Transcript U.S. Cattle Sector

U.S. Cattle Sector
James Mintert, Ph.D.
Professor
Dept. of Agricultural Economics
Kansas State University
K-State Research & Extension
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U.S. Cattle Sector
1 Cattle Finishing Sector
2 Stocker/Backgrounder Sector
3 Cow-Calf Sector
K-State Research & Extension
United States
Fed (Slaughter) Cattle Marketed By State
State
Texas
Kansas
Nebraska
Colorado
Iowa
Idaho
Cattle Marketed
(Mill. Head)
U.S.
Rank
5.98
5.50
4.91
2.47
1.59
0.73
1
2
3
4
5
6
K-State Research & Extension
United States
# of Beef Cows By State
State
Texas
Missouri
Nebraska
Oklahoma
S. Dakota
Montana
Kansas
Cows
(Mill.
Head)
5.43
2.06
1.97
1.90
1.73
1.58
1.49
U.S.
Rank
1
2
3
4
5
6
7
K-State Research & Extension
Fed Cattle Price Determination
Long Run Issues
»
Demand
»
Supply
Short Run Issues
»
Supplies
K-State Research & Extension
Fed Cattle Price Determination
PRICE
Demand
Supply
P0
Q0
QUANTITY
K-State Research & Extension
Fed Cattle Price Determination
Long Run
PRICE
Demand0
S1
Supply0
D1
P1
Q1
QUANTITY
K-State Research & Extension
Long Run Supply Issues
Commercial Cattle Carcass Weights
775
750
Actual Carcass Weights
Trend
725
Pounds
700
675
650
625
600
575
70
73
76
79
82
85
Source : USDA & K-State Re s e arch & Exte ns ion
88
91
94
97
00
Year
K-State Research & Extension
Long Run Supply Issues
Dressed Beef Production
Per Cow Per Year
.
.
700
650
Be ef Production Pe r Cow
600
Tre ndline
Pounds
550
500
450
400
350
300
250
200
50
55
60
Source: USDA & KSU
65
.
70
75
80
85
90
95
00
Ye ar
K-State Research & Extension
Long Run Supply Issues
Million Head
.
Annual Commercial Cattle Slaughter
.
44
43
42
41
40
39
38
37
36
35
34
33
32
31
70
72
74
76
78
80
82
84
86 88
Year
90
92
94
96
98
00
02
04
Source: USDA & K-State Research & Extension
2003 & 2004 LMIC Forecasts
K-State Research & Extension
Long Run Supply Issues
Commercial Beef Production
.
28
Billion Pounds
.
27
26
25
24
23
22
21
20
70
72
74
76
78
80
82
Source: USDA & K-State Research & Extension
2003 & 2004 LMIC Forecasts
84
86
88 90
Year
92
94
96
98
00
02
04
K-State Research & Extension
Beef Demand Index
Retail Choice Beef Demand Index
100
90
80
Index Value
70
60
94
88 86
83
79 76
70 69
66 65
63
59 58
56 55
53 51
50
50
52
54 56 55
40
30
20
10
0
81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
Ye ar
Source: USDA, Dept. of Commerce & K-State Research & Extension
Price Deflated By CPI, 1980 =100 for Beef Demand Index
K-State Research & Extension
Beef Demand Weakened
Retail Choice Beef Demand Index
100
90
80
Index Value
70
60
94
88 86
83
79 76
70 69
66 65
63
59 58
56 55
53 51
50
50
52
54 56 55
40
30
20
10
0
81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
Ye ar
Source: USDA, Dept. of Commerce & K-State Research & Extension
Price Deflated By CPI, 1980 =100 for Beef Demand Index
K-State Research & Extension
Beef Demand’s Turnaround
Retail Choice Beef Demand Index
100
90
80
Index Value
70
60
94
88 86
83
79 76
70 69
66 65
63
59 58
56 55
53 51
50
50
52
54 56 55
40
30
20
10
0
81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
Ye ar
Source: USDA, Dept. of Commerce & K-State Research & Extension
Price Deflated By CPI, 1980 =100 for Beef Demand Index
K-State Research & Extension
But Demand Weakened In ‘02
Retail Choice Beef Demand Index
100
90
80
Index Value
70
60
94
88 86
83
79 76
70 69
66 65
63
59 58
56 55
53 51
50
50
52
54 56 55
40
30
20
10
0
81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
Ye ar
Source: USDA, Dept. of Commerce & K-State Research & Extension
Price Deflated By CPI, 1980 =100 for Beef Demand Index
K-State Research & Extension
Will Beef Demand Rebound In ‘03?
Wholesale Beef Demand Index
October - December Quarter
90
80
Index Value
70
60
83
77 77 78
72
69 66 67
66 67
57 56
50
53 51
50 50
52 51
45 45
48 49
40
30
20
10
0
81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
Ye ar
Source: USDA, Dept. of Commerce & K-State Research & Extension
Price Deflated By CPI, 1980 =100 for Beef Demand Index
K-State Research & Extension
Fed Cattle Price Determination
Long Run
Long Run Issues
»
Demand Shifters
–
Income
–
Population
–
Competing Meat Supplies
–
Exports (Income, Population & Market
Access)
–
Tastes and Preferences
K-State Research & Extension
Annual U.S. Poultry Production
Ready-To-Cook Weight .
.
.
Poultry Production
.
.
(Billion Lbs.)
45
40
Turkey Production
35
Chicken Production
30
25
20
15
10
5
0
81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
Source: USDA
Year .
K-State Research & Extension
Annual U.S. Commercial Pork Production .
21
20
Billion Pounds
19
18
17
16
15
14
13
12
11
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02
Year
Source: USDA, 2003 LMIC Forecast
Source: USDA,
1999 KSU Forecast
K-State Research & Extension
Long-Run Beef Export Growth
Has Been Phenomenal
Annual U.S. Beef Exports
.
.
3.0
2.5
Billion Pounds
2.0
1.5
1.0
0.5
0.0
61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01
Source: USDA
.
Year
K-State Research & Extension
Net Exports Have Been Growing
U S BEEF INDUSTRY NET EXPORT VALUES
Annual
Bil. $
3
Live
Cattle
2
Beef &
Veal
1
0
Hides
&
Skins
Other
-1
Total
-2
1976
1979
1982
1985
Source: LMIC & U.S. Dept. of Commerce
1988
1991
1994
1997
2000
K-State Research & Extension
Who We Ship Beef To Changed In 2002
2001 U.S. Beef Exports
Market Share By Country
CARIBBEAN
OTHER
1% CANADA
6%
10%
S. KOREA
15%
MEXICO
24%
JAPAN
44%
Source: USDA & KSU,
based on quantity shares
K-State Research & Extension
Who We Ship Beef To Changed In 2002
2002 U.S. Beef Exports
Market Share By Country
CARIBBEAN
1% CANADA
OTHER
7%
10%
S. KOREA
25%
MEXICO
26%
JAPAN
31%
Source: USDA & KSU,
based on quantity shares
K-State Research & Extension
Russia’s Ban On Poultry Imports Increased
Domestic Competing Meat Supplies
Annual U.S. Broiler Exports To Russia
2.50
2.25
Billion Pounds
2.00
1.75
1.50
1.25
1.00
0.75
0.50
0.25
0.00
90
91
92
93
Source: USDA & KSU
94
95
96
97
98
99
00
01
02
Ye ar
K-State Research & Extension
Russia’s Ban On Poultry Imports Increased
Domestic Competing Meat Supplies
Annual U.S. Broiler Exports
6.0
5.5
Billion Pounds
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
90
91
92
93
Source: USDA & KSU
94
95
96
97
98
99
00
01
02
Ye ar
K-State Research & Extension
Forecasting Cattle Supplies
Annual Production Forecasts
»
Cattle Cycle
»
Annual Inventory Estimates
– USDA’s
Annual Cattle Inventory Report
K-State Research & Extension
U.S. Cattle Inventory
January 1, 1925-2003
140
January 1, 2003 = 96.1 Million Head
130
0.6% Less Than
on Jan. 1, 2002
120
Million Head
.
.
.
110
100
90
80
70
60
50
25
30
35
Source: USDA
40
45
50
55
60
65
70
75
80
85
90
95
00
Year
K-State Research & Extension
Average Cattle Cycle Is About 10 Years
But Current Cycle Is In Its 14th Year
Cattle Inventories By Cycle
.
135
Cattle Inventory (Million Head)
1967-1979
1979-1990
125
115
105
1958-1967
95
85
1/1/03
1949-1958
75
1
2
3
4
5
6
7
8
9
Year of Cycle .
10
11
12
13
14
Source: USDA & KSU
K-State Research & Extension
Drought Produced Another Round of Modest
Liquidation in 2002
Estimated Kansas Cow-Calf Returns
300
.
250
.
200
$'s Per Cow
150
100
50
0
-50
-100
75
77
79
81
83
Sour ce : K-State Re s e ar ch & Exte ns ion
Re tur ns Above V ar iable Cos ts
2002 Es tim ate d
85
87
89
91
93
95
97
99
01
Ye ar
K-State Research & Extension
Most of the “Drought” Cows Did
Not Go to Slaughter
Total F.I. Cow Slaughter
11
10
Million Head
9
8
7
6
5
4
70
72
Source: USDA
74
76
78
80
82
84
86
88
90
92
94
96
98
00
02
Year
K-State Research & Extension
Cow Slaughter Up This Year
But Increase Is Primarily Dairy Cows
Average Daily F.I. Cow Slaughter
28
2003
2002
5 Yr Avg
Thousand Head Per Day
27
26
25
24
23
22
21
20
19
18
Jan
Feb
Mar
Apr
May
Jun
July
Aug
Sep
Oct
Nov
De c
Month
Source: USDA & KSU
K-State Research & Extension
Fed Cattle Price Determination
Short Run
PRICE
S1
Supply0
S2
Demand0
P1
P0
P2
QUANTITY
K-State Research & Extension
Forecasting Cattle Prices
Short Run Issues
»
Supplies
– Cattle
On Feed Reports
K-State Research & Extension
U.S. Cattle On Feed .
Lots Over 1000 Head .
12.00
2003
2002
5 Yr. Avg.
11.75
11.50
Million Head
11.25
11.00
10.75
10.50
10.25
10.00
9.75
9.50
Jan
Feb Mar
Apr
May Jun
Source: USDA & K-State Research & Extension
Jul
Aug
Month
Sep
Oct
Nov Dec
U.S. Net Placements
Lots Over 1000 Head
.
.
3.00
2003
2002
5 Yr. Avg.
2.75
Million Head
2.50
2.25
2.00
1.75
1.50
1.25
1.00
Jan
Feb
Mar
Apr
May
Jun
Source: USDA & K-State Research & Extension
Jul
Aug
Sep
Oct
Nov
Dec
Month
K-State Research & Extension
Forecasting Cattle Prices
Short Run Issues
»
Supplies
– Cattle
On Feed Reports
Role
of Non-Fed Slaughter
Seasonal Variation
K-State Research & Extension
Cyclical Peak
In Slaughter Cattle Prices Still Ahead
Annual Average Steer Prices
Kansas Slaughter Steers
.
.
85
.
75
Steer Price ($/Cwt.)
80
70
65
60
55
50
45
40
35
75
77
79
81
83
85
87
89
Ye ar
91
.
93
95
97
99
01
03
Source: USDA, 2003 Forecast
K-State Research & Extension
W. Kansas 11-13 Cwt. Steer Price Index .
104
103
Percent of Annual Average
103
1989-1998 Index
103
102
102
101
101
101
100
100
100
101
99
98
97
97
97
96
95
Jan
98
96
Feb
M ar
Apr
M ay
Jun
Jul
Aug
Sep
Oct
Nov
De c
M onth
Source: AMS-USDA & KSU
K-State Research & Extension