Cattle Situation and Outlook Tim Petry – Livestock Economist www.ndsu.edu/livestockeconomics October 17, 2012

Photo courtesy of Judy Jacobson, Watford City

Backgrounding-2012.pptx

All beef cattle market classes broke price records in 2011 and 2012

also wholesale beef prices retail beef prices

How about 2013? What could derail prices?

Livestock Price and Production Patterns 1. Seasonal 2. Cycle

3. Long term 4. Unexpected

LFTB

Drought – A Game Changer

Most Important Driver of Feeder Cattle Prices and Backgrounding Potential

CORN PRICE

FEED!

WINTER WHEAT

SILAGE

NOV FC vs DEC CORN

All Feeder Livestock Affected

Livestock Marketing Information Center; Data Source: USDA-AMS, Compiled & Analysis by LMIC

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

90

100

110

120

130

140

150

160

170

JAN APR JUL OCT

$ Per Cwt.

Avg.2006-10

2011

2012

C-P-4910/09/12

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

100110120130140150160170180190200

JAN APR JUL OCT

$ Per Cwt.

Avg.2006-10

2011

2012

C-P-5410/09/12

FEEDER PIG PRICES40 Pounds, Weekly

15

25

35

45

55

65

75

85

95

JAN

APRJU

LOCT

$ Per Head

Avg.2006-10

2011

2012

H-P-0110/09/12

FEEDER LAMB PRICES3-Market Average; CO, TX & SD; Weekly

7090

110130150170190210230250270

JAN APR JUL OCT

$ Per Cwt.

Avg.2006-10

2011

2012

S-P-0610/09/12

Livestock Marketing Information Center Data Source: USDA/NASS

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

30

35

40

45

50

55

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

Mil. Head

C-N-3207/20/12

-3.2%

Price Outlook?

MED. FRAME #1 STEER CALF PRICES 550-600 Pounds, N.D., Weekly

90

100

110

120

130

140

150

160

170

180

190

JAN APR JUL OCT

200720082009201020112012

MED. & LRG. #1 FEEDER STEER PRICES 750-800 Pounds, N.D., Weekly

8090

100110120130140150160170

JAN APR JUL OCT

2007

2008

2009

2010

2011

2012

Fut 2012

Fut 2013

CME Feeder Cattle Index

859095

100105110115120125130135140145150155160

9/1/

0511

/1/0

51/

1/06

3/1/

065/

1/06

7/1/

069/

1/06

11/1

/06

1/1/

073/

1/07

5/1/

077/

1/07

9/1/

0711

/1/0

71/

1/08

3/1/

085/

1/08

7/1/

089/

1/08

11/1

/08

1/1/

093/

1/09

5/1/

097/

1/09

9/1/

0911

/1/0

91/

1/10

3/1/

105/

1/10

7/1/

109/

1/10

11/1

/10

1/1/

113/

1/11

5/1/

117/

1/11

9/1/

1111

/1/1

11/

1/12

3/1/

125/

1/12

7/1/

129/

1/12

16% 21% 19% 22% 10%

? +17%

19%

SF_LS796 Sioux Falls, SD Oct 12, 2012 USDA-ND Dept of Ag Market News North Dakota Weekly Auction Summary - For the week ending Oct 13, 2012 Receipts: 7,773 Last Week 4,047 Last Year 3,923 Combined results of 3 auctions this week: Kist, Napoleon and Stockmen’s. Compared to last weeks’ lighter run: Steer and heifer calves 2.00 to 3.00 higher, yearling feeder steers 1.00 to 2.00 higher, yearling feeder heifers unevenly steady. Good demand for all weights of feeders this week in spite of higher corn costs and lower feeder cattle futures markets. Cash fed cattle market inactive until late afternoon Friday when packers had to come up with higher money to get cattle bought. Feeder Steers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price 10 284 284 201.00 201.00 42 324-347 328 194.50-208.00 204.17 55 356-380 367 187.00-209.50 196.65 171 412-446 435 170.00-189.50 180.88 11 401-404 403 197.00-198.50 197.68 Value Added 262 457-480 465 168.00-182.00 174.74 460 504-548 526 156.00-170.00 163.01 508 550-599 571 147.25-161.00 154.24 30 621-627 626 144.00-149.00 144.99 394 603-645 626 146.00-156.00 153.26 Calves 11 694 694 154.25 154.25 175 651-699 678 145.85-154.75 149.57 Calves 163 706-722 714 144.50-152.25 150.86 Calves 99 756-788 768 142.75-149.75 144.26 44 796 796 135.75 135.75 Calves 51 807-836 814 139.25-145.75 144.05 289 852-896 873 138.00-141.50 140.47 65 933-947 946 137.60-138.50 137.68 160 958-989 973 131.25-137.60 134.33

SLAUGHTER STEER PRICES5 Market Weighted Average, Weekly

80859095

100105110115120125130135140

JAN APR JUL OCT

$ Per Cwt.

2013Futures

2012Futures

2012

2011

Avg.2006-010

Livestock Marketing Information Center Data Source: USDA-AMS

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?

LRP-Then purchase date: Jun 4 maturity date: Oct 29

MKT CLASS PRICE PREMIUM CURRENT

PRICE 500-600 lb. steer 172.81 4.12 157.92 750-800 lb. steer 157.10 3.75 143.56 Fed cattle 122.18 4.03 124.07

ANNUAL AVERAGE CATTLE PRICES

55

80

105

130

155

180

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

$ Per Cwt

500-600lbSteerCalves

700-800lbFeederSteers

FedSteers

C-P-0608/09/12Livestock Marketing Information Center

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

Harvest usually brings out the bears

Questions?