Cattle & Beef Outlook

Transcription

1 Cattle & Beef Outlook Glynn Tonsor Dept. of Agricultural Economics, Kansas State University Overarching Beef Industry Economic Outlook Supplies Peak herd size may extend given 17 returns Demand Key to surprising margins in 17

2 $ Per Cwt MED. & LRG. #1 STEER CALF PRICES Pounds, Southern Plains, Weekly JAN APR JUL OCT Avg Beef Basis, Salina KS 2018 Projections (as of 12/12): Oct. 17: $154 Nov. 14: $154 $173 $148 Data Source: USDA AMS C-P-54 12/11/17 $ Per Cwt AVERAGE CALF PRICES lb Steer Calves, Southern Plains $ $ $ $ Annual Average 4th Quarter Data Source: USDA AMS, Compiled and Forecasts by LMIC

3 $ Per Cow COW-CALF RETURNS AND CATTLE INVENTORY U.S., Annual Mil. Head Estimated Cow Calf Returns Cattle Inventory Jan 1 80 Data Source: USDA AMS & USDA NASS, Compiled and Analysis by LMIC C-P-67 12/03/17 $ Per Cow ESTIMATED AVERAGE COW CALF RETURNS Returns Over Cash Cost (Includes Pasture Rent), Annual $534 $ Data Source: USDA & LMIC, Compiled by LMIC C-P-66 12/03/17 $21 $69 $4

4 $ Per Cow y = x R² = ESTIMATED AVERAGE COW CALF COSTS Total Cash Cost Plus Pasture Rent, Annual Year Break Even (550# $/cwt) 1990 $ $ $ $ $ $ $ $448 $553 $879 $806 $ Data Source: USDA & LMIC, Compiled by LMIC 12/03/17 Mil. Head 140 TOTAL CATTLE INVENTORY BY CYCLE U.S., January Data Source: USDA NASS C-N-40 08/13/17

5 Mil. Head 140 JANUARY 1 TOTAL CATTLE INVENTORY U.S., Annual = 93.6 Million Head +1.8 Percent Data Source: USDA NASS C-N-01 08/13/17 Mil. Head JANUARY 1 COW INVENTORY U.S., Annual 2017 = 31.2 Million Head +3.5 Percent Beef Dairy 2017 = 9.3 Million Head +0.4 Percent Data Source: USDA NASS C-N-02 08/13/17

6 VOG Projections: Production Chart: Cattle Fax All Slides.pdf Economic Outlook Overview: Post Weaning Forward Looking Margin Perspective Pratt, KS 12/12/17 situation: PRE CONDITIONING Buy 725 lb steer on 04/04/18 ($143) Sell 1,000 lb steer on 9/05/18 ($137) {1.8 ADG} VOG: $122/cwt

7 Percent Economic Outlook Overview: Stockers Historical Margin Perspective BUY/SELL MARGINS S. Plains, Mar lb. Steer as % of Nov lb. Steer Average Average Data Source: USDA AMS, Compiled and Analysis by LMIC C-P-60 08/13/17 $ Per Cwt. 190 MED. & LRG. #1 FEEDER STEER PRICES Pounds, Southern Plains, Weekly Beef Basis, Salina KS 2018 Projections (as of 12/12): Mar. 14: $142 Apr. 11: $ $ $ JAN APR JUL OCT Avg Data Source: USDA AMS C-P-49 12/11/17

8 Economic Outlook Overview: Feedlots Q1 Q3 of 2017 MUCH better than anticipated Upcoming projections reflect higher placement costs $ Per Cwt. 150 SLAUGHTER STEER PRICES 5 Market Weighted Average, Weekly $117 $ JAN APR JUL OCT Avg Data Source: USDA AMS 12/11/17

9 Historical and Projected Kansas Feedlot Net Returns (as of 12/11/17 ) ( Oct. 17 : -$138/steer Representative Barometer for Trends in Profitability Historical and Projected Kansas Feedlot Net Returns (as of 12/11/17 ) (

10 AVERAGE ANNUAL RETURNS TO CATTLE FEEDERS Feeding 750 Lb. Steers, S. Plains, Custom Feeding Total Costs $ Per Head Data Source: USDA AMS, Analysis and Forecasts by LMIC C-P-10 12/02/17 Quarterly Forecasts (LMIC: 12/3/17) % Chg. Average % Chg. Comm'l % Chg. Year Comm'l from Dressed from Beef from Quarter Slaughter Year Ago Weight Year Ago Production Year Ago 2017 I 7, , II 8, , III 8, , IV 8, , Year 32, , I 8, , II 8, , III 8, , IV 8, , Year 33, , I 8, , II 8, , III 8, , IV 8, , Year 33, ,

11 Quarterly Forecasts (LMIC: 12/3/17) Live Sltr. % Chg. Feeder Steer Price Year Steer Price from Southern Plains Quarter 5-Mkt Avg Year Ago 7-800# 5-600# 2017 I II III IV Year I II III IV Year I II III IV Year Meat Supplies & Trade

12 Bil. Pounds COMMERCIAL BEEF PRODUCTION US, Quarterly JAN MAR APR JUN JUL SEP OCT DEC Avg. 2012/ Data Source: USDA NASS, Forecasts by LMIC M-S-01 11/25/17 Bil. Pounds 3.5 US BEEF AND VEAL EXPORTS Carcass Weight, Annual Data Source: USDA ERS & USDA FAS, Compiled and Forecasts by LMIC I-N-06 11/25/17

13 Percent 12 US BEEF AND VEAL EXPORTS As a Percentage of Production, Carcass Weight, Annual Data Source: USDA ERS & USDA FAS, Compiled and Forecasts by LMIC I-N-07 11/25/17 Bil. Pounds 4.0 US BEEF AND VEAL IMPORTS Carcass Weight, Annual Data Source: USDA ERS & USDA FAS, Compiled and Forecasts by LMIC I-N-12 11/25/17

14 Percent US BEEF AND VEAL IMPORTS As a Percentage of Production, Carcass Weight, Annual Imported less (as % of prod.) in 2016 than Data Source: USDA ERS & USDA FAS, Compiled and Forecasts by LMIC I-N-08 11/25/17 Bil. Pounds 3.5 US BEEF AND VEAL NET IMPORTS Carcass Weight, Annual Data Source: USDA ERS & USDA FAS, Compiled and Forecasts by LMIC I-N-28 11/25/17

15 Percent 14 US BEEF AND VEAL NET IMPORTS As a Percentage of Production, Carcass Weight, Annual Data Source: USDA ERS & USDA FAS, Compiled and Forecasts by LMIC I-N-11 11/25/17 USDA Long Term projections Feb report, early release estimates ( Per capita meat consumption, retail weight Item Beef Pork Total red meat Broilers Total poultry Red meat & poultry Note: Totals may not add due to rounding. 30

16 USDA Long Term projections Feb report, early release estimates ( Per capita meat consumption, retail weight 2019 would be highest for beef since 2009 Item Beef Pork Total red meat Broilers Total poultry Red meat & poultry Note: Totals may not add due to rounding. Year Total Red Meat & Poultry Pounds US RED MEAT & POULTRY CONSUMPTION Per Capita, Retail Weight, Annual Total Poultry Red Meat Data Source: USDA NASS, Compiled & Analysis by LMIC M-C-07 12/05/17

17 Pounds US RED MEAT & POULTRY CONSUMPTION Per Capita, Retail Weight, Annual Beef Pork Total Chicken Turkey Data Source: USDA NASS, Compiled & Analysis by LMIC M-C-10 12/05/17 Pounds US RED MEAT & POULTRY CONSUMPTION Per Capita, Retail Weight, Annual Beef Pork Total Chicken Turkey Data Source: USDA NASS, Compiled & Analysis by LMIC M-C-01 12/05/17

18 Pounds US TOTAL RED MEAT CONSUMPTION Per Capita, Retail Weight, Annual Data Source: USDA NASS, Compiled & Analysis by LMIC M-C-02 12/05/17 Pounds 120 US POULTRY CONSUMPTION Per Capita, Retail Weight, Annual Total Chicken Turkey Data Source: USDA NASS, Compiled & Analysis by LMIC M-C-03 12/05/17

19 Pounds 54 US PORK CONSUMPTION Per Capita, Retail Weight, Annual Data Source: USDA NASS, Compiled & Analysis by LMIC M-C-14 12/05/17 Pounds 70 US BEEF CONSUMPTION Per Capita, Retail Weight, Annual Data Source: USDA NASS, Compiled & Analysis by LMIC M-C-15 12/05/17

20 USDA Long Term projections Feb report, early release estimates ( Per capita meat consumption, retail weight Item Beef Pork Total red meat Broilers Total poultry Red meat & poultry Note: Totals may not add due to rounding. Projections INCLUDE trade dependency 39 USDA Long Term projections Feb report, early release estimates ( Beef long-term projections Item Units Commercial production Mil. lbs. 25,221 26,400 27,620 28,312 28,644 29,097 Change from previous year Percent 4.7% 4.6% 2.5% 1.2% 0.6% Imports Mil. lbs. 3,015 2,966 3,030 2,920 2,954 3,090 Total supply Mil. lbs. 28,986 30,190 31,417 32,014 32,225 32, % 4.1% 1.9% 0.7% 0.5% Exports Mil. lbs. 2,556 2,855 2,970 2,752 2,734 2, % 4.0% -7.3% -0.7% 0.2% Total consumption Mil. lbs. 25,673 26,635 27,732 28,702 28,931 29,278 Per capita, retail weight Pounds Change from previous year Percent 3.1% 3.3% 2.9% 0.0% 0.0% 40

21 USDA Long Term projections Feb report, early release estimates ( Beef long-term projections Item Units Prices: Beef cattle, farm $/cwt Calves, farm $/cwt Steers, 5-area $/cwt Feeder steers, Oklahoma City $/cwt Percent 2.0% -1.1% -7.5% -5.3% -1.4% Feed price ratio: Beef cattle-corn Ratio Beef cow inventory 1,000 head 30,166 31,210 31,875 32,225 31,932 31,341 Percent 3.5% 2.1% 1.1% -0.9% 0.7% 41 Q1.2017: 3.5% vs. Q Q2.2017: 3.7% vs. Q Q2.2017: Per Capita Consumption = +0.6% (Year over Year) Real All Fresh Beef Prices = 2.4% ($5.67/lb nominal price) IF Real All Fresh Beef Prices 0.7% = 0% Demand Change meat/meat demand 42

22 Q3.2017: +0.5% vs. Q Q3.2017: Per Capita Consumption = +2.2% (Year over Year) Real All Fresh Beef Prices = 1.9% ($5.77/lb nominal price) IF Real All Fresh Beef Prices 2.4% = 0% Demand Change meat/meat demand 43 Updated Retail Beef Demand Indices Cattlemen s Beef Board Sept. 18,

23 Demand up 4 of 6 months to start 2017 (June 17 : 113)

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25 Assessing Beef Demand Determinants Glynn T. Tonsor, Ted C. Schroeder, and Jayson L. Lusk Cattlemen s Beef Board Wrap Up Broad Profitability Outlook Cow calf: Converging toward Long Term Levels 2017 Better than Expected, May Delay Peak Herd Size Stocker: $ at stake has moderated Margins vary widely across situations but opportunity persist Feedlot: Early 2017 offered notable equity recovery Margins have deteriorated ($10/cwt) since ~ Nov. 1 50

26 More information available at: This presentation will be available in PDF format at: Glynn T. Tonsor Professor Dept. of Agricultural Economics Kansas State University 51 Utilize a Wealth of Information Available at AgManager.info

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