Beef Cattle Situation and OutlookDr. Curt Lacy and Dr. John McKissick

Extension Livestock Economists

Other Items to Watch this Year U.S. currency value Crude oil prices Economy Total meat production

MED. & LRG. #1 & 2 STEER CALF PRICES500-600 Pounds, Georgia, Weekly

85

90

95

100

105

110

115

120

125$ Per Cwt.

Avg.2001-05

2006

2007

2008

Livestock Marketing Information Center 01/02/08

MED. & LRG. #1 & 2 FEEDER STEER PRICES700-800 Pounds, Georgia, Weekly

75

80

85

90

95

100

105$ Per Cwt.

Avg.2001-05

2006

2007

2008

Livestock Marketing Information Center 01/02/08

SLAUGHTER STEER PRICESSouthern Plains, Weekly

70

75

80

85

90

95

100

105

JAN APR JUL OCT

$ Per Cwt.

Avg.2002-06

2007

2008

C-P-5201/15/08Livestock Marketing Information Center

2008 Outlook

Recent and Projected Beef Supply

23.5

24

24.5

25

25.5

26

26.5

2004 2005 2006 2007 2008

ActualProjected

Total Meat Supplies

0

20

40

60

80

100

2004 2005 2006 2007 2008

Beef Pork Lamb/ Mutton Broilers Turkeys

87.191.8590.7689.585.4

What is the Market Offering Today-Futures Based Price Projections

$80.00

$85.00

$90.00

$95.00

$100.00

$105.00

$110.00

Feb Apr

J un Aug O

ctDec Feb A

pr

$/C

wt.

500# calf 650# Feeder 750# Feeder Live Cattle

What is the Market Offering Today-Futures Based Price Projections

$400.00

$450.00

$500.00

$550.00

$600.00

$650.00

$700.00

$750.00

Feb Mar Apr May J un J ul Aug Sep Oct Nov

$/h

ea

d

500# calf 650# Feeder 750# Feeder

What You Can Sell for Today-Futures Based Price Projections

$800.00$850.00$900.00$950.00

$1,000.00$1,050.00$1,100.00$1,150.00$1,200.00$1,250.00$1,300.00

$/h

ea

d

L ive Cattle

Fuel Prices 1997-2006

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$/

Gallo

n

Diesel (bulk)

Diesel prices are up 145% since 2002

Impact of Fuel & Fertilizer Prices on Cost of Production

$20$30$40$50$60$70$80$90

$100$110

2002 2007

500# Calf ($/ Cwt.) Hay ($/ ton)

Projected Profits for 2008Item South

GeorgiaNorth

Georgia

Expected Returns Over Variable Costs ($/cow)

($3.13) ($30.58)

Chance for positive returns 48% 30%

Returns to Land, Labor, Capital and Management ($/cow)

$56.87 ($2.80)

Breakeven Price ($/cwt.) $100.32 $101.73

Longer-term Outlook

BEEF COWS THAT HAVE CALVEDJANUARY 1, 2007(1000 Head)

950 to 5,310 (11)520 to 950 (9)300 to 520 (8)

90 to 300 (11)0 to 90 (11)

C-N-1502/02/07

717Alaska

Hawaii

US Total

6.5

175 921

700725

CT 7

DE 4

950

585

85.2

473

427234

1070

1500 1207

490

11

MD 50

MA 7111

405

518

2146

1382

1940233

NJ 9

440

112

392

939

296

2000

575

150RI 1.5

203

1669

1153

5303

344

VT 10

710

265

212

265

763

32894

Livestock Marketing Information Center

Data Source: USDA/NASS

NH 4

JANUARY 1 COW INVENTORYU.S., Annual

5

10

15

20

25

30

35

40

45

50

1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

Mil. Head

Beef

Dairy

C-N-0207/20/07

-0.3 Percent

2007 = 32.9 Million Head

+0.7 Percent2007 = 9.1 Million Head

Livestock Marketing Information Center

Data Source: USDA/NASS

HEIFERS HELD AS BEEF COW REPLACEMENTS

January 1, U.S.

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

Mil. Head

C-N-3807/20/07

-0.5 %

Livestock Marketing Information Center

Data Source: USDA/NASS

Beef Cow FactoryJanuary 1, U.S.

3

13

23

33

43

53

63

1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006

Mil. Head

Heifers Cows 2008 Projection

C-N-3801/28/05

Livestock Marketing Information Center

Data Source: USDA/NASS

-1.0%

Live Cattle DemandAnnual, Beef Production, 5-Area Live Cattle Price

90

919293

94

959697

98

99

0001

02

0304

0506

55.00

60.00

65.00

70.00

75.00

80.00

85.00

90.00

95.00

22.00 23.00 24.00 25.00 26.00 27.00 28.00 Beef Production, Mil. Pounds

$/C

wt.

Old Demand New Demand

2007

DEMAND FOR FEEDERSRelationship Between GA Steer Prices and Omaha, NE

Corn Prices

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

Fedd

er P

rice

$/C

wt.

$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

Cor

n Pr

ice

$/B

u.

500-600# GA Steer Price 700-800# GA Steer Price Omaha Corn Price

Energy Bill 36 billion gallons of ethanol used by blenders by

2022. 15 billion gallons required to come from corn by

2015. 15 billion gallons ethanol ≈5.4 billion bushels of

corn. 2007 U.S. corn crop = 10.54 billion bushels. At 2007 yield of 153 bushels, need 35.29 million

acres just for ethanol.

Big Picture Things to Consider Impacts of Ethanol on Feed Costs Source Verification Natural/Organic Markets National Animal ID MCOOL

Market

Political

Summary & Implications Supply

The herd has expanded some but the drought has halted growth for this year. It is likely that the drought will have longer term implications other than cow

numbers. Demand

Demand for beef remains good but,…economy is a big question!! Higher corn prices will reduce demand for feeders Exports will help.

Profits Most cow-calf producers will be hard pressed to cover out of pocket expenses for

next 2-4 years. Higher feed, fuel and fertilizer costs will continue to squeeze profits. Lower prices for feeders may make retained ownership and heifer retention more

feasible. Know the RISKS!!!