Cattle and Beef Markets: Short and Long Run Challenges and Opportunities

Cattle and Beef Markets: Short and Long Run Challenges and Opportunities

Derrell S. PeelBreedlove Professor of Agribusiness and Extension Livestock Marketing Specialist

Oklahoma State University

Major Beef Market Factors

• Cattle Inventory and Beef Production• Beef Demand• International Trade• Feed and Input Markets• Forage Conditions

BOXED BEEF CUTOUT VALUEChoice 600-900 Lbs. Carcass, Weekly

140

150

160

170

180

190

200

210

JAN APR JUL OCT

$ Per Cwt.

Avg.2007-11

2012

2013

C-P-6204/23/13Livestock Marketing Information Center

Data Source: USDA-AMS

SLAUGHTER STEER PRICESSouthern Plains, Weekly

85

9095

100105

110

115120

125130

135

JAN APR JUL OCT

$ Per Cwt.

Avg.2007-11

2012

2013



MED. & LRG. #1 FEEDER STEER PRICES700-800 Pounds, Southern Plains, Weekly

95

105

115

125

135

145

155

165

JAN APR JUL OCT

$ Per Cwt.

Avg.2007-11

2012

2013


Data Source: USDA-AMS, Compiled & Analysis by LMIC

FEEDER STEER vs FED STEER PRICES700-800 Lbs. Minus Slaughter Steer, S. Plains, Weekly

5

10

15

20

25

30

35

40

JAN APR JUL OCT

$ Per Cwt.

Avg.2007-11

2012

2013



MED. & LRG. #1 STEER CALF PRICES400-500 Pounds, Southern Plains, Weekly

120130140

150160170180190

200210220

JAN APR JUL OCT

$ Per Cwt.

Avg.2007-11

2012

2013

C-P-49A04/23/13Livestock Marketing Information Center


SLAUGHTER COW PRICESSouthern Plains, 85-90% Lean, Weekly

45

55

65

75

85

95

JAN APR JUL OCT

$ Per Cwt.

Avg.2007-11

2012

2013



JANUARY 1 TOTAL CATTLE INVENTORYU.S., Annual

80

90

100

110

120

130

140

1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 2013

Mil. Head

C-N-0102/04/13

-1.6 Percent2013 = 89.3 Million Head

Livestock Marketing Information CenterData Source: USDA-NASS

JANUARY 1 BEEF COW INVENTORYU.S., Annual

28

30

32

34

36

38

40

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

Mil. Head

C-N-0201/29/12Livestock Marketing Information Center

Data Source: USDA-NASS

Cycl

ical

Expa

nsio

n

Cycl

ical

Liqu

idati

on

Drou

ght

Liqu

idati

onCy

clic

alEx

pans

ion

Inpu

t Sho

ck-

Rece

ssio

nLi

quid

ation

Drou

ght

Liqu

idati

on

-2.9 Percent2013 = 29.3 Million Head

JANUARY 1 FEEDER CATTLE SUPPLIESResidual, Outside Feedlots, U.S.

20

25

30

35

40

1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013

Mil. Head



HEIFERS HELD AS BEEF COW REPLACEMENTS

January 1, U.S.

4.5

5.0

5.5

6.0

6.5

7.0

1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013

Mil. Head

C-N-3802/04/13

+1.9 %

Livestock Marketing Information CenterData Source: USDA-NASS

BEEF PRODUCTION vs. CATTLE INVENTORY

Inventory on January 1, U.S.

88

93

98

103

108

113

118

1987 1990 1993 1996 1999 2002 2005 2008 2011 2014

Mil. Head

22

23

24

25

26

27

28Bil. Pounds

Commercial Beef Production

Total Cattle Inventory

M-S-2308/10/12Livestock Marketing Information Center


Cattle Slaughter, Annual

28

29

30

31

32

33

34

35

36

37

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Million Head

M-S-03A01/29/13Livestock Marketing Information Center

Data Source: USDA-NASS, Compiled & Analysis by LMIC

U S ALL HAY STOCKSDecember 1

70

80

90

100

110

120

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Mil. Tons

G-NP-2201/11/13Livestock Marketing Information Center

Data Source: USDA-NASS, Compiled & Forecasts by LMIC

Hay Price, $/ton

$50.00$70.00

$90.00$110.00

$130.00$150.00

$170.00$190.00

$210.00

1982 1987 1992 1997 2002 2007 2012

All Hay Alfalfa Other Hay

BEEF PRODUCTIONFederally Inspected, Weekly

375

400

425

450

475

500

525

550Mil. Pounds

Avg.2007-11

2012

2013


Data Source: USDA-AMS & USDA-NASS

CATTLE SLAUGHTERFederally Inspected, Weekly

470

520

570

620

670

720

JAN

APRJU

LOCT

Thou. Head

Avg.2007-11

2012

2013

C-S-0804/26/13Livestock Marketing Information Center


STEER DRESSED WEIGHTFederally Inspected, Weekly

800

810

820

830

840

850

860

870

880

890Pounds

Avg.2007-11

2012

2013



BEEF COW SLAUGHTERFederally Inspected, Weekly

45

50

55

60

65

70

75

80

85Thou. Head

Avg.2007-11

2012

2013



TOTAL COW SLAUGHTERFederally Inspected, Weekly

85

95

105

115

125

135

145

155Thou. Head

Avg.2007-11

2012

2013



CHOICE MINUS SELECT BEEF PRICESCarcass Cutout Value 600-900 Lbs., Weekly

0

5

10

15

20

25

JAN APR JUL OCT

$ Per Cwt.

Avg.2007-11

2012

2013



COMMERCIAL BEEF PRODUCTIONQuarterly

5.3

5.5

5.7

5.9

6.1

6.3

6.5

6.7

6.9

JAN-MAR APR-JUN JUL-SEP OCT-DEC

Bil. Pounds

Avg.2007/11

2012

2013

2014



WHOLESALE BEEF RIBEYE PRICESBoneless, Light, Weekly

450

500

550

600

650

700

750

800

850$ Per Cwt.

Avg.2007-11

2012

2013

M-P-2104/23/13Livestock Marketing Information Center


WHOLESALE BEEF FULL TENDER PRICESMusl-On, 5 Pounds and Up, Weekly

700

800

900

1000

1100

1200

1300$ Per Cwt.

Avg.2007-11

2012

2013



WHOLESALE BEEF BOTTOM ROUND PRICES18-33 Pounds, Weekly

140

150

160

170

180

190

200

210

220

230

JAN

APRJU

LOCT

$ Per Cwt.

Avg.2007-11

2012

2013



WHOLESALE BEEF CHUCK PRICESBoneless 2 Piece, Weekly

140

160

180

200

220

240

260$ Per Cwt.

Avg.2007-11

2012

2013

04/23/13Livestock Marketing Information CenterData Source: USDA-AMS

WHOLESALE BONELESS BEEF PRICESFresh, 50% Lean, Weekly

40

50

60

70

80

90

100

110$ Per Cwt.

Avg.2007-11

2012

2013



WHOLESALE BONELESS BEEF PRICESFresh, 90% Lean, Weekly

130

150

170

190

210

230

250$ Per Cwt.

Avg.2007-11

2012

2013



COMMERCIAL PORK PRODUCTIONQuarterly

5.0

5.2

5.4

5.6

5.8

6.0

6.2

6.4

6.6


Bil. Pounds

Avg.2007/11

2012

2013

2014



WHOLESALE HAM PRICESTrimmed Selected, 23-27 Pounds, Weekly

50

55

60

65

70

75

80

85

90$ Per Cwt.

Avg.2007-11

2012

2013



WHOLESALE PORK LOIN PRICES1/4 Inch Trim, Vacuum Sealed, Weekly

85

95

105

115

125

135

145

155

165$ Per Cwt.

Avg.2007-11

2012

2013



WHOLESALE PORK BELLY PRICESSkin-on, 14-16 Pounds, Weekly

70

80

90

100

110

120

130

140

150

160$ Per Cwt.

Avg.2007-11

2012

2013



WHOLESALE PORK TRIMMING PRICESFresh, 72% Lean, Weekly

40

45

50

55

60

65

70

75

80

85$ Per Cwt.

Avg.2007-11

2012

2013



WHOLESALE PORK SPARERIB PRICESTrimmed, Light Poly, Weekly

100

110

120

130

140

150

160

170

180$ Per Cwt.

Avg.2007-11

2012

2013



RTC BROILER PRODUCTIONQuarterly

8.5

8.7

8.9

9.1

9.3

9.5

9.7


Bil. Pounds

Avg.2007/11

2012

2013

2014



WHOLESALE CHICKEN BREAST PRICESSkinless/Boneless, Northeast, Truckload, Weekly

110115120125130135140145150155160Cents Per Pound

Avg.2007-11

2012

2013

P-P-0204/15/13Livestock Marketing Information Center


WHOLESALE CHICKEN LEG PRICESNortheast, Truckload, Weekly

45

50

55

60

65

70

75

80

85Cents Per Pound

Avg.2007-11

2012

2013



WHOLESALE CHICKEN WING PRICESNortheast, Truckload, Weekly

100

125

150

175

200

225Cents Per Pound

Avg.2007-11

2012

2013



BROILER CHICKS PLACEDWeekly

145

150

155

160

165

170

175

180Mil. Birds

Avg.2007-11

2012

2013

P-S-1104/18/13Livestock Marketing Information Center


U S BEEF AND VEAL EXPORTSCarcass Weight, Monthly

120

140

160

180

200

220

240

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Mil. Pounds

Avg.2007-11

2012

2013

I-N-1604/08/13Livestock Marketing Information Center

Data Source: USDA-ERS & USDA-FAS

U S BEEF AND VEAL EXPORTSCarcass Weight, Annual

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1989 1992 1995 1998 2001 2004 2007 2010 2013

Bil. Pounds


Data Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC

MAJOR U S BEEF EXPORT MARKETSCarcass Weight, Annual

0

100

200

300

400

500

600

700

Japan Canada Mexico Korea

Mil. Pounds

Avg.2006/10

2011

2012



U.S. Beef ExportsMajor Markets

0

500

1000

1500

2000

2500

3000

1000

lbs C

arca

ss W

t

OTHERKOREAMEXICOCANADAJAPAN

U S BEEF AND VEAL IMPORTSCarcass Weight, Monthly

125

145

165

185

205

225

245

265


Mil. Pounds

Avg.2007-11

2012

2013



MAJOR U S BEEF IMPORT SOURCESCarcass Weight, Annual

0100200300400500600700800900

1000

Australia New Zealand Canada Mexico

Mil. Pounds

Avg.2006/10

2011

2012



United States: Beef Trade2013-2014 Projected

0200400600800

10001200140016001800

1,00

0 M

ET

RIC

TO

NS

Exports Imports

U S BEEF AND VEAL IMPORTSCarcass Weight, Annual

1.5

2.0

2.5

3.0

3.5

4.0

1989 1992 1995 1998 2001 2004 2007 2010 2013

Bil. Pounds



CATTLE IMPORTS FROM CANADA AND MEXICO

Annual

0

500

1000

1500

2000

1987 1990 1993 1996 1999 2002 2005 2008 2011

Thou. Head

Mexico

Canada



U S CATTLE IMPORTS FROM CANADAMonthly

30

50

70

90

110

130

150


Thou. Head

Avg.2007-11

2012

2013



U S CATTLE IMPORTS FROM MEXICOMonthly

25

45

65

85

105

125

145

165

185

205


Thou. Head

Avg.2007-11

2012

2013



STEER HIDE AND OFFAL VALUELive Animal Basis, Weekly

9.00

10.00

11.00

12.00

13.00

14.00

15.00

JAN APR JUL OCT

$ Per Cwt.

Avg.2007-11

2012

2013



CORN ACREAGE

60

65

70

75

80

85

90

95

100

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Acr

es P

lant

ed (m

illio

n)

Livestock Marketing Information CenterData Source: USDA-NASS, Compiled & Analysis by LMIC

NATIONAL AVERAGE CORN YIELDCrop Year

60

80

100

120

140

160

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Bu. Per Acre



U S ANNUAL CORN PRODUCTIONCrop Year

2

4

6

8

10

12

14

16

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Bil. Bushels



SOUTHERN PLAINS CORN PRICESWeekly

4.00

5.00

6.00

7.00

8.00

9.00$ Per Bu.

Avg.2007-11

2012

2013

G-P-0404/18/13Livestock Marketing Information Center


CATTLE ON FEEDUS Total, Monthly

9.5

10.0

10.5

11.0

11.5

12.0


Mil. Head

Avg.2007/11

2012

2013



FEEDLOT PLACEMENTSUS Total, Monthly

1.3

1.5

1.7

1.9

2.1

2.3

2.5

2.7


Mil. Head

Avg.2007/11

2012

2013



FED CATTLE MARKETINGSUS Total, Monthly

1.5

1.6

1.7

1.8

1.9

2.0

2.1

2.2


Mil. Head

Avg.2007/11

2012

2013

C-M-1104/19/13Livestock Marketing Information Center


CHOICE STEER PRICE vs BREAKEVENCattle Feeding, S. Plains, Monthly

80

90

100

110

120

130

140

150

2005 2006 2007 2008 2009 2010 2011 2012 2013

$ Per Cwt

SteerPrice

Breakeven

ProjectedBreakeven

Livestock Marketing Information CenterData Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC

C-P-2104/16/13

Latest Data: March 2013

AVERAGE RETURNS TO CATTLE FEEDERSFeeding 725 Lb. Steers, S. Plains, Monthly

-325-275-225-175-125-75-252575

125175225275

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

$ Per Head

Livestock Marketing Information CenterData Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC

C-P-2204/16/13

Latest Data: March 2013

2013 Cattle Market Expectations

• Cattle and beef prices pushed higher by limited supplies– Beef production down by 4.5-5.0%

• Beef demand will limit price increases• Question is “How much higher?”• Moderation in feed prices• Higher cow and heifer prices (if no drought)

– Breeding cow and heifer demand

JANUARY 1 FEEDER CATTLE SUPPLIESResidual, Outside Feedlots, U.S.

2426283032343638404244464850

1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013

Mil. Head

Data Source: USDA-NASS, Calculations by Derrell Peel

JANUARY 1 CATTLE ON FEED

9

10

11

12

13

14

15

16

1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013

Mil. Head

Data Source: USDA-NASS, Calculations by Derrell Peel

Cattle on Feed as % of Estimated Feeder Supplies

January 1, 1965-2013

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

55.00%

60.00%

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

2012, 2013 Projected

Corn PriceCrop year average, 1960-2013

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Cost per Pound of TDN, Cents/lb.

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

1982 1987 1992 1997 2002 2007 2012

Corn Hay

Source: Nevil Speer. Based on corn at 88% and hay at 55% TDN

Stocker Value of Gain,Average Weekly, 1992-2006

Weeks

WeightGain

Beg.Weight

12 15 16 17 18 19 20 22 23 24

200 lbs ADG>> 2.38 1.79 1.58 1.43

475 0.559 0.568 0.572 0.576

525 0.571 0.581 0.586 0.587

575 0.583 0.593 0.596 0.598

625 0.579 0.590 0.592 0.592

250 lbs ADG>> 2.38 2.10 1.88 1.55

475 0.571 0.575 0.577 0.579

525 0.573 0.578 0.579 0.581

575 0.582 0.587 0.587 0.588

300 lbs ADG>> 2.38 2.14 1.95 1.55

475 0.571 0.573 0.574 0.575

525 0.573 0.575 0.575 0.576

Feedlot Cost of GainKansas, $/cwt.

Jan-

90

Jan-

92

Jan-

94

Jan-

96

Jan-

98

Jan-

00

Jan-

02

Jan-

04

Jan-

06

Jan-

08

Jan-

10

Jan-

12

40.00 50.00 60.00 70.00 80.00 90.00

100.00 110.00 120.00 130.00 140.00

Steer Price, Total Value and Value of Gain 2010-2012, OKC, Oklahoma

Weight (lbs)

Average Price ($/cwt.)

Total Value ($/hd)

VOG400 lb. Beg. Weight($/lb.)

VOG450 lb. Beg. Weight($/lb





400 $167.07 $668450 $159.11 $716 $0.95500 $152.33 $762 $0.93 $0.91550 $146.85 $808 $0.93 $0.92 $0.92600 $141.85 $851 $0.91 $0.90 $0.89 $0.87650 $137.62 $895 $0.91 $0.89 $0.89 $0.87 $0.87700 $134.35 $940 $0.91 $0.90 $0.89 $0.88 $0.89 $0.92750 $131.58 $987 $0.91 $0.90 $0.90 $0.90 $0.90 $0.92800 $128.72 $1,030 $0.90 $0.90 $0.89 $0.89 $0.89 $0.90850 $125.58 $1,067 $0.89 $0.88 $0.87 $0.87 $0.87 $0.86900 $121.55 $1,094 $0.85 $0.84 $0.83 $0.82 $0.81 $0.80

KANSAS FEEDLOT CLOSEOUTSFeeding Costs per Cwt, Steers

65

75

85

95

105

115

125

135

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

$/cwt

Avg.2007/11

2012

2013

04/01/13Data Source: KSU Focus on Feedlots, Compiled by LMIC

Corn Price and Estimated Feedlot Cost of GainBased on Kansas Feedlot Data

Corn Price$/Bu

Estimated Feedlot Cost of Gain $/cwt.

5.00 87.15.50 92.56.00 97.86.25 100.36.50 102.96.75 105.47.00 107.87.25 110.37.50 112.77.75 115.08.00 117.48.25 119.78.50 122.0

U.S. Ave., -8.5 %

Change in Beef Cow Inventory, January 1, 2007-2012

-11.4%

-18.1%

-1.4%

+5.4%

-0.9%-2.6%

+3.3%-4.9%

-15.7%-1.75, 2011-5.4%

-4.1%

-16.4%-3.7%, 2011

-11.8%

-1.1%

-15.4%

-8.3%

-3.5%

-2.9%

-17.6%

-5.4%-12.5%

-1.3%

-11.4%-0.8%

-7.5%

-9.9%

-7.8%

0.0%

-22.5%

-16.7%

-0.4%

-9.4%

-8.2%

+4.9%

+0.9%

+6.7%

-2.0%

-6.5%

ANNUAL AVERAGE CATTLE PRICESSouthern Plains

55

75

95

115

135

155

175

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

$ Per Cwt

500-600lbSteerCalves

700-800lbFeederSteers

FedSteers



Cattle Sector Implications

• Cow-calf– Good profit potential; cost management key– Rebuilding strategy and costs– Producer transition

• Stocker – Good value of gain

• Feedlots and packers will continue to struggle– Loss of capacity likely

• Production challenges bigger than marketing challenges

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Documents

Cattle and Beef Markets: Short and Long Run Challenges and Opportunities