Beef Outlook. Regional Dealer Event. February 9, Dr. Scott Brown Agricultural Markets and Policy Division of Applied Social Sciences

Transcription

1 Beef Outlook Regional Dealer Event February 9, 2018 Dr. Scott Brown Agricultural Markets and Policy Division of Applied Social Sciences

2 $ Per Cwt. MED. & LRG. #1 STEER CALF PRICES Pounds, Southern Plains, Weekly JAN APR JUL OCT Avg Data Source: USDA-AMS Livestock Marketing Information Center C-P-49A 01/29/18

3 $ Per Cwt. SLAUGHTER STEER PRICES Southern Plains, Weekly JAN APR JUL OCT Avg Data Source: USDA-AMS Livestock Marketing Information Center C-P-52 01/29/18

4 U.S. Corn Supply and Use, Feb Projected 2015/ / /18 Planted area (mil. ac.) Harvested area (mil. ac.) Yield (bu./ac.) Beginning stocks (mil.bu.) 1,731 1,737 2,293 Production 13,602 15,148 14,604 Imports Total supply 15,401 16,942 16,947 Feed 5,114 5,467 5,550 Ethanol 5,224 5,439 5,525 Food, seed, other 1,424 1,450 1,470 Exports 1,901 2,293 2,050 Total use 13,664 14,649 14,595 Ending stocks 1,737 2,293 2,352 Stocks/use ratio 12.7% 15.7% 17.1% Farm price $3.61 $3.36 $3.30

5 2017 Above Expectations; But 2018? Since 2016: Supply pressure Economics and weather pointed to beef cow expansion Other meat supplies have followed suit Last year: Demand supported prices A rare year with supplies and prices up High-quality beef is still a growth market This year: Cow herd expansion slowing or coming to an end? Demand at a new level? Or is a retreat most likely?

6 Selected Retail Meat Prices Chicken breast, boneless Chicken legs, bone-in Ham, boneless Pork chops Bacon, sliced Sirloin steak Round steak Beef for stew Round roast Chuck roast Ground beef Percent Change, 2017 (YTD) vs. 2010

7 Meat Production Billion Pounds Beef Pork Chicken (p) 2019 (p)

8 More Meat for U.S. Consumers Still to Come Pounds per Person (p) Domestic Meat Availability

9 Beef Availability per U.S. Resident Percent Change vs. Year Ago fed steer price change: AVG MAX MIN 11 years with <-1% Q change 7.0% 24.7% -10.3% 9 years with -1 to 1% Q change 1.4% 7.8% - 4.2% 6 years with >1% Q change -5.7% 6.6% -18.4% (p)

10 Economies of Scale Are Present In All Agricultural Sectors

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13 $ Per Cow ESTIMATED AVERAGE COW CALF RETURNS Returns Over Cash Cost (Includes Pasture Rent), Annual Data Source: USDA-AMS, Compiled and Analysis by LMIC Livestock Marketing Information Center C-P-66 12/03/17

14 How Many More Beef Cows? Million Head Beef Cow Inventory (p)

15 Weather Has Cooperated in Growing the Beef Cow Herd???

16 Beef Cow Slaughter Thousand Head JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC avg.

17 Beef Cow Slaughter / Jan. 1 Inventory Percent

18 Cattle on Feed, Capacity Lots Million Head JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC avg. 2018

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20 Heifers / Total on Feed Percent

21 F.I. Dressed Cattle Weight Pounds JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC avg.

22 U.S. Meat Markets: How Does Trade Figure In? Change in Total Meat, Billion Lbs (p) Production Net Trade

23 Trade: Why is it Important? 1.8 Index, avg. = Corn+Soy+Wheat Prod. Beef+Pork+Chicken Prod. U.S. Population

24 Trade: Why is it Important? 1.40 Index, avg. = U.S. Population ROW Population

25 Trade: Why is it Important? 2.2 Index, avg. = U.S. Real GDP ROW Real GDP

26 Beef Trade Million Pounds Exports Imports

27 Growth Potential in China! Beef Consumption, Lbs./Person U.S. Canada EU S. Korea Japan China/HK/TW

28 Beef Values: Domestic vs. International 9 8 Dollars per Unit Export Value (per kg) All Fresh Retail (per lb.)

29 Beef Production Growth Percent Change vs. Previous Year U.S. Rest of World (p)

30 Premiums Available for Beef Carcass Quality 30 Dollars per Hundredweight /27/03 10/27/06 10/27/09 10/27/12 10/27/15 Prime Over Choice Choice Over Select

31 Range around SW MO Feeder Prices

32 Cattle Prices Dollars per Cwt Fed Steer Feeder Steers ( lb) (p)

33 Cattle Prices Dollars per Cwt Fed Steer Feeder Steer (p)

34 Cattle Takeaways Heavy supplies of beef and meat will last a while Beef cow herd expansion slowing; may be ending Beef output will continue to grow; lots of pork and chicken too Demand has been supportive thus far Consumer demand for beef, especially higher quality, is solid Export potential bright due to China, other exporter struggles There is more downside risk moving forward Uncertainty with trade deals, return to historical demand What can you do on your operation to take advantage?

35 Questions Dr. Scott Brown University of Missouri 222 Mumford Hall Columbia, MO (573) Weekly Livestock Update, Brownfield Ag News