@AnneDunford By Anne Wasko Gateway Livestock, Market Analyst June 2014
J/98 J/99 J/00 J/01 J/02 J/03 J/04 J/05 J/06 J/07 J/08 J/09 J/10 J/11 J/12 J/13 J/14 US $/cwt $160 US Fed Steer Price $140 $120 $100 $80 $60 $40 Source: Cattlefax
J/00 J/01 J/02 J/03 J/04 J/05 J/06 J/07 J/08 J/09 J/10 J/11 J/12 J/13 J/14 Cdn $ per cwt $240 $220 $200 $180 $160 $140 $120 $100 $80 W Can 5-600 lb Steer Jan 2000 to current Source: CanFax
Jan-08 Jul Jan-09 Jul Jan-10 Jul Jan-11 Jul Jan Jul Jan-13 Jul Jan-14 Canadian $ per kg Monthly Canadian Retail Beef Price $17 $16 $15 $14 $13 $12 $11 Source: Stats Can
SUPPLY AND PRODUCTION
73 76 79 82 85 88 91 94 97 00 03 06 09 12 15P Million Head 50 45 40 35 U.S. Beef Cow Inventory January 1-1973 to 2015P Down 12% since 2006 or 4 mil head, ½ lost during the 2011 & 2012 droughts. 30 25 Source: USDA, Cattlefax Year 2015P +1/2%
31 30 29 28 27 26 25 24 23 US Steer & Heifer Slaughter 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14P 15P Source: USDA Jan 1 COF # s started off the smallest since 1997
70 73 76 79 82 85 88 91 94 97 00 03 06 09 12 Billion Pounds 28 U.S. Beef Production 1970 to 2014P 26 24 22 20 18 Source: USDA, Cattlefax Year Total sltr -1.2 mil head Fed -630,000 & Nonfed -570,000
70 73 76 79 82 85 88 91 94 97 00 03 06 09 12 15P Million Head 5.5 5 4.5 Canadian Beef Cow Numbers January 1-1970 to 2015P Cow herd 26% smaller since 05 or 1.4 mil head 4 3.5 3 2.5 Year Source: Statistics Canada
06 07 08 09 10 11 12 13 14 Thousand Head 600 550 500 W Canada Beef Heifers for Replacement on Jan 1 40,000 head since 2010 simply doesn t cut it 450 400 350 300 Year Source: Statistics Canada
Thousand Head Canadian Slaughter Cow Marketings 1200 1000 Slaughter Exports 800 600 2014P -6% 400 200 0 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 Source: Statistics Canada, CanFax, AAFC Year
Thousand Head 3750 3500 3250 3000 2750 2500 2250 2000 Source: Statistics Canada, CBGA, AAFC, CanFax Canadian Fed Marketings 1976 to 2016P 76 80 84 88 92 96 00 04 08 12 16P Year With a further 2% reduction forecast for 2014 (2.57 mil) we cannot expect much change in fed supply until the cow herd grows. Even if producers make the decision to keep heifers this fall, she won t produce a calf until 2016 which won t impact production until 2017. And in the short run, reduces feeder supply.
02 03 04 05 06 07 08 09 10 11 12 13 14 AB/SK Feedlot Bunk Capacity vs # of Feedlots # o f f e e d l o t s 250 225 200 175 150 2000 1800 1600 1400 1200 1000 800 600 400 200 0 t h o u s a n d h e a d Source: CanFax COF Capacity # of lots
Billion Pounds 4.0 Canadian Beef Production 1965-2014P 3.5 3.0 Smallest since 95 2.5 2.0 1.5 65 69 73 77 81 85 89 93 97 01 05 09 13 Str & Hfr carcass wts YTD -35 lbs Source: Canfax, AAFC, Statistics Canada
$400 US Cow-Calf Profit/Loss $/head cash costs $300 $200 $100 $0 -$100 -$200 80 83 86 89 92 95 98 01 04 07 10 13 Source: Cattlefax
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14P Percent U.S. Heifers as % of Total Feedlot Placements 35% 30% 25% 20% Source: USDA
$/cow wintered $400 Alberta Cow-Calf Returns $300 $200 $100 $0 -$100 -$200 91 93 95 97 99 01 03 05 07 09 11 13 Source: Canfax Year
76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14P 80% 75% Canadian Heifer Slaughter Ratio 15 yr avg - 69% 70% 65% 60% 55% 50% 45% 40% Source: AAFC, CBGA, CanFax, Stats Canada
DEMAND
Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec $/cwt $250 $240 $230 $220 $210 $200 $190 $180 $170 $160 US Weekly Choice Cutout Source: USDA 2011 2012 2013 2014
??? Beef is and will be good value to pork thru summer. $225 Beef cut-out / $125 Pork = 1.8:1 ratio
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec $/kg $17.00 $16.00 Canadian Retail Beef Price Apr +13% from yr ago $15.00 $14.00 $13.00 $12.00 2011 2012 2013 2014 Source: Statistics Canada
cents/lb 400 380 US Ground Beef Price Apr +16% 360 340 320 300 280 260 240 2011 2012 2013 2014 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: USDA
Billion Pounds 26 U.S. Pork Production 24 22 20 18 16 14 12 10 Source: USDA, Cattlefax 70 73 76 79 82 85 88 91 94 97 00 03 06 09 12 Year YTD hog sltr -4% but tonnage -1% due to heavier wts Experts still expect hog sltr -10% this summer/fall
April 2014 Restaurant Index was the strongest since May 2013. Fast casual saw the best performance. Beef remains the top protein in foodservice.
90 92 94 96 98 00 02 04 06 08 10 12 Demand Index (2000=100) 120 110 100 Canadian Retail Beef Demand Index The good news is that high prices do not reduce demand, they reduce the quantity demanded. - Steve Meyer 90 80 Source: Statistics Canada, CanFax, US Beef Demand Study Group
TRADE
tonnes 600000 Canadian Beef Exports 500000 400000 300000 +8% 200000 100000 0 92 94 96 98 00 02 04 06 08 10 12 14P US Japan Mexico China, HK S Korea Russia Other
tonnes 300 Canadian Beef Imports 250 200 150 100 50 0 92 94 96 98 00 02 04 06 08 10 12 14P US Aust NZ Argentina Uruguay Brazil Other
$/lb. $2.90 $2.70 $2.50 $2.30 Canadian Boneless Beef Prices (85% cow trim) $2.10 $1.90 $1.70 $1.50 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 5 yr ave 2012 2013 2014 Source: Canfax
# of head in thousands 1000 900 800 700 600 500 400 300 200 100 0 Fed Cattle Exports 353,000 head in 2013, down 18% 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Steers Heifers
Cdn $ per cwt $5 Alberta Fed Steer Basis Alberta/Nebraska (Cash to Cash) $0 ($5) ($10) ($15) ($20) ($25) ($30) ($35) 3 yr ave 2012 2013 2014 1 5 9 13 17 21 25 29 33 37 41 45 49 Source: CanFax Week
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Cdn $ per cwt $2 Alberta 850 lb Feeder Steer Basis ($2) ($6) ($10) ($14) ($18) ($22) ($26) ($30) 3 yr ave 2014 ($34) Source: CanFax
Source: GTIS, Global Agritrends Imports = 2% of Chinese consumption
PRICES
80/81 82/83 84/85 86/87 88/89 90/91 92/93 94/95 96/97 98/99 00/01 02/03 04/05 06/07 08/09 10/11 12/13 14/15P Billion Bushels 16 US Corn Production 14 12 10 8 6 4 2 0 Crop Year
Cdn $ per cwt $155 Alberta Weekly Fed Steer Price $145 $135 $125 $115 $105 $95 1 6 11 16 21 26 31 36 41 46 51 Week 2011 2012 2013 2014
J/10 A J O J/11 A J O J/12 A J O J/13 A J O J/14 A $ per head $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 ($50) ($100) ($150) ($200) ($250) ($300) Feedlot - Profit/Loss Margin Yearling Steer - Jan 2010 to current Source: CanFax
Cdn $ per cwt $200 Weekly 850 lb Steer Price W. Canada $190 $180 $170 $160 $150 $140 $130 $120 $110 Source: CanFax 1 5 9 13 17 21 25 29 33 37 41 45 49 2011 2012 2013 2014
Index 103 102 101 100 Seasonal 550 lb. Steer Calf Index (1993-2013) 93-13 Index 2014 cash $240 $230 $220 $210 99 98 97 96 J F M A M J J A S O N D $200 $190 $180 $170
US $ per cwt $155 $150 $145 $140 $135 $130 $125 $120 $115 $110 Weekly US Fed Steer Price 1 6 11 16 21 26 31 36 41 46 51 2012 2013 2014 Source: Cattlefax
Cdn $ per cwt $115 $105 $95 Western Canada D1,2 Weekly Cow Price 2011 2012 2013 2014 $85 $75 $65 $55 1 6 11 16 21 26 31 36 41 46 51 Source: Canfax
J/98 J/99 J/00 J/01 J/02 J/03 J/04 J/05 J/06 J/07 J/08 J/09 J/10 J/11 J/12 J/13 J/14 US $/cwt $160 $140 US Fed Steer Price 2012-2016?? $125-150? $120 $100 $80 1998-2003 $60-80 2004-2011 $80-100 $60 $40
NA cattle numbers remain tight for 3+ years Smaller beef and pork production in 2014 Poultry production slightly larger Consolidation & structure continue to evolve Slowing NA demand but growing global demand Consumers want to know more about their food - transparency Market access is vital for Canadian livestock industry Outside factors create uncertainty & cost: COOL & other trade issues, economic conditions, weather (drought) Expect more volatility & risk lots on the line at these price levels!
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