Compiled & Forecasts by LMIC


Nov. 19, 2019


80

100

120

140

160

180

200

JAN APR JUL OC T

$ Per Ton

DISTILLERS DRIED GRAIN PRICESChicago, Illinois, Weekly

Avg. 2013-17 2018 2019


100

110120

130140

150160170

180190

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

Mil. Tons

US ALL HAY SUPPLYCrop Year

Production May 1 Stocks


Cattle

95

105

115

125

135

145

JAN APR JUL OC T

$ Per Cwt.

SLAUGHTER STEER PRICES5 Market Weighted Average, Weekly

Avg. 2013-17 2018 2019


130

140

150

160

170

180

190

JAN APR JUL OC T

$ Per Cwt.

MED. & LRG. #1 FEEDER STEER PRICES700-800 Pounds, Southern Plains, Weekly

Avg. 2013-17 2018 2019


140

150

160

170

180

190

200

210

220

JAN APR JUL OC T

$ Per Cwt.

MED. & LRG. #1 STEER CALF PRICES500-600 Pounds, Southern Plains, Weekly

Avg. 2013-17 2018 2019



Nov. 19, 2019


35

45

55

65

75

85

JAN APR JUL OC T

$ Per Cwt.

CUTTER COW PRICESNational Direct, Live, Weekly

Avg. 2013-17 2018 2019


60

70

80

90

100

110

120

130

140

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Mil. Head

TOTAL CATTLE INVENTORY BY CYCLEU.S., January 1

1938-49 1949-58 1958-67 1967-791979-90 1990-04 2004-14 2014-19


33

34

35

36

37

38

39

40

41

1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019

Mil. Head

CALF CROPJuly Estimates, U.S., Annual


40

45

50

55

60

65

70

75

JAN APR JUL OC T

Thou. Head

BEEF COW SLAUGHTERFederally Inspected, Weekly

Avg. 2013-17 2018 2019


120

130

140

150

160

170

180

190

200

210

220

JAN APR JUL OC T

Thou. Head

HEIFER SLAUGHTERFederally Inspected, Weekly

Avg. 2013-17 2018 2019


80

90

100

110

120

130

140

1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019

Mil. Head

JANUARY 1 TOTAL CATTLE INVENTORYU.S., Annual



Nov. 19, 2019


5.5

5.7

5.9

6.1

6.3

6.5

6.7

6.9

7.1


Bil. Pounds

Thousands

COMMERCIAL BEEF PRODUCTIONUS, Quarterly

Avg. 2014/18 2019 2020 2021


2019Annual Per Person Dis. 57.2 Lb. Retail.

0.0 Lb. Y/O/Y



- 0.6 Lb. Y/O/Y



- 1.2 Lb. Y/O/Y


2015 = 54.0

90

100110

120130

140150160

170180

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

$ Per Cwt

CHOICE STEER PRICE vs BREAKEVENCattle Feeding, S. Plains, Monthly

Steer Price Breakeven Projected Breakeven

Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC

Latest Data: October 2019

50

75

100

125

150

175

200

225

250

275

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021

$ Per Cwt

AVERAGE ANNUAL CATTLE PRICESSouthern Plains

500-600lb Steer Calves 700-800lb Feeder Steers Fed Steers

Data Source: USDA-AMS, Compiled and Forecasts by LMIC

Price Comparisons: Nebraska/Southern PlainsEarly Novemeber Weekly Auctions (Conmined) Steers, 500- to 600-pounds, $ Per Cwt.

Year Nebraska S. Plains NE Premium2015 220.45 207.78 12.672016 140.65 138.42 2.232017 183.43 175.06 8.372018 174.47 164.16 10.312019 161.76 156.02 5.74

Data Source: USDA-AMS (Market News Division)NE Combined versus Ok and KS Combined Average

155

160

165

170

175

2017 2018 2019 2020 2021

$ Per Cwt

AVERAGE CALF PRICES500-600lb Steer Calves, Southern Plains

Annual Average 4th Quarter

Data Source: USDA-AMS, Compiled and Forecasts by LMIC

0

100

200

300

400

500

600

700

800

900

1000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

$ Per Cow

ESTIMATED AVERAGE COW CALF COSTSTotal Cash Cost Plus Pasture Rent, Annual

Data Source: USDA & LMIC, Compiled by LMIC


Nov. 19, 2019


-100

0

100

200

300

400

500

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

$ Per Cow

ESTIMATED AVERAGE COW CALF RETURNSReturns Over Cash Cost (Includes Pasture Rent), Annual

Data Source: USDA & LMIC, Compiled by LMIC

Marketing, Managing, and Financing (Cow-Calf Perspective from an Economist)

• Marketing ...– What Did We Learn from DTP, 9-11, BSE, and KS Plant Fire– Beyond the Ranch Gate it’s a Margin Business (money is made on

arbitrage opportunities)• Managing …

– Each Year -- Sequential Decision Making (Especially Bad and Good Forage Years)

– Do I Manage by Cattle Cycles? – Don’t Bet A Lot On It• Financing …

– Financial Statements – Cash Flow is Looking Ahead and Links to your Marketing Plan

– What to Do When You Make Money?

Captive Supply

Packer Ban

Monetary Policy

Imports

CFTC

APAImmigration Policy and

Legislation

LRP

Risk Mgmt

Cost of Production

EXCHANGE RATE

Food

Saf

ety

Horse Harvesting

GE Animals Af

rican

Sw

ine

Feve

r (A

SF)

Grades & Standards

Animal Rights

GIPSA- Rule

Transportation Regs

Phytosanitary

Crop

Insu

ranc

e

Formula Pricing

ABF (Antibiotic Free)

Issues, Issues, Issues….

QUALITY

AMA’s

Packing Plant Capacity and investment

Beta-agonists

Sustainability

Price Discovery

PEDv

Price VolatilityCultured (Clean/Fake) Meat/Poultry

Retaliatory Tariffs Plant-Based Substitutes

USMCA

CPTPPBio Security

Dairy X Steers

Market Power

Thank You!www.lmic.info

cattle market and outlook 28 us land grant universities · npb cme-group canadian consortium noble...

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