Photo courtesy of Judy Jacobson, Watford City Cattle Situation and Outlook Tim Petry Livestock Economist www.ndsu.edu/livestockeconomics September 19, 2016 outlook-9-19-2016.pptx
Record Breaking Prices! 2014 A Year to Remember 300 280 260 240 220 200 180 160 140 120 100 STARS ALIGNED PERFECTLY MED. FRAME #1 STEER CALF PRICES 550-600 Pounds, N.D., Weekly - 2014 JAN APR JUL OCT
HIGHLIGHTS - 2014 Short Supply Feeder cattle supply tight Heifers retained Beef production down 6% Steer slaughter 3% Heifer slaughter 9% Beef cow slaughter 18% Dairy cow slaughter 10% Good Demand Beef exports strong Quantity same Value up 16% By-product value record high Domestic demand improving Economy Lower pork/poultry production than expected Record corn crop, improved pasture conditions
What Happened?
WHAT HAPPENED? 2015 Record pork production Record chicken production Beef, pork, chicken exports struggling High $US value West Coast dock workers Bird flu Russia & world unrest Byproducts Record cold storage meat stocks Chinese/World Economics U.S. Stock Market Continued short cattle supply, but increasing Lower gas prices
WASDE U.S. Meat Production and Prices 2014 2015 Change from 2014 2016 forecast Change from 2015 2017 forecast Change from 2016 Production Billion Pounds Percent Pounds Percent Pounds Percent Beef 24.25 23.70-2.3 24.94 5.2 25.80 3.4 Pork 22.84 24.50 7.3 24.89 1.6 25.51 2.5 Broilers 38.55 40.05 3.9 40.90 2.1 42.01 2.7 Turkey 5.76 5.63-2.3 6.06 7.6 6.14 1.2 Total meat 92.17 94.63 2.7 97.55 3.1 100.24 2.8 Prices Dollars/cwt Dollars/cwt Steers 154.56 148.12-4.2 123.75-16.5 120.75-2.4 Hogs 76.03 50.23-33.19 46.96-6.5 43.25-7.9 Cents/lb Cents/lb Broilers 104.9 90.5-13.7 85.5-4.5 88.3 3.2 Turkey 107.6 116.2 8.0 119.2 2.6 115.5-3.1 Sept. 12, 2016
U.S. Ranking in World Production Exports Beef 1 4 Pork 2 1 Chicken 1 2 Turkey 1 1 Eggs 2 2
I-N-16 09/07/16 I-N-50 09/07/16 Data Source: USDA-ERS & USDA-FAS, Livestock Marketing Information Center
Mil. Pounds 375 350 325 300 275 250 225 200 175 150 125 US BEEF AND VEAL IMPORTS Carcass Weight, Monthly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Avg. 2010-14 2015 2016 Data Source: USDA-ERS & USDA-FAS Livestock Marketing Information Center I-N-15 09/07/16
Thou. Head 90 BEEF COW SLAUGHTER Federally Inspected, Weekly 80 70 60 50 40 30 JAN APR JUL OCT Avg. 2010-14 2015 2016 Data Source: USDA-AMS & USDA-NASS Livestock Marketing Information Center C-S-34 09/16/16
Mil. Head 140 TOTAL CATTLE INVENTORY BY CYCLE U.S., January 1 130 120 110 100 90 80 70 60 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1938-49 1949-58 1958-67 1967-79 1979-90 1990-04 2004-14 2014-16 Data Source: USDA-NASS Livestock Marketing Information Center C-N-40 02/01/16
U.S. Drought Monitor August 5, 2014 August 6, 2013 August 7, 2012 August 2, 2011
Percent 40 US RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly 35 30 25 20 15 10 5 0 May Jul Sep Avg. 2010-14 2015 2016 Data Source: USDA-NASS, Compiled & Analysis by LMIC Livestock Marketing Information Center G-NP-30 08/29/16
CHANGE IN BEEF COWS NUMBERS JANUARY 1, 2015 TO JANUARY 2016 (1000 Head) U.S. Total: 1029 Livestock Marketing Information Center Data Source: USDA-NASS 2/5/2016
C-N-38 02/01/16 C-N-30 02/01/16 Livestock Marketing Information Center; Data Source: USDA/NASS
HEIFERS HELD AS BEEF COW REPLACEMENTS January 1, ND Thousand Head 250 200 150 100 50 0 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Data Source: USDA-AMS & USDA-NASS - Livestock Marketing Information Center C-S-18 09/16/16
How much expansion is needed? 60 Cow Inventory and Beef Production 30 55 25 Million Head 50 45 40 20 15 10 Billion Pounds 35 30 Source: USDA compiled by LMIC 1930 1933 1936 1939 1942 1945 1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 5 0 Cow Inventory Beef Production
Average Net Return to Labor and Management Per Beef Cow N.D. Farm Business Mgmt., Excluding Red River Valley 1000 800 600 400 200 0-200 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 15 16 Average Projected High 20% Low 20%
NOV FC vs. DEC CORN 2012 2014
NOV FC VS DEC CORN
MED. FRAME #1 STEER CALF PRICES 550-600 Pounds, N.D., Weekly 300 280 260 240 220 200 180 160 140 120 100 JAN APR JUL OCT 2016 2015 2014 2009-2013 Ave
MED. & LRG. #1 FEEDER STEER PRICES 750-800 Pounds, N.D., Weekly 260 240 220 200 180 160 140 120 100 80 JAN APR JUL OCT 2017 Futures 2016 Futures 2016 2015 2014 2009-2013 Ave
SF_LS750 Sioux Falls, SD Wed Sep 14, 2016 USDA-ND Dept of Ag Market News Feeder Steers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price 43 607 607 148.00 148.00 21 662-682 675 147.00 147.00 13 711-743 728 135.00-136.50 135.82 27 776-791 783 131.00-135.50 133.31 56 803-844 834 127.50-136.75 135.25 36 903-948 921 123.50-126.00 124.66 15 999 999 118.00 118.00 Fleshy 110 1035 1035 127.00 127.00 Fancy West Fargo Stockyards - West Fargo, ND Feeder Cattle Weighted Average Report for 09/14/2016 Receipts: 1307 Last Week: N/A Year Ago: N/A No recent comparables for trend comparison. Annual "Big Iron" sale here at West Fargo Stock Yards saw an attractive offering of yearlings and a few calves. Yearlings were largely in off grass and in ight to moderate flesh. Demand mostly moderate. Included in the run were 47 percent steers, and 53 percent heifers. 88 percent over 600lbs.
SF_LS750 Sioux Falls, SD Wed Sep 14, 2016 USDA-ND Dept of Ag Market News West Fargo Stockyards - West Fargo, ND Feeder Cattle Weighted Average Report for 09/14/2016 Receipts: 1307 Last Week: N/A Year Ago: N/A Feeder Heifers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price 44 628-649 645 135.50-137.00 136.73 Thin Fleshed 119 750-766 753 124.00-126.75 126.17 65 840 840 125.50 125.50 54 871-895 877 121.75-125.00 124.20 9 1001 1001 116.00 116.00
Premiums likely (but not consistent) for: Verified shots (ND VIP) Natural (no antibiotics or implants) Source/age verified Weaned Bovine Viral Diarrhea persistently infected (BVD-PI) tested negative Beef Quality Assurance (BQA) Replacement quality heifers * Check with your market before selling
245 235 225 215 205 195 185 175 165 155 145 135 125 115 105 95 85 CME Feeder Cattle Index 16% 21% 19% 22% 10% 9/1/05 12/1/05 3/1/06 6/1/06 9/1/06 12/1/06 3/1/07 6/1/07 9/1/07 12/1/07 3/1/08 6/1/08 9/1/08 12/1/08 3/1/09 6/1/09 9/1/09 12/1/09 3/1/10 6/1/10 9/1/10 12/1/10 3/1/11 6/1/11 9/1/11 12/1/11 3/1/12 6/1/12 9/1/12 12/1/12 3/1/13 6/1/13 9/1/13 12/1/13 3/1/14 6/1/14 9/1/14 12/1/14 3/1/15 6/1/15 9/1/15 12/1/15 3/1/16 6/1/16 9/1/16 17% 19% 0% 10% 7% 23%?
175 $ Per Cwt. 165 155 145 135 125 115 105 95 85 SLAUGHTER STEER PRICES 5 Market Weighted Average, Weekly JAN APR JUL OCT Avg. 2008-12 2013 2014 2015 2016 Fut 2016 Fut 2017
Fed Cattle Price Predicament - 2015 C-P-39 01/04/16 M-S-09 01/22/16 C-S-18 06/24/16 Data Source: USDA-AMS & USDA-NASS Livestock Marketing Information Center
Competing Meats H-P-09 09/12/16 P-P-01 09/12/16 Data Source: USDA-AMS Livestock Marketing Information Center S-P-05 09/12/16
C-P-62 09/12/16 M-P-24 09/12/16 Data Source: USDA-AMS Livestock Marketing Information Center
$ Per Cwt. 145 135 125 115 105 95 85 75 65 55 45 SLAUGHTER COW PRICES 85-90% Lean, Weekly JAN APR JUL OCT Avg. 2009-13 2014 2015 2016 Livestock Marketing Information Center Data Source: USDA-AMS C-P-35 01/04/16
$ Per Cwt 275 250 225 200 175 150 125 100 75 50 AVERAGE ANNUAL CATTLE PRICES 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 500-600lb Steer Calves 700-800lb Feeder Steers Fed Steers Data Source: USDA-AMS, Compiled and Forecasts by LMIC Livestock Marketing Information Center C-P-06 09/02/16
Price Risk Management Tools Cash forward contract Video and internet auctions CME futures CME options Livestock Risk Protection (LRP) Livestock Gross Margin (LGM) Which one or combination fits your marketing plan?
Year Coverage Price Fall Steer Calf LRP Results Premium Actual Price LRP Payment LRP Profit 2005 105.78 1.67 127.75 -- -1.67 2006 114.42 1.49 107.55 6.87 5.38 2007 123.20 2.58 119.27 3.93 1.35 2008 127.38 5.46 107.37 20.01 14.55 2009 112.18 3.73 102.94 9.24 5.51 2010 121.02 2.88 122.61 -- -2.88 2011 149.57 5.00 156.92 -- -5.00 2012 155.75 4.00 158.33 -- -4.00 2013 171.29 3.13 181.97 -- -3.13 2014 231.16 7.25 264.95 -- -7.25 2015 229 7.17 199.41 29.59 22.42 2016 145.46 4.97 July 15 to Nov 15 (17 wk)
SF_LS766 Sioux Falls, SD Thu Nov 12, 2015 USDA-ND Dept of Ag Market News Stockmans Livestock Exchange Feeder Cattle Weighted Average Report for 11/12/2015 Receipts: 4101 Last Week: 4762 Year Ago: 4553 Feeder Steers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price 7 308-334 323 286.00-287.00 286.41 18 364-375 368 259.00-283.00 268.43 114 406-449 424 226.00-257.00 247.26 185 455-494 485 211.00-228.00 221.86 291 501-549 528 205.00-228.00 214.01 350 551-586 575 190.00-208.00 199.41 431 613-647 628 183.00-202.25 194.37 Calves 309 652-697 674 180.00-194.50 186.53 Calves 30 727 727 181.50 181.50 Calves
Volatile Prices Will Continue! Questions!