economic outlook of beef cattle - university of...
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Economic Outlook of Beef Cattle
Stan Bevers
Professor & Ext. Economist
Texas A&M AgriLife Extension Service
Vernon, Texas
University of Florida Beef Cattle Short Course
Gainesville, Florida
May 4, 2016
“Experts often possess more data than judgement.”
Mr. Colin PowellFormer US Secretary of StateRetired Four Star General, US ArmyStatesman and author
30,000 Foot View of the Industry
U.S. Beef Cow InventoryJanuary 1
25
30
35
40
45Million Head
BEEF COWS THAT HAVE CALVEDJANUARY 1, 2016(1000 Head)
Alaska 4.0
Hawaii 72.8
U.S. Total 30,330.8
223
534
625
217
513
325
180
1486
704
772
425
904
1690
1852
1488
1953
4290
350
940
1912
893
452
270
396 196 284
1021
896
500 673 505
915
175
363
629201
180
1,000 to 4,365
500 to 1,000
250 to 500
100 to 250
0 to 100
118 110
BEEF COWS THAT HAVE CALVEDJANUARY 1, 1980(1000 Head)
Alaska 2.4
Hawaii 83.0
U.S. Total 36,983
383
646
869
295
648
303
258
1427
621
853
630
962
1520
1950
1714
2160
5585
560
1746
2270
1042
674
248
699 515
131
430
1106
948
901 843 750
1173
284
404
710241
175
85
1,000 to 5,585
500 to 1,000
250 to 500
100 to 250
0 to 100
CHANGE IN BEEF COW INVENTORYJANUARY 1, 1980 TO JANUARY 1, 2016(1000 Head)
Alaska 1.6
Hawaii -10.2
U.S. Total -6,643
-160
-112
-78
-78 -205
-226
-207
-1,295
-210
-358
-149
-222
-303 -319
-85
-52
-401 -245
-258
-109
-41
-250k plus
-100k to -250k
-50k to -100k
-1 to -50k
Increased
-244
-81
-170
-135
-806-98
-58
-146
-81
U.S. Calf Crop
25
30
35
40
45
50Million Head
So Then, What Happened to Lower
Feedlot Numbers and Being Current?
9.0
9.5
10.0
10.5
11.0
11.5
12.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Mill
ion
He
adCattle on Feed2014 2015 2016 2011-15
1260
1270
1280
1290
1300
1310
1320
1330
1340
1350
1360
1370
1380
1390
1400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Po
un
ds
FI Slaughter Weights2014 2015 2016 2011-15
Daily Livestock Report, November 12, 2015
760
780
800
820
840
860
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Po
un
ds
FI Carcass Weights2014 2015 2016 2011-15
760
780
800
820
840
860
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Po
un
ds
FI Carcass Weights2014 2015 2016 2011-15
28.7 lbs.
Cattle Slaughter/Carcass Weights
On Feed Inventories& Slaughter Weights
1250
1275
1300
1325
1350
1375
1400
9.5
10.0
10.5
11.0
11.5
12.0
12.5
Jan
Ap
rJu
lO
ctJa
nA
pr
Jul
Oct
Jan
Ap
rJu
lO
ctJa
nA
pr
Jul
Oct
Jan
Ap
rJu
lO
ctJa
nA
pr
Jul
Oct
On Feed Slaughter Weight
2011 2012 2013 2014 2015 2016
What Happened to Lower Feedlot Numbers and Being Current?
• It’s not a loss until you sell
• Renegotiation of bank loans
• Cost of gains were cheap in the MW
• Cost to maintain a high occupancy rate
1.25
1.50
1.75
2.00
2.25
2.50
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Mill
ion
He
ad
Cattle on Feed - Placements2014 2015 2016 2011-2015
1.25
1.50
1.75
2.00
2.25
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Mill
ion
He
ad
Cattle on Feed - Marketings2014 2015 2016 2011-15
Total Meat Supplies
U.S. Commercial Beef ProductionBillion Pounds
20
21
22
23
24
25
26
27
28
USDA-WASDE
U.S. Commercial Pork ProductionBillion Pounds
12
14
16
18
20
22
24
26
USDA-WASDE
U.S. F.I. Broiler ProductionBillion Pounds
10
15
20
25
30
35
40
45
USDA-WASDE
Red Meat and Poultry in Cold StorageCombined in Refrigerated Warehouses
1,800
1,900
2,000
2,100
2,200
2,300
2,400
2,500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Mill
ion
Po
un
ds
5 Year Average 2015 2016
USDA-NASS
Demand for Beef
Retail Beef Prices (Monthly)
350
375
400
425
450
475
500
525
550
575
600
625
650
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
$ Per Cwt
All Fresh Choice
10097
9187 87
8481
77 7881 80 81
84 83
9188
85 8581
76 75 7679 81
86
93
0
10
20
30
40
50
60
70
80
90
100
Ind
ex
Annual Retail All Fresh Beef Domestic Demand Index1990-2015
Beef Imports/Exports
0
500
1000
1500
2000
2500
3000
3500
4000
Mill
ion
Po
un
ds
Imports Exports
US Dollar Index
70
80
90
100
110
120
Beef Imports/ExportsSince 2003 BSE
0
500
1000
1500
2000
2500
3000
3500
4000
Mill
ion
Po
un
ds
Imports Exports
Feed Costs
US Hay Stocks (on Dec. 1)Million tons
0
20
40
60
80
100
120
140
US Corn Supply & Demand
0
3
6
9
12
15
18
21
24
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Perc
en
t
Millio
n B
us
hels
Production Imports Domestic Use Exports Ending Stocks S/U Ratio
As of April 12, 2016, USDA-WAOB
Ten Year Average = 1.418; 2015/16 Projections = 1.862
US Corn Supply & Demand
0
3
6
9
12
15
18
21
24
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Perc
en
t
Millio
n B
us
hels
Production Imports Domestic Use Exports Ending Stocks S/U Ratio
As of April 12, 2016, USDA-WAOB
Ten Year Average = 1.418; 2015/16 Projections = 1.862
World Corn Supply & Demand
10
13
16
19
22
25
28
31
34
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Perc
en
t
Millio
n B
ush
els
Production Use Ending Stocks S/U Ratio
As of April 12, 2016, USDA-WAOB
Ten Year Average = 5.653; 2015/16 Projections = 8.224
Cash Corn Price
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
$5.50
$6.00
$6.50
$7.00
$7.50
$8.00
$8.50
2011 2012 2013 2014 2015 2016
Cattle & Beef Prices
91
94
97
100
103
106
109
$115
$125
$135
$145
$155
$165
$175
2015 2016 5year 2014
Slaughter Steer Prices
Cattle Fax Data
From March 2015 to EOY15, slaughter steers lost $700/head in value.
90
95
100
105
110
$125
$155
$185
$215
$245
2015 2016 5 Year
750 Lbs Steer Prices
Cattle Fax Data
From March 2015 to October 2015, feeder steers lost $600/head in value.
CME Feeder Cattle Index650 – 849 pound steers
$100
$150
$200
$250
2012 2013 2014 2015
450 Lbs Steer Prices
Cattle Fax Data
85
90
95
100
105
110
115
$150
$180
$210
$240
$270
$300
$330
2015 2016 5 Year
$1,400/head
$950/head
Utility Cow Prices
Cattle Fax Data
85%
90%
95%
100%
105%
110%
115%
$50
$65
$80
$95
$110
$125
$140
2015 2016 5 Year
Boxed Beef Prices
Cattle Fax Data
90%
95%
100%
105%
110%
$165
$190
$215
$240
$265
2015 2016 5 Year
What Does All of This Mean to You?
2016 Actual/Futures Prices
100.00
125.00
150.00
175.00
200.00
225.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
550 750 750 P Live Live P
$-
$200
$400
$600
$800
$1,000
$1,200
$1.00
$1.25
$1.50
$1.75
$2.00
$2.25
$2.50
2016 2017 2018 2019 2020
Per Head Local Weaned Calves 600-650 OKC Steers
Cattle Price ProjectionsUSDA 2016 Agricultural Outlook Conference
Long Term Projections
Summary• Peak prices in 2014.• Expected prices to slowly decline beginning in
2015;– However, October 2015 through April 2016 was very
problematic.– Beef market continues to work itself out of this
• Feed (corn & hay) should be plentiful.• Beef demand continues to be strong• Beef exports being hampered by strength of the
US dollar, but may be changing.• Longer term, expect lower prices for the next
three years; question is where is the bottom?
Questions/Comments
Stan Bevers
Texas AgriLife Extension Service
940 552-9941 ext. 231
http://agrisk.tamu.edu