cattle market situation and outlook -...
TRANSCRIPT
1
Cattle Market Situation and Outlook
Presented by Randy Blach
CattleFax
800-825-7525
May 5, 2010
2
S & P 500
3
4
May-75, 9.0%
Nov-82, 10.8%
Jun-92, 7.8%
Jun-03, 6.3%
Feb-10, 9.7%
2
3
4
5
6
7
8
9
10
11
12
Jan
-67
Ap
r-6
9
Jul-
71
Oct
-73
Jan
-76
Ap
r-7
8
Jul-
80
Oct
-82
Jan
-85
Ap
r-8
7
Jul-
89
Oct
-91
Jan
-94
Ap
r-9
6
Jul-
98
Oct
-00
Jan
-03
Ap
r-0
5
Jul-
07
Oct
-09
Pe
rce
nt
Months
U.S. Unemployment Rate, 1967 - Current
Source: BLS
5
Continued high unemployment means slow recovery for
foodservice industry
• “Total foodservice industry traffic has experienced its steepest decline in 28 years.”
Food service business has recently shown signs of stability, but significant growth is not yet apparent.
Source: NPD Group
6
100
111
116114
109
121124
120
117116
109
98
80
85
90
95
100
105
110
115
120
125
130
135
140
98 99 00 01 02 03 04 05 06 07 08 09
IND
EX
YEARS
Wholesale Beef Demand IndexJan - Dec
Source: USDA, KSU, CattleFaxbased on deflated prices
Demand loss devalued cattle prices
$140 bucks a head during 2009
7
-12% -9%
-2%
+4%
80
85
90
95
100
105
110
115
120
125
130
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Ind
ex
Months
Wholesale Beef Demand Index(3-Month Rolling Index)
Source: CattleFax, KSU, USDA
Base Year = 1998Mar-Apr estimated
2008
2009
2007
2010
Jan, Feb, Mar demand down 2% vs last year.Feb, Mar, Apr demand estimated up 4%,assuming fed price averages $99 in April.
If the market is seasonal for the rest of the yearbased on these spring highs and net beef supplyis down 3%, demand will be up 2% for the year.
8
Hide & Fed
Composite Offal Steer
Cutout Value Price
$158 $10.20 $95.52
$155 $10.20 $93.90
$152 $10.20 $92.28
$149 $10.20 $90.66
*Composite cutout tims 54% plus hide & offal value equals fed price
+0%
2010 vs 2009Demand Change
Wholesale Beef
+6%
+4%
+2%
10
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
90 92 94 96 98 00 02 04 06 08 10 F
$ P
ER
HE
AD
Year
Cattle Production Costs - TOTAL
Packing cost
Feeding cost
Growing, 200#
Cash cow/calf costs
11
30
31
32
33
34
35
36
37
38
39
40
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10
Mil
lio
n H
ea
d
YEARS
Beef Cow Inventory
Source: USDAProjected 2011
F
Down 126,000 head (0.5%)
Declined 12 of last 14 years
Smallest since1963
12
25
27
29
31
33
35
37
39
PE
RC
EN
T
YEARS
Percent Heifer Placements
EXPANSION
CONTRACTION
EXPANSION
Source: CattleFax
13
0
10
20
30
40
50
60
Million2010 Global Beef Cow Herd
Source: Forecasts, USDA/FAS, CattleFax
15
26.0
19.7
17.6
12.7
7.55.8
4.63.7
2.8 2.7
0
5
10
15
20
25
30
Bil Lbs, cwe2009 Global Beef Production
Source: Forecasts, USDA/FAS, CattleFax
16
2.1
1.4
1.1
0.6
0.4
0.0
-0.4-0.6 -0.6 -0.7
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
Bil Lbs, cwe2009: 5-Yr Change in Beef Production
Source: Forecasts, USDA/FAS, CattleFax
17
Global beef production down for
the 3rd year in a row
18
19
Source: USDA
0
10,000
20,000
30,000
40,000
50,000
60,000H
EA
D
WEEK
U.S. Feeder Imports (Canada+Mexico)3-yr avg (00, 01, 02) 2009 2010
YTD Total = 301,974 (-44,019; -13%)
20
0
5,000
10,000
15,000
20,000
25,000
1/5 3/5 5/5 7/5 9/5 11/5
HE
AD
WEEK
U.S. Imports of Slaughter Strs/Hfrs from Canada
2008 2009 2010
YTD Total = 184,414 (+24,127; +15%)
21
22
23
24
-60
-50
-40
-30
-20
-10
0
10
209
/9
9/3
0
10
/21
11
/11
12
/2
12
/23
1/1
4
2/4
2/2
5
3/1
8
4/8
4/2
9
5/2
0
6/1
0
7/1
7/2
2
8/1
2
Po
un
ds
WEEK
Cumulative Change in Carcass Weights Starting in September - Weather Years
Long Term AVG 87/88 92/93 '00/01 '06/07 '09/10
Still on pace to be down 60lbs from the high at 870lbs.
25
470
490
510
530
550
570
590
610
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Mill
ion
Po
un
ds
Weekly Average Net Beef Supply
5-Yr Avg
2009
2010
26
61.1
58.7
50
55
60
65
70
75
80
85
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10
Po
un
ds
YEARS
Per Capita Net Beef Supply
Source: USDAProjected 2009-2010
2009 F 61.1 lbs2010 F 58.7 lbsSmallest since 1952
27
-21%
2%
24%
-23%
-9%
-17%
-30%
-20%
-10%
0%
10%
20%
30%
Broiler
ExportsPork
ExportsBeef
ExportsBeef
ImportsCattle
ImportsHog
Imports
Year-To-Date U.S. Trade Data Through February 2010
Source: U.S. Dept of Commerce, USDA/ERS
28
29
160
170
180
190
200
210
220
230
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10
Pou
nd
s
Years
Per Capita Net Meat & Poultry Supplies
Source: USDA
F2010 204.7 lbs,down 2.8 lbsDown 15 lbs from peak in 2006
5862667074788286909498
102106110114
1/8
/00
7/8
/00
1/8
/01
7/8
/01
1/8
/02
7/8
/02
1/8
/03
7/8
/03
1/8
/04
7/8
/04
1/8
/05
7/8
/05
1/8
/06
7/8
/06
1/8
/07
7/8
/07
1/8
/08
7/8
/08
1/8
/09
7/8
/09
1/8
/10
7/8
/10
$/C
WT
WEEKS
CattleFax Fed Steer Price
Old Range
New Range
Market consolidating at low end ofa higher range
Major Demand Loss
31
32
70
74
78
82
86
90
94
98
102
106
110
(10,000)
4,000
18,000
32,000
46,000
60,000
74,000
88,000
102,000
116,000
130,000
144,000
$/C
WT
Co
ntr
acts
Weeks
Non-Commercial (spec. funds) Net Long Position vs Weekly Live
Cattle Close
Non Comm Net Long Weekly Live Cattle Close
Source: CME and CFTC - Futures & Options Combined
-NC net long position increased 7,393 contracts to 139,469.
-Total open interest (including options) was up 17,529, at 440,368 still below record high.
33
35
376,742
353,486
218,505
160,932
128,315
202465
177254160667
8285296645
322,873 317,661301,155
132,275
180,784
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Apr May Jun Jul Aug
He
adForward Contract Cattle
2008 2009 2010
36
37
Feeder Cattle
Major Bottoms
38
-
10,000
20,000
30,000
40,000
50,000
60,000 C
on
trac
ts
Weeks
Total Feeder Cattle Open Interest
Source: CME and CFTC -Futures & Options Combined
39
$75.00
$79.27
$83.55
$87.82
$92.09
$96.36
$100.64
$104.91
$109.18
$113.45
$117.73
$122.00
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
Pe
rce
nta
ge
Weeks
Feeder Cattle - Funds Net Long Position as a % of Total Open Interest
Non Comm Net Position as % of Total OI Weekly Feeder Cattle Close
Net Long (+)
Net Short (-)
Source: CME and CFTC - Futures & Options Combined
40
41
42
40
60
80
100
120
140
160
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
$/C
WT
Years
550 LB Steer Calf Price
Source: CattleFax2010-2014 projected
Cycle LowsCycle Lows
Cycle Lows
43
44
Spot Corn Price
Low end of Range $3.00-3.20
High end of Range
$4.00-$4.20
45
46
Questions
CattleFax
800-825-7525
www.CattleFax.com