Transcript Current Economic Climate of the Cattle Business: What it

Current Economic Climate
of the Cattle Business
Derrell S. Peel
Breedlove Professor of Agribusiness and
Extension Livestock Marketing Specialist
Oklahoma State University
Current Economic Climate
• Short and Medium Term
– Current market situation
– Industry and external factors
• Long Term
– Industry structural change
Major Market Factors
•
•
•
•
•
Cattle Inventory and Beef Production
Beef Demand
International Trade
Feed and Input Markets
Forage Conditions
BOXED BEEF CUTOUT VALUE
Choice 600-900 Lbs. Carcass, Weekly
$ Per Cwt.
195
Avg.
2005-09
185
175
165
2010
155
145
2011
135
JAN
APR
Livestock Marketing Information Center
Data Source: USDA-AMS
JUL
OCT
C-P-62
10/31/11
SLAUGHTER STEER PRICES
Southern Plains, Weekly
$ Per Cwt.
125
120
Avg.
2005-09
115
110
105
2010
100
95
90
2011
85
80
JAN
APR
Livestock Marketing Information Center
Data Source: USDA-AMS
JUL
OCT
C-P-52
10/31/11
MED. & LRG. #1 FEEDER STEER PRICES
700-800 Pounds, Southern Plains, Weekly
$ Per Cwt.
150
Avg.
2005-09
140
130
120
2010
110
100
2011
90
JAN
APR
Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
JUL
OCT
C-P-49
10/31/11
MED. & LRG. #1 STEER CALF PRICES
400-500 Pounds, Southern Plains, Weekly
$ Per Cwt.
175
Avg.
2005-09
165
155
145
2010
135
125
2011
115
JAN
APR
Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
JUL
OCT
C-P-49A
10/31/11
SLAUGHTER COW PRICES
Southern Plains, 85-90% Lean, Weekly
$ Per Cwt.
85
80
Avg.
2005-09
75
70
65
2010
60
55
50
2011
45
40
JAN
APR
Livestock Marketing Information Center
Data Source: USDA-AMS
JUL
OCT
C-P-35
10/31/11
Oklahoma Cattle Inventory, January 1
2012 Forecast
Beef Cows
Beef Heifers
Feeder Supply
All Cattle and
Calves
2011
2012
Head
Head
%
Change
Change
2,036,000
1,780,000
-256,000
-12.6%
355,000
239,000
-116,000
-32.7%
2,120,000
1,102,000 -1,018,000
-48.0%
5,100,000
3,723,000 -1,377,000
-27.0%
Oklahoma and U.S. Cattle Cycles:
Beef Cow Inventory, January 1
2900
47000
45000
2700
43000
2500
41000
2300
39000
2100
37000
35000
1900
33000
1700
31000
1500
1970
29000
1973
1976
1979
1982
1985
1988
1991
OKLA
1994
US
1997
2000
2003
2006
2009
2012
Oklahoma All Cattle and Calves
7000
5000
4000
3000
2000
20
10
20
00
19
90
19
80
19
70
19
60
19
50
19
40
19
30
1000
19
20
1000 Head
6000
Oklahoma Cattle Inventory by Agricultural Statistics District,
January 1, 2012 Forecast
All Cattle and Calves
PANHANDLE
WEST
CENTRAL
SOUTHWEST
NORTH
CENTRAL
CENTRAL
SOUTH
CENTRAL
NORTHEAST
EAST
CENTRAL
SOUTHEAST
Total
Beef Cows
2011
629,000
%
2012 Change
452,000
-28.1%
443,500
495,000
248,500
251,000
-44.0%
-49.3%
167,000
180,000
129,000
137,500
-22.8%
-23.6%
572,000
758,400
305,000
526,000
-46.7%
-30.6%
177,000
324,000
143,500
273,000
-18.9%
-15.7%
675,700
750,900
447,000
755,500
-33.8%
0.6%
319,000
353,500
276,500
345,000
-13.3%
-2.4%
-0.2% 280,000 266,000
-13.2% 147,000 140,500
-27.0% 2,036,000 1,780,000
-5.0%
-4.4%
-12.6%
499,500 498,500
276,000 239,500
5,100,000 3,723,000
2011
88,500
%
2012 Change
69,000
-22.0%
Estimated Change in Grazing Animal Density,
Head/Sq. mile, Jan. 1,2011 to 2012
Panhandle 70 => 29
State Ave. 130 => 91
N. Cent.
136 => 70
W. Cent.
112 => 58
S. W.
143 => 71
N. East. 150 => 150
OKLAHOMA
Central
147 => 100
E. Cent.
155 => 155
S. Cent.
127 => 84
S. East. 155 => 135
NATIONAL AVERAGE CORN PRICE
Crop Year, Received by Farmers
$ Per Bushel
7.00
6.00
5.00
4.00
3.00
2.00
1.00
1987
1989
1991
1993
1995
Livestock Marketing Information Center
Data Source: USDA-NASS, Compiled & Forecasts by LMIC
1997
1999
2001
2003
2005
2007
2009
2011
G-NP-03
10/12/11
Feedlot Cost of Gain
Kansas, $/cwt.
110.00
100.00
90.00
80.00
70.00
60.00
50.00
40.00
Price ($/cwt)
Price-Weight Relationship
Medium/Large No. 1 Steers
165
160
155
150
145
140
135
130
125
120
115
110
105
100
'APR 2005
Oct-11
375 425 475 525 575 625 675 725 775 825 875 925
weight (pounds)
Steer Price, Total Value and Value of Gain, Oct 2011, Oklahoma
7-Market Ave.
Weight
(lbs)
425
475
525
575
625
675
725
775
825
875
925
Average
Price
($/cwt.)
160.31
151.80
148.23
143.42
140.42
143.86
143.50
140.78
138.13
139.03
134.65
Total Value Value of Gain
($/head)
425 lb. Beg.
Weight
($/lb.)
681.32
721.05
778.21
824.67
877.63
970.85
1040.38
1091.05
1139.57
1216.51
1245.51
0.98
1.16
1.20
1.17
1.15
Value of Gain
525 lb. Beg.
Weight
($/lb.)
1.31
1.25
1.20
Value of Gain
625 lb. Beg.
Weight
($/lb.)
1.31
1.36
1.23
Cattle Markets are Providing Twin
Signals to Producers
• Increase Calf Production
– Herd Expansion
• More Stocker Production
– Keep feeder cattle on forage longer
• Both Signals Imply Increased Demand for
Forage
• Different From History When Cow-Calf and
Stocker Production was a Tradeoff
Total Meat Supplies Down in 2012
•
•
•
•
Beef
Pork
Broilers
Total Meat
2011
↓0.25%
↑1.5%
↑0.8%
↑0.8%
2012
↓3.5%
↑0.5%
↓2.5%
↓1.9%
BEEF PRODUCTION
vs. BEEF COW INVENTORY
Mil. Head
40
Inventory on January 1, U.S.
38
Bil. Pounds
28
Commercial Beef Production
27
36
26
34
25
32
24
30
23
Beef Cow Inventory (left axis)
28
22
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
2012 Projected. Compiled from USDA data with
analysis by the Livestock Marketing Information
Center and Derrell Peel
JANUARY 1 FEEDER CATTLE SUPPLIES
Residual, Outside Feedlots, U.S.
Mil. Head
43
41
39
37
35
33
31
29
27
25
1981
1984
1987
1990
Livestock Marketing Information Center
Data Source: USDA-NASS
1993
1996
1999
2002
2005
2008
2011
C-N-30
01/28/11
ANNUAL AVERAGE CATTLE PRICES
Southern Plains
$ Per Cwt
155
500-600lb
Steer
Calves
135
115
700-800lb
Feeder
Steers
95
Fed
Steers
75
55
1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
C-P-06
10/05/11
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