ron plain extension economist university of missouri-columbia
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Stocker Cattle Outlook. February 2009. Ron Plain Extension Economist University of Missouri-Columbia. Source: LMIC. Source: LMIC. March 2008 Corn Futures. A dime increase in the price of corn reduces the value of feeder cattle by $6-9 per head. January 2008 Feeder Cattle Futures. - PowerPoint PPT PresentationTRANSCRIPT
Ron PlainExtension Economist
University of Missouri-Columbia
Stocker Cattle OutlookFebruary 2009
Choice Steer Price & BreakevenS. Plains Cattle Feedlots, Monthly
75
80
85
90
95
100
105
110
115
2004 2005 2006 2007 2008 2009
$ Per Cwt
Steer Price Breakeven Projected Breakeven
Source: LMIC
Average Returns to Cattle FeedersFeeding 725 Lb. Steers, S. Plains, Monthly
-175
-125
-75
-25
25
75
125
175
225
275
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
$ Per Head
Source: LMIC
March 2008 Corn Futures
January 2008 Feeder Cattle Futures
A dime increase in the price of corn reduces the value of feeder cattle by $6-9 per head
70
80
90
100
110
120
130
140Ja
n
Feb
Mar
Apr
May Ju
n
Jul
Aug
Sep Oct
Nov
Dec
$/cw
t
300-400 lb
400-500 lb
500-600 lb
600-700 lb
700-800 lb
1100-1300
Monthly Average Steer Prices,Oklahoma City, 1998-2007
5 Years of High Fed Cattle Prices
Choice 1100-1300 Lb. SteersYield Grade 2-4, Nebraska Direct
50
55
60
65
70
75
80
85
90
95
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08
$/cw
t
2009 prices are expected to be down
500-550 Lb. SteersMedium & Large #1, Oklahoma City
50
60
70
80
90
100
110
120
130
140
1987 1990 1993 1996 1999 2002 2005 2008
$/cw
t
U.S. Cattle Inventory, 1886-2009
40
50
60
70
80
90
100
110
120
130
140
1886
1891
1896
1901
1906
1911
1916
1921
1926
1931
1936
1941
1946
1951
1956
1961
1966
1971
1976
1981
1986
1991
1996
2001
2006
Mil. Head
Source: USDA/NASS
U.S. Cattle Inventory, January 1
60
70
80
90
100
110
120
130
140
1941 1946 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006
Mil. Head
2009: 94.5 million head, Down 1.6% Lowest inventory since 1959
January 2009 Cattle Inventory Percent of year earlier
All Cattle & Calves 98.4Beef Cows 97.6Dairy Cows 100.8Beef Replace. Heifers 97.9Dairy Replace. Heifers 99.9Other Heifers 98.5Steers 500 lbs & up 97.7Calves under 500 lbs 98.8
U.S. Calf Crop, 1950-2009
34
36
38
40
42
44
46
48
50
52
54
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Mill
ion
He
ad
2008: 36.1 million head, Down 1.8%
Feeder Steer vs. Fed Steer Prices700-800 Lbs. Minus Slaughter Steer, S. Plains, Weekly
0
5
10
15
20
25
30
JA
N
AP
R
JU
L
OC
T
$ per cwt.Avg. 2002-06200720082009
Livestock Marketing Information Center
Beef Cow SlaughterFederally Inspected, Weekly
35
40
45
50
55
60
65
70
75
80
85
Ja
n
Ap
r
Ju
l
Oc
t
Thou. Head
2005 2006 2007 2008 2009
2008 beef cow slaughter was up 12.3%
January Cattle on Feed Report
• Steers on feed down 7.5%
• Heifers on feed down 6.4%
Beef Trade
U.S. Beef Imports & Exports
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,0001
98
0
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
Mill
ion
Pou
nd
s
Imports Exports
Exchange Rate: Can $ Per US $
0.90
1.00
1.10
1.20
1.30
1.40
1.50
1.60
1.70Q
1 90
Q1
95
Q1
00
Q1
05
U.S. Beef Imports & Exportsas % of U.S. Production, Monthly
0
2
4
6
8
10
12
14
16
18
20
2002
--A
pr Jul
Oct
2003
--A
pr Jul
Oct
2004
--A
pr Jul
Oct
2005
--A
pr Jul
Oct
2006
--A
pr Jul
Oct
2007
--A
pr Jul
Oct
2008
--A
pr Jul
Oct
Percent
Imports
Exports
U.S. Beef Production, Exports & Imports million pounds, YTD, 2007 & 2008
Jan-Dec 2007
Jan-Dec 2008
Percent Change
U.S. beef production
26,420.8 26,564.6 + 0.54%
U.S. beef exports 1,434.0 1,888.2 + 31.68%
U.S. beef imports 3,052.2 2,537.9 - 16.85%
Production -exports + imports
28,039.0 27,214.3 - 2.94%
U.S. Beef Exports, Jan-Dec 08
Change from Year Ago
Country 000 lbs Percent
Mexico 62,920 + 10.73%
Canada 49,676 + 14.65%
Japan 71,677 + 44.96%
Vietnam 80,056 +191.21%
Taiwan 14,713 + 20.82%
Hong Kong 154 + 0.48%
S Korea 74,177 + 95.20%
TOTAL 454,262 + 31.68%
U.S. Beef Exports to Major MarketsCarcass Weight, Monthly
0
20
40
60
80
100
120
2001 2002 2003 2004 2005 2006 2007 2008
Mil. Pounds
Japan
Canada
Mexico
South Korea
Cattle Imports
U.S. Monthly Cattle Imports
0
50,000
100,000
150,000
200,000
250,00020
02
AP
R
JUL
OC
T
2003
Ap
r
Jul
Oct
2004
Ap
r
Jul
Oct
2005
Ap
r
Jul
Oct
2006
Ap
r
Jul
Oct
2007
Ap
r
Jul
Oct
2008
Ap
r
Jul
Oct
Head
Canada
Mexico
Beef Demand
Change in Domestic Beef DemandBase Elasticity = -0.75
-10
-5
0
5
10
1520
02 Apr Ju
lO
ct20
03 Apr Ju
lO
ct20
04 Apr Ju
lO
ct20
05 Apr Ju
lO
ct20
06 Apr Ju
lO
ct20
07 Apr Ju
lO
ct20
08 Apr Ju
lO
ct
% C
hang
e Y
ear A
go
Choice Minus Select Beef PricesCarcass Cutout Value 600-900 Lbs., Weekly
0
2
4
6
8
10
12
14
16
18
JAN APR JUL OCT
$ Per Cwt.Avg. 2002-06
2007
2008
2009
Livestock Marketing Information Center
Retail Price of Choice Beef
380
390
400
410
420
430
440
450
460
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cen
ts P
er P
ou
nd
2005
2006
20072008
Beef Supply
Steer Slaughter WeightFederally Inspected, Weekly
780
790
800
810
820
830
840
850
860
870
Ja
n
Ap
r
Ju
l
Oc
t
Thou. Head2006
2007
2008
2009
Cattle on FeedLarge U.S. Feedlots, Monthly
9.5
10.0
10.5
11.0
11.5
12.0
12.5
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Mil. Head
2007
2008
2009
Boxed Beef Cutout ValueChoice 600-900 Lbs. Carcass, Weekly
125
135
145
155
165
175
185
JA
N
AP
R
JU
L
OC
T
$ Per Cwt.Avg. 2002-06
2007
2008
2009
Livestock Marketing Information Center
Steer Hide and Offal ValueLive Animal Basis, Weekly
5.00
6.00
7.00
8.00
9.00
10.00
11.00
12.00
13.00
JAN
AP
R
JUL
OC
T
$ Per Cwt. Avg. 2002-06200720082009
Livestock Marketing Information Center
Slaughter Steer Prices5 Market Weighted Average, Weekly
75
80
85
90
95
100
105
JA
N
AP
R
JU
L
OC
T
$ Per Cwt.Avg. 2002-06
2007
2008
2009
Livestock Marketing Information Center
Med. & Large #1 Feeder Steer Prices700-800 Pounds, Southern Plains, Weekly
90
95
100
105
110
115
120
125
$ per cwt.Avg. 2002-06
2007
2008
2009
Livestock Marketing Information Center
Med. & Large Steer Calf Prices500-600 Pounds, Southern Plains, Weekly
95
100
105
110
115
120
125
130
135
140
JA
N
AP
R
JU
L
OC
T
$ per cwt.Avg. 2002-06
2007
2008
2009
Livestock Marketing Information Center
Med. & Large Steer Calf Prices400-500 Pounds, Southern Plains, Weekly
105
110
115
120
125
130
135
140
145
150
$ Per Cwt.Avg. 2002-06
2007
2008
2009
Livestock Marketing Information Center
Slaughter Cow PricesSouthern Plains, 85-90% Lean, Weekly
40
45
50
55
60
65$ per cwt. Avg. 2002-06
2007
2008
2009
Livestock Marketing Information Center
Forecast for 2009
U.S. Commercial Beef Production Million Pounds
*forecast
2007 2008 2009
Qtr 1 6,237 6,371 6,225*
Qtr 2 6,649 6,897 6,630*
Qtr 3 6,802 6,911 6,830*
Qtr 4 6,733 6,385 6,425*
Year 26,421 26,564 26,110*
------Change------
07-08 08-09.
+2.1% - 2.3%.
+3.7% - 3.9%.
+1.6% - 1.2%.
- 5.2% +0.6%.
+0.5% - 1.7%
Note: Q3 07 & Q1 09 have only 63 slaughter days
Nebraska Slaughter Steer PricesChoice Steers Per Live Hundredweight
2006 2007 2008 2009
Qtr 1 $89.24 $90.61 $89.59 82-84*
Qtr 2 $80.39 $93.45 $92.82 83-88*
Qtr 3 $85.40 $91.36 $98.45 83-88*
Qtr 4 $86.61 $91.85 $88.22 85-90*
Year $85.41 $91.82 $92.27 $83-88*
*forecast
Cattle Price Forecast, 2009 Steer Prices, $/cwt _ 11-1300# 750-800# 500-550# Yr. -- Qtr. Nebraska Okla. City Okla. City 2008 – 1* 89.59 99.88 121.75
2008 – 2* 92.82 106.60 122.19
2008 – 3* 98.45 110.81 122.85
2008 – 4* 88.22 94.62 105.22
2009 – 1 82-84 93-98 108-113
2009 – 2 83-88 94-99 108-113
2009 – 3 83-88 95-100 103-108
2009 – 4 85-90 93-98 100-105 *Actual
Major Uncertainties
• Corn prices & cost of gain
• Pasture conditions– Fertilizer prices
• Beef exports– Exchange rates– Japan & South Korea
• Domestic demand
Marketing Strategies
• Feedlot cost of gain is way up– Background calves longer– Increase placement weights– Decrease cow numbers
• Rebuild your hay stocks– Lower your stocking rate
• There is a growing supply of DDGS– Try feeding some
Forecast Summary
• Calf crop trending down
• Stable beef exports
• Weak domestic demand
• High feed cost
• Red ink for cattle producers
