Transcript Beef Cattle Production, Income and Expenses

Beef Cattle Outlook
Dr. Curt Lacy
Extension Economist-Livestock
University of Georgia
Florida Cattlemen’s Institute
January 26, 2012
Overview
• Recent Trends
• Outlook for 2012 and beyond
• Marketing Alternatives
MED. & LRG. #1 & 2 STEER CALF PRICES
500-600 Pounds, Georgia, Weekly
$ Per Cwt.
150
Avg.
2006010
140
130
2011
120
110
2012
100
T
O
C
JU
L
2010
AP
R
JA
N
90
Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
01/18/12
MED. & LRG. #1 & 2 FEEDER STEER PRICES
700-800 Pounds, Georgia, Weekly
$ Per Cwt.
130
Avg.
2006010
120
110
2011
100
90
2012
80
T
O
C
L
JU
AP
R
JA
N
70
Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
01/18/12
SLAUGHTER STEER PRICES
5 Market Weighted Average, Weekly
$ Per Cwt.
130
125
Avg.
2006-10
120
115
110
2011
105
100
95
90
2012
85
80
JAN
APR
Livestock Marketing Information Center
Data Source: USDA-AMS
JUL
OCT
BOXED BEEF CUTOUT VALUE
Choice 600-900 Lbs. Carcass, Weekly
$ Per Cwt.
205
195
Avg.
2006-10
185
175
2011
165
155
2012
145
135
JAN
APR
Livestock Marketing Information Center
Data Source: USDA-AMS
JUL
OCT
C-P-62
01/23/12
CHOICE MINUS SELECT BEEF PRICES
Carcass Cutout Value 600-900 Lbs., Weekly
$ Per Cwt.
20
18
Avg.
2006-10
16
14
12
2011
10
8
6
4
2012
2
0
JAN
APR
Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
JUL
OCT
C-P-68
01/23/12
5 THINGS SHAPING
MARKETS TODAY AND
FOR 2012
BEEF COW SLAUGHTER
Federally Inspected, Weekly
Thou. Head
95
90
85
80
Avg.
2006-10
2011 Beef Cow Slaughter
Ca. 3.8 million
75
2011
70
65
60
55
50
2012
Livestock Marketing Information Center
Data Source: USDA-AMS & USDA-NASS
T
O
C
L
JU
AP
R
JA
N
45
C-S-34
01/20/12
U S BEEF COW INVENTORY
vs FI BEEF COW SLAUGHTER
Annual
Mil. Head
36
Mil. Head
4.2
35
3.9
34
3.6
33
3.3
32
3.0
31
2.7
30
2.4
1986
1988 1990
1992 1994
Livestock Marketing Information Center
Data Source: USDA-NASS
1996 1998
2000 2002
2004
2006 2008
2010
C-S-28
01/28/11
Beef Cow
Inventory
FI Beef
Cow
Slaughter
U S BEEF COW INVENTORY CHANGE
vs FI BEEF COW SLAUGHTER
As a Percent of Total Cow Inventory, Annual
Mil. Head
1.5
Percent
13.5
1
12.5
0.5
11.5
0
10.5
-0.5
Beef Cow
Inventory
Change
9.5
-1
8.5
-1.5
7.5
-2
6.5
1986 1988 1990 1992 1994
Livestock Marketing Information Center
Data Source: USDA-NASS
1996 1998 2000 2002 2004 2006 2008
2010
C-S-28A
01/28/11
Slaughter
as % of
Inventory
Source: DTN/Telvent
TOTAL U.S. EXPORTS
OF BEEF MUSCLE CUTS
1000 MT
22
Weekly
20
18
16
14
12
10
8
6
4
Jan-08
Jul-08
Jan-09
Livestock Marketing Information Center
Data Source: USDA-FAS
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
12/29/11
What can we expect this year and next?
OUTLOOK FOR 2012 AND BEYOND
BEEF COWS THAT HAVE CALVED
JANUARY 1, 2011
(1000 Head)
233
1476
880
549
446
237
333
180
5.1
Hawaii
79
US Total
265
1610
727
488
1478
2036
5025
30865
Livestock Marketing Information Center
Data Source: USDA/NASS
10
90
99
1772
600
Alaska
694
VT
360
840
157
213 290
352
200 675
1865
1023
351
990
184
928
495
659 502
461
13
NH 3
MA 6
RI 1.5
CT 4
NJ
DE
MD
9
3.5
42
880
450
160
0
to 5,030
to 880
to 450
to 160
926
C-N-15
01/28/11
(12)
(11)
(13)
(14)
CALF CROP
July 1 Estimates, U.S., Annual
Mil. Head
45
2011 = 35.5 Million Head
-0.5 Percent
43
41
39
37
35
1981
1984
1987
Livestock Marketing Information Center
Data Source: USDA-NASS
1990
1993
1996
1999
2002
2005
2008
2011
C-N-18B
07/22/11
Meat supplies were slightly larger in
2011 but will be lower in 2012
Commodity
Beef
Pork
Total Red Meat*
Broilers
Total Poultry**
Total RedMeat & Poultry
2011
2012
2010 Projected Forecast 11 vs 10
12 vs 11
BILLION POUNDS
PERCENT CHANGE
26.41
26.30
25.08
-0.42%
-4.86%
22.46
22.78
23.21
1.40%
1.85%
49.18
49.37
48.58
0.38%
-1.63%
36.52
36.84
36.11
0.87%
-2.02%
42.59
43.09
42.39
1.16%
-1.65%
91.77
92.46
90.97
0.75%
-1.64%
Source: USDA-WASDE, January 2012 Report
Tight Stocks Since 1995 in Feed Crops Despite Large Crops
16,000
50%
US Corn Supply and Demand
14,000
40%
12,000
10,000
8,000
30%
19.8%
6,000
17.5%
20%
13.9% 13.1%
11.6% 12.8%
4,000
5.4%
2,000
6.7%
0
10%
0%
04/05
05/06
Ending Stocks
06/07
07/08
Production
08/09
09/10
10/11
Domestic Use and Exports
11/12
Stocks:Use
Economic (Demand)Outlook
• Positives
– Low interest rates
– Little inflation pressure
– Generally strong
corporate balance sheets
– Recently improving
hiring prospects
• Negatives
– Uncertainty over
European situation
– Federal debt/deficit
– Political uncertainty
Projected Prices 2011 and Beyond
$140
$130
$120
$110
$100
$90
$80
$70
$60
$50
$40
2010
2011
2012
2013
Source: USDA, LMIC and UGA
GA 500# steer
GA 750# steer
Choice fed steer
GA Slaughter cow
INPUTS, PROFITS AND RISK
MANAGEMENT FOR 2012
COW-CALF RETURNS
AND CATTLE INVENTORY
$ Per Cow
U.S., Annual
Mil. Head
150
115
100
110
50
105
0
100
-50
95
-100
90
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
C-P-67
11/17/11
Livestock Marketing Information Center
Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC
Cow-Calf
Returns
Cattle
Inventory
Jan 1
Date
4/7/2008
5/19/2009
6/30/2008
8/11/2008
9/29/2008
11/10/2008
12/22/2008
2/9/2009
3/23/2009
5/11/2009
6/29/2009
8/10/2009
9/28/2009
11/9/2009
12/21/2009
2/1/2010
3/15/2010
4/26/2010
6/21/2010
8/9/2010
9/20/2010
11/1/2010
12/13/2010
1/24/2011
3/7/2011
4/18/2011
5/30/2011
7/11/2011
8/22/2011
10/3/2011
11/14/2011
12/26/2011
$/ton
Don’t look for fertilizer prices to go
down
Fertilizer Prices 2002-2011
$1,400.00
$1,200.00
$1,000.00
$800.00
$600.00
Ammonium Nitrate
DAP (Diammonnm Phospate)
Potash
$400.00
$200.00
$-
Feedstuffs will be higher also
Weekly Average Feed Prices
$700.00
$10.00
Whole Cottonseed
$9.00
$600.00
$8.00
Dollars Per Ton
$500.00
$7.00
Corn Gluten Pellets
$6.00
$400.00
$5.00
Soybean Hull Pellets
$300.00
$4.00
$3.00
$200.00
$2.00
$100.00
$1.00
$3/3/2008
$3/3/2009
3/3/2010
3/3/2011
2 Yellow Corn
Cost of production will be higher but
should be manageable for most
Cost of Production ($/Cwt.)
$165.00
$155.00
$145.00
Range of Expected Prices
$135.00
$125.00
$115.00
$105.00
$95.00
$85.00
$75.00
2012
Expected Production Costs in 2012
Variable Costs
Fixed Costs
There are opportunities to manage risk
$160.00
$150.00
$140.00
$130.00
$120.00
$110.00
$100.00
$90.00
$80.00
Feeder Cattle Futures
CME Feeder Cattle Futures Month
Dec-12
Nov-12
Oct-12
Sep-12
Aug-12
Jul-12
Jun-12
May-12
Apr-12
Mar-12
Live Cattle Futures
Feb-12
$/Cwt.
CME Live and Feeder Cattle Futures Close
for January 25, 2012
Beef Cattle Outlook Summary
Fewer cows = less beef
-less competing meats
+slowly improving economy
Higher Prices in 2011
Beef Cattle Outlook
R. Curt Lacy, Ph.D.
Extension Economist-Livestock
www.secattleadvisor.com
Can we produce enough beef?
Beef Cows vs. Beef Production
USA, 1920-2011
30.00
50
45
35
30
15.00
25
20
10.00
15
10
5.00
5
-
0
Prod (mil)
Beef Cows
Beef Cows (Millions)
40
20.00
Billions
Pounds of Beef Production
25.00