Download - WELCOME: BEEF ECONOMICS WEBINAR
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WELCOME: BEEF ECONOMICS WEBINAR• Audio Announcement: all lines are currently
muted and we will begin promptly at 1:30pm CST• Please select your audio now. • To dial the conference, select “Use Telephone” in
your audio pane and enter your unique audio pin. • Select “Use Mic & Speakers” to use VoIP audio.• Submit questions and comments via the Chat panel• Note: Today’s presentation is being recorded and
will be provided within 48 hours.
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May 14, 2013
Sponsored by:
Presenter: Dr. Glynn Tonsor, Kansas State University
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WEBINAR OVERVIEW
• Broad Economic Outlook Overview for Industry
• Note take-home points of “big picture” reports:– 2012 Cow-Calf Cost and Returns Estimates– 10-year breeding herd projections
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Overarching Current Economic Outlook• Supplies
– “Certain” Cattle Supplies (hd) – Less Certain Beef Supplies (lbs)
• Demand– Uncertain and Confused
• Weather Persistence or Recovery?– Corn planting growing concern – Drought management varies regionally
• Additional Excess Capacity Resolution?
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Economic Outlook Overview: Cow-Calf Expansion?• Feeders Available per Feeder in Feedlot: 3.41 in 1973; 2.43 in 2012
Source: USDA NASS Jan. 1 data; Tonsor tabulations
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Economic Outlook Overview: Cow-Calf Expansion?
1970s 1980s 1990s 2000s 2010s 1973 2012 2012 vs. 1973Cows & Heifers that have Calved 52,431 46,681 43,397 41,922 39,948 52,553 39,387 -13,1661000 Head
Calf Crop 47,208 42,068 39,226 37,298 35,096 49,194 34,279 -14,9151000 Head
All Cattle & Calves 122,156 108,284 99,676 96,121 92,444 121,539 90,769 -30,7701000 Head
January 1, All Cattle On Feed 13,053 11,686 12,755 14,118 13,926 14,432 14,121 -3111000 Head
Feedlot Inventory/Total Cattle Inventory 10.69% 10.79% 12.80% 14.69% 15.06% 11.87% 15.56% 3.68%Feedlot Inventory/Calf Crop 27.65% 27.78% 32.52% 37.85% 39.68% 29.34% 41.20% 11.86%Feeders Available per Feeder in Feedlot 3.62 3.60 3.08 2.64 2.52 3.41 2.43 -0.98
Source: USDA NASS Jan. 1 data; Tonsor tabulations
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Economic Outlook Overview: Cow-Calf Expansion?
• Feeders Available per Feeder in Feedlot: • 3.41 in 1973; 2.43 in 2012
• No July Cattle Inventory Report
• Pasture conditions worst in areas of attempted heifer retention
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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 CenterData Source: USDA-NASS, Compiled & Analysis by LMIC
Last year Cows % of Total10/23/11 14862 48.31%10/30/11 14185 46.11%05/06/12 6161 20.03%
This Year10/21/12 21009 70.50%10/28/12 21009 70.50%05/06/13 15674 52.60%
Beef Cows in stateswith 40% Poor to Very Poor
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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 CenterData Source: USDA-NASS, Compiled & Analysis by LMIC
CO, KS, MT, NE, ND, SD, & WY29.6% of Cows
34.3% of Retained Heifers(Jan. 2013)
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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-3105/06/13Livestock Marketing Information Center
Data Source: USDA-NASS, Compiled & Analysis by LMIC
AZ, CA, ID, NV, NM, OR, UT, & WA
10.4% of Cows 11.3% of Retained Heifers
(Jan. 2013)
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SOUTHERN PLAINS REGIONRANGE AND PASTURE CONDITION
Percent Poor and Very Poor, Weekly
10
20
30
40
50
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70
80
May Jul Sep
Percent
Avg.2007-112012
2013
G-NP-3305/06/13
Livestock Marketing Information CenterData Source: USDA-NASS, Compiled & Analysis by LMIC
OK & TX19.7% of Cows
16.4% of Retained Heifers(Jan. 2013)
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CORNBELT REGIONRANGE AND PASTURE CONDITION
Percent Poor and Very Poor, Weekly
0
10
20
30
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60
70
80
May Jul Sep
Percent
Avg.2007-112012
2013
G-NP-3405/06/13
Livestock Marketing Information CenterData Source: USDA-NASS, Compiled & Analysis by LMIC
IL, IN, IA, MI, MN, MO, OH, & WI
14.6% of Cows14.5% of Retained Heifers
(Jan. 2013)
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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 CenterData Source: USDA-NASS, Compiled & Analysis by LMIC
AL, AR, FL, GA, KY, LA, MS, NC, SC, TN, VA, & WV
24.6% of Cows 21.3% of Retained Heifers
(Jan. 2013)
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Do some regions have an economic advantage for expansion?
http://www.ers.usda.gov/data-products/commodity-costs-and-returns.aspx
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Do some regions have an economic advantage for expansion?
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Do some regions have an economic advantage for expansion?
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Do some regions have an economic advantage for expansion?
Allocated Costs: Opportunity costs of unpaid labor,
capital recovery, etc.
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Do some regions have an economic advantage for expansion?
Operating Costs: Feed (purchased, homegrown, grazed),
vet/medicine, utilities, etc.
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As of: 5/13/13’
http://www.agmanager.info/livestock/marketing/graphs/cattle/prices/default.asp
May FC: 5/13: $1364/12: $1413/13: $144
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Economic Outlook Overview : Stockers
• Historically high Values of Gain (VOG) – But also historically high Costs of Gain (COG)…
• Salina, KS 5/13/13 situation:– Buy 550 lb steer on 10/16/13 ($159)– Sell 750 lb steer on 1/15/14 ($148) {2.2 ADG}
• VOG: $117/cwt – http://www.beefbasis.com/ForecastingTools/ValueofGain/tabid/
1132/Default.aspx
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http://www.agmanager.info/livestock/marketing/graphs/cattle/prices/VOG.asp
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Economic Outlook Overview : Feedlots• Excess capacity concerns remain & are growing…
• Closeouts have been at historically high losses… – 12 month rolling avg. thru March 13’ -$173
• Watch response to shrinking available supplies…
– Is “feeding country moving north” ???
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Historical and Projected Kansas Feedlot Net Returns (as of 5/9/13’) (http://www.agmanager.info/livestock/marketing/outlook/newsletters/FinishingReturns/default.asp)
Representative Barometer for Trends in Profitability
March 13’: -$182/steer
June LC: 5/13: $1214/12: $1213/12: $1241/14: $130
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Quarterly Forecasts (LMIC: 04/28/13)% Chg. Average % Chg. Comm'l % Chg.
Year Comm'l from Dressed from Beef fromQuarter Slaughter Year Ago Weight Year Ago Production Year Ago
2012I 8,026 -3.5 782.7 1.5 6,282 -2.0II 8,309 -3.8 779.0 2.6 6,473 -1.3III 8,333 -4.6 790.3 2.5 6,586 -2.2IV 8,283 -1.3 793.5 2.6 6,572 1.3
Year 32,951 -3.3 786.4 2.3 25,913 -1.12013
I 7,779 -3.1 793.4 1.4 6,172 -1.7II 8,038 -3.3 785.1 0.8 6,311 -2.5III 7,856 -5.7 795.8 0.7 6,252 -5.1IV 7,620 -8.0 798.3 0.6 6,083 -7.4
Year 31,293 -5.0 793.1 0.9 24,818 -4.22014
I 7,253 -6.8 800.4 0.9 5,805 -6.0II 7,557 -6.0 791.7 0.8 5,983 -5.2III 7,428 -5.4 803.7 1.0 5,970 -4.5IV 7,198 -5.5 805.9 1.0 5,801 -4.6
Year 29,436 -5.9 800.3 0.9 23,559 -5.1
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Quarterly Forecasts (LMIC: 04/28/13)Live Sltr. % Chg. Feeder Steer Price
Year Steer Price from Southern PlainsQuarter 5-Mkt Avg Year Ago 7-800# 5-600#
2012I 125.30 13.8 154.25 182.41II 120.91 7.2 152.65 178.65III 119.69 4.9 141.82 150.57IV 125.54 2.9 146.50 161.42
Year 122.86 7.1 148.81 168.262013
I 125.51 0.2 142.41 170.13II 126-129 5.4 140-143 169-173III 123-127 4.4 143-148 168-173IV 127-132 3.2 144-150 166-174
Year 126-128 3.4 142-146 168-1732014
I 131-136 6.4 149-156 174-183II 132-138 5.9 154-162 178-188III 129-136 6.0 156-165 175-186IV 131-139 4.2 154-164 171-184
Year 132-136 5.5 155-160 177-183
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Economic Outlook Overview : Beef Demand• Demand less certain than supply currently
heightened need to monitor…
• Meat prices rising w/i basket of purchases…– as prices increase, public will require more quality…
• quality and value are in the eye of the beholder... debates on various technologies likely will intensify within
industries, with customers, and with consumers…– “Vote vs. buy” behavior differences important
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Yr-over-Yr increases in 10 of last 11 quarters (since Q3 of ’10); Q1.2013 = +1.57%
Actual Quantity & Price Changes:1990: 67.8 lbs (per capita cons.);$2.00 (real All Fresh price)2012: 57.3 lbs (per capita cons.);$2.04 (real All Fresh price)
Q1.2013: Per Capita Consumption = -1.71% (Year-over-Year) Real All Fresh Beef Prices = +3.78% ($4.91/lb nominal price) IF Real All Fresh Beef Prices +2.18% = 0% Demand Change
http://www.agmanager.info/livestock/marketing/Beef%20Demand/default.asp
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C-P-65A02/08/13
Livestock Marketing Information CenterData Source: Bureau of Economic Analysis & USDA-ERS, Compiled & Analysis by LMIC
2013, 54.8 lbs/capita, 0% Demand Change Case = $4.89/lb (+4.28% vs. 12’)
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Longer-term projections (as of Feb. 2013) http://www.usda.gov/oce/commodity/projections/index.htm
IF 2013 per capita consumption falls from 56.8 lbs to 54.8 lbs (-3.52%) AND IF 2013 All Fresh Beef price increases by +4.28% ($4.89/lb) = 0% Demand Change…
2021 Projection 1.1 million less than Feb. 12’…
2022 herd +12% (vs. 2012)
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• U.S. beef cow inventory: • 29.9 million in 2012 (was 37.9 million in 1983)• 29.8 million in 2013
• 29.5 million in 2014; net expansion starts in 2015 (29.6)• 33.5 million in 2022 • 34.5 million in 1997;
• Beef Production (billion lbs): 25.4 (1997), 25.7 (2012) • More beef/cow will continue = less # head throughput …
• If/when herd expands, likely NOT going back to 1980s levels …
Longer-term projections (as of Feb. 2013) http://www.usda.gov/oce/commodity/projections/index.htm
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• “Developing World” Changes (2012-2022)• Increasing global $, pop., & per capita meat cons.
• Africa & Middle East (3.8 - 4.9% GDP/yr)• Region accounts for >40% of meat import growth. Yet
arguably the least understood growth market…• Latin America (4.0% GDP/yr)
• Growing producer & consumer…• China (7.8% GDP/yr)
• Canada has access but US does not …• South Korea (3.5% GDP/yr – but 10x per capita inc. of China)
• US has access but Canada does not…
Longer-term projections (as of Feb. 2013) http://www.usda.gov/oce/commodity/projections/index.htm
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• “Developed World” Changes (2012-2022)• Declining global economic prevalence, populations, & per capita
meat consumption
• US/Canada (2.4 – 2.6% GDP/yr)• Different dependence on domestic consumption…
• Japan (1.1% GDP/yr): • Major meat importer currently (changes in age restriction a +)
but will exporters care less going forward?• Europe (1.7% GDP/yr):
• Will influential role as “food thought leader” persist?
Longer-term projections (as of Feb. 2013) http://www.usda.gov/oce/commodity/projections/index.htm
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Sponsored by:
Mark your calendars for remaining 2013 webinars (all begin at 1:30 pm CST):
August 13November 5
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What will U.S. beef cow herd size be in 10 years?
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How much “excess capacity” currently exist in U.S. feedlot industry?
1. None 2. 1-10%3. 11-20%4. 21-30% 5. Over 30%
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Questions typed by participants during the webinar presentation
which were not directly responded to are addressed in the remaining
subsequent slides.
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Sponsored by: