Livestock Outlook - Kate Brooks - 2014 Cornhusker Economics Outlook

Livestock Outlook

Kathleen R. Brooks, Ph.D.Extension Livestock Marketing Specialist

Department of Agricultural EconomicsUniversity of Nebraska-Lincoln

[email protected]

Outline Beef Cattle Hog

Beef Cattle Outlook

Photo taken by Troy Waltz

2013 Recap Drought conditions in U.S improving Herd liquidation stabilizing toward end of 2013

Declining grain and forage prices Record high cattle prices Increased cow-calf profitability potential Poor feedlot and packer margins with some

improvement towards end of yearExcess capacity within feedlot industry

Record high wholesale and retail prices Beef demand domestically & export markets

No Drought: 10.25%Abnormally Dry to Moderate: 63.25%Severe to Extreme Drought: 26.50%

Cattle Inventory Report, January 1, 2014

All cattle & calves -1.8%, 87.7 mil hd (smallest since 1951) NE: -2.4% at 6.15 mil hd

Beef cow inventory -0.9%, 29.0 mil hd NE: -0.4% at 1.797 mil hd

Beef replacement heifers +1.7%, 5.5 mil hd NE: +10.6%, 387 thousand hd

Calf crop -1.0%, 33.9 mil hd NE: -2.3%, 1.68 mil hd

Cattle & calves on feed for slaughter -5%, 12.7 mil hd NE: -3.9% 2.5 mil hd

C-S-3412/27/13Livestock Marketing Information Center

Data Source: USDA-AMS & USDA-NASS

2013 Slaughter-6.4% (vs. 2012)

-10.7% (vs. 2007-11)

Since September slaughter 17.6% below 2012 and 18.9% below 2007-11 average…

…Period of herd stabilization (with little or no growth) that often occurs in first year of herd expansion???

ESTIMATED AVERAGE COW CALF RETURNSReturns Over Cash Cost (Includes Pasture Rent), Annual

-100-50

050

100150200250300350400

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

$ Per Cow

C-P-6601/29/14Livestock Marketing Information Center

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

Cow-Calf Outlook Improved margins Improved pasture conditions, declining input

prices, record calf prices

Is it enough to trigger expansion??? Market signals vs.

mother nature

Longer-Term Projections (as of Feb. 2014) http://www.usda.gov/oce/commodity/projections/index.htm

30,158

29,295

29,050 29,349

29,678

30,734

31,558 31,953

32,300 32,739

33,293

33,668

28,000

29,000

30,000

31,000

32,000

33,000

34,000

2012 2014 2016 2018 2020 2022

Beef Cow

Inventory (1,000

Head)

15% Increase in herd for 2023 compared to 2013

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

Feedlot Sector Significant improvements in returns over last several

months

Capacity issues still a concern

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

-325-275

-225-175-125-75

-252575

125175

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$ Per Head

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

C-P-2202/20/14

Livestock Marketing Information CenterData Source: USDA-AMS

SLAUGHTER STEER PRICES5 Market Weighted Average, Weekly

95

105

115

125

135

145

155

JAN APR JUL OCT

$ Per Cwt.

Avg.2008-12

2013

2014

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

75

85

95

105

115

125

135

145

155

2006 2007 2008 2009 2010 2011 2012 2013 2014

$ Per Cwt

SteerPrice

Breakeven

ProjectedBreakeven

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

C-P-2102/20/14

CATTLE ON FEEDUS Total, Monthly

9.5

10.0

10.5

11.0

11.5

12.0

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

Mil. Head

Avg.2008/12

2013

2014

C-N-1002/21/14Livestock Marketing Information Center

Data Source: USDA-NASS

*Futures as of the close on Wed February 26, 2014

Thru June 2015 all cattle futures contracts are above $130 per cwt

*Futures as of the close on Wed February 26, 2014

Thru Nov 2014 all feeder cattle futures contracts are above $171 per cwt

% Chg. Average % Chg. Comm'l % Chg.Comm'l from Dressed from Beef from

Slaughter Year Ago Weight Year Ago Production Year Ago(1,000 Head) (Lbs.) (Mil. Lbs.)

2012I 8026 -3.5 783 1.5 6282 -2.0II 8309 -3.8 779 2.6 6473 -1.3III 8333 -4.6 790 2.5 6586 -2.2IV 8283 -1.3 794 2.6 6572 1.3

Year 32951 -3.3 786 2.3 25913 -1.12013

I 7779 -3.1 793 1.4 6172 -1.7II 8325 0.2 783 0.5 6517 0.7III 8322 -0.1 794 0.5 6609 0.4IV 8033 -3.0 799 0.7 6420 -2.3

Year 32459 -1.5 792 0.8 25718 -0.82014

I 7280 -6.4 796 0.4 5797 -6.1II 7711 -7.4 786 0.4 6061 -7.0III 7735 -7.1 799 0.6 6177 -6.5IV 7529 -6.3 802 0.4 6041 -5.9

Year 30255 -6.8 796 0.4 24076 -6.42015

I 6985 -4.1 801 0.6 5595 -3.5II 7366 -4.5 792 0.8 5836 -3.7III 7453 -3.6 806 0.9 6006 -2.8IV 7362 -2.2 806 0.5 5937 -1.7

Year 29166 -3.6 801 0.7 23374 -2.9

Quarterly Forecasts (LMIC: 2/3/14)

YearQuarter

Live Sltr. % Chg. Feeder Steer PriceYear Steer Price from Southern Plains d

Quarter 5-Mkt Avg Year Ago 7-800# 5-600#($/Cwt.) ($/Cwt.)

2012I 125.30 13.8 154.25 182.41

II 120.91 7.2 152.65 178.65 III 119.69 4.9 141.82 150.57 IV 125.54 2.9 146.50 161.42

Year 122.86 7.1 148.81 168.26 2013

I 125.51 0.2 142.41 170.13 II 124.95 3.3 137.34 159.71

III 122.30 2.2 155.95 171.19 IV b 130.77 4.2 167.04 187.56

Year 125.88 2.5 150.69 172.15 2014

I c 139-142 11.9 169-172 200-205 II 138-141 11.6 170-175 205-212

III 133-137 10.4 171-177 199-207 IV 136-141 5.9 168-175 195-204

Year 137-140 10.0 169-175 199-208 2015

I 139-145 1.1 170-178 199-210 II 140-147 2.9 171-180 205-217

III 136-144 3.7 173-184 198-211 IV 138-146 2.5 170-182 192-207

Year 139-145 2.5 172-180 199-211

Quarterly Forecasts (LMIC: 02/03/14)

RETAIL ALL FRESH BEEF DEMAND INDEXAnnual, Using CPI 1990=100

10096

9186 86 82 79

75 75 77 80 81 85 8392 88 85 85

8077 75 77 79 81

0

20

40

60

80

100

120

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

Index Value

Livestock Marketing Information CenterData Source: Bureau of Labor Statistics, USDA-ERS, Compiled & Analysis by LMIC

U S BEEF EXPORTS TO MAJOR MARKETSCarcass Weight, Monthly

010

203040

506070

8090

2005 2006 2007 2008 2009 2010 2011 2012 2013

Mil. Pounds

Japan

Canada

Mexico

SouthKorea

I-N-3502/07/14Livestock Marketing Information Center

Data Source: USDA-ERS & USDA-FAS

Livestock Marketing Information CenterData Source: USDA-ERS & USDA-FAS

U S BEEF AND VEAL EXPORTSCarcass Weight, Monthly

130

150

170

190

210

230

250

270

290


Mil. Pounds

Avg.2007-11

2012

2013

I-N-1602/07/14

2013 Beef Exports up 5.3%

Hog Outlook

Diagnostic Case Submissions Testing Positive for PEDv

December 2013 Hog Inventory Report2013

(1,000 head)2013 as

% of 2012All Hogs & Pigs 65,940 99.3Kept for Breeding 5,757 98.9Kept for Marketing 60,183 99.4

Under 50 lbs. 19,049 98.750-119 lbs. 16,669 99.5120-179 lbs. 12,626 99.9180 lbs. and over 11,838 99.7

(thousand litters)

Mar-May Farrowings 2,816 95.4June-Aug Farrowings 2,925 99.9Sep-Nov Farrowings 2,882 99.8Dec-Feb Farrowing Intentions 2,825 101.3Mar-May Farrowing Intentions 2,855 101.4

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

PIGS PER LITTERQuarterly

7.2

7.7

8.2

8.7

9.2

9.7

10.2

10.7

1988 1991 1994 1997 2000 2003 2006 2009 2012

Head

H-N-5812/27/13Livestock Marketing Information Center

Data Source: USDA-NASS

BARROW AND GILT DRESSED WEIGHTFederally Inspected, Weekly

194196198200202204206208210212214

JAN

APR

JUL

OCT

Pounds

Avg.2008-12

2013

2014

H-S-2402/24/14Livestock Marketing Information Center

Data Source: USDA-AMS & USDA-NASS

Est 2012 Profits = -$3.54Est 2013 Profits = -$0.89

Forecasted 2014 Profits = +$41.80Forecasted Jan-July 2015 Profits = +$26.06

EARLY WEANED PIG PRICESNational, 10-12 Lbs, Delivered, Weekly

2025303540455055606570

JAN

APR

JUL

OCT

$ Per Head

Avg.2008-12

2013

2014

H-P-2102/24/14Livestock Marketing Information Center

Data Source: USDA-AMS

FEEDER PIG PRICES40 Pounds, Weekly

10

30

50

70

90

110

130

JAN

APR

JUL

OCT

$ Per Head

Avg.2008-12

2013

2014


Data Source: USDA-AMS

BARROW AND GILT PRICESIowa - So. Minnesota, Carcass Base Price, Weekly

50

60

70

80

90

100

110

JAN

APR

JUL

OCT

$ Per Cwt.

Avg.2008-12

2013

2014


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

U S NET PORK EXPORTSCarcass Weight, Monthly

225

275

325

375

425

475


Mil. Pounds

Avg.2007-11

2012

2013

I-N-3202/07/14Livestock Marketing Information Center

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

Source: USDA/ERS, Bureau of Labor Statistics

U.S. Pork Exports, Jan-Dec 2013

Source: USDA/ERS, Bureau of Labor Statistics

Change from a Year AgoCountry Carcass Weight, 1,000 lbs Percent

Japan -37,673 -2.7%Mexico 76,472 6.6%Canada -9,358 -1.6%South Korea -135,944 -32.6%China (Mainland) -141,601 -22.2%Russia -257,928 -93.7%Hong Kong 14,594 10.5%China (Taiwan) 7,319 24.7%Other Countries 83,025 12.1%TOTAL -388,285 -7.2%

RETAIL PORK DEMAND INDEXAnnual, Using CPI 1990=100

100 97 9590 89

83 83 8491 92 91 90 91 90 90

8580 83

79 80 79 80 7984

0

20

40

60

80

100

120

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

Index Value

Livestock Marketing Information CenterData Source: Bureau of Labor Statistics, USDA-ERS, Compiled & Analysis by LMIC

% Chg.Average % Chg. Comm'l % Chg.Year Comm'l fromCarcass from Pork from

Quarter Slaughter Year Ago Weightear Ago Production Year Ago(1,000 Head) (Lbs.) (Mil. Lbs.) (Re

2012I 28105 2.3 209 0.2 5858 2.4

II 26661 2.1 207 0.6 5519 2.8III 27965 2.1 201 0.3 5631 2.7IV 30433 1.8 206 -0.8 6244 0.9

Year 113163 2.1 206 0.1 23253 2.22013

I 27874 -0.8 208 -0.5 5777 -1.4II 26778 0.4 206 -0.5 5519 -0.0

III 27668 -1.1 204 1.2 5624 -0.1IV 29808 -2.1 211 2.6 6278 0.5

Year 112126 -0.9 207 0.7 23197 -0.22014

I 27803 -0.3 213 2.4 5912 2.3II 26569 -0.8 211 2.0 5593 1.3

III 27684 0.1 205 0.7 5678 1.0IV 30257 1.5 212 0.3 6402 2.0

Year 112313 0.2 210 1.3 23585 1.72015

I 28343 1.9 214 0.8 6074 2.7II 27184 2.3 213 1.0 5779 3.3

III 28467 2.8 208 1.4 5921 4.3IV 31287 3.4 213 0.7 6667 4.1

Year 115281 2.6 212 1.0 24441 3.6

Quarterly Hog & Pork Forecasts (LMIC: 2/27/14)

% Chg. Prices % Chg.Year Per Capita from National Wtd from

Quarter Consumption Year Ago Avg Base Year Ago(Retail Wt.) ($/Cwt.)

2012I 11.1 -2.6 84.11 7.3

II 10.9 -1.2 85.31 -4.7III 11.2 1.8 84.74 -8.6IV 12.7 3.6 80.59 -5.2

Year 45.9 0.5 83.69 -3.12013

I 11.5 3.1 81.08 -3.6II 11.3 3.0 89.32 4.7

III 11.4 2.0 95.25 12.4IV 12.7 0.0 82.98 3.0

Year 46.8 1.9 87.16 3.62014

I 11.7 2.0 84-86 4.8II 11.3 0.5 93-96 5.8

III 11.4 -0.4 95-99 1.8IV 12.6 -0.9 83-88 3.0

Year 47.0 0.3 89-92 4.02015

I 11.8 0.9 83-89 1.2II 11.3 -0.3 88-95 -3.2

III 11.4 0.6 87-95 -6.2IV 12.9 2.7 76-85 -5.8

Year 47.5 1.0 84-91 -3.3

Quarterly Hog & Pork Forecasts (LMIC: 2/27/14)

Photo taken by Troy Waltz

Thank You!

[email protected]

Livestock Outlook - Kate Brooks - 2014 Cornhusker Economics Outlook

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Transcript of Livestock Outlook - Kate Brooks - 2014 Cornhusker Economics Outlook