10/18/2015. Outline. Commodity Outlook

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1 Commodity Outlook Stephen R. Koontz Professor & extension economist Department of Agricultural & Resource Economics Colorado State University Ag Lender s Meetings in Colorado October, 2015 Outline Cattle & Beef Feed Markets: Corn & Forage Wheat Oilseeds & Other Inputs & Land Values Short term & Long term Price Outlook Management Strategies Commodity Market Outlook Summary Cattle No more record high prices & more expansion. Corn Good crop, demand issues, & again future acreages. Hay plentiful. Wheat Big U.S. & world stocks. Oilseeds Big crop but demand growth. Dairy Surprising resilience and restraint. Inputs Soft as ever. 1

2 Weekly Live Cattle Contract Monthly Live Cattle Contract This market is looking for a bottom trading range $ /cwt. $170 Weekly Feeder Cattle Contract Monthly Feeder Cattle Contract This market will drift lower trading range $ /cwt. $240 2

3 Cattle Outlook Fed cattle market will trend down: Domestic demand was strong. International demand and trade are weak. Competing meats. Feeder cattle and calf prices will weaken for the next several years: Herd building. Cheaper feed will be mismanaged. USDA Quarterly Cattle Price Forecasts Date Fed Cattle 7 800# Feeder 5 600# Calf 2015: VI $ $ $ : I $ $ $ : II $ $ $ : III $ $ $ : VI $ $ $ : I $ $ $ : II $ $ $ : III $ $ $ : VI $ $ $ Mil. Head CATTLE ON FEED US Total, Monthly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Avg. 2009/ Mil. Head FEEDLOT PLACEMENTS US Total, Monthly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Avg. 2009/ Data Source: USDA NASS C-N-10 09/23/15 Data Source: USDA NASS C-N-08 09/23/15 3

4 Mil. Head 2.1 FED CATTLE MARKETINGS US Total, Monthly Mil. Head 6.5 CATTLE ON FEED OVER 90 DAYS US Total, Monthly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Avg. 2009/ JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Avg. 2009/ Data Source: USDA NASS C-M-11 09/23/15 Data Source: USDA NASS, Compiled & Analysis by LMIC C-N-11 09/23/15 Mil. Head 5 CATTLE ON FEED OVER 120 DAYS US Total, Monthly Thou. Head 725 CATTLE SLAUGHTER Federally Inspected, Weekly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Avg. 2009/ Data Source: USDA NASS, Compiled & Analysis by LMIC C-N-12 09/23/15 Data Source: USDA AMS & USDA NASS C-S-08 10/02/15 4

5 200 Thou. Head HEIFER SLAUGHTER Federally Inspected, Weekly Thou. Head STEER SLAUGHTER Federally Inspected, Weekly Data Source: USDA AMS & USDA NASS C-S-13 10/02/15 Data Source: USDA AMS & USDA NASS C-S-17 10/02/15 Pounds 1370 LIVE WEIGHT STEER AND HEIFER Texas/Oklahoma Panhandle Area, Weekly Thou. Head 20 CALF SLAUGHTER Federally Inspected, Weekly Data Source: USDA AMS & USDA NASS C-S-26 10/02/15 Data Source: USDA AMS & USDA NASS C-S-32 10/02/15 5

6 Thou. Head 150 TOTAL COW SLAUGHTER Federally Inspected, Weekly Thou. Head 90 BEEF COW SLAUGHTER Federally Inspected, Weekly Data Source: USDA AMS & USDA NASS C-S-14 10/02/15 Data Source: USDA AMS & USDA NASS C-S-34 10/02/15 Thou. Head 75 DAIRY COW SLAUGHTER Federally Inspected, Weekly Mil. Pounds 2400 COMMERCIAL BEEF PRODUCTION Monthly JAN MAR MAY JUL SEP NOV Data Source: USDA AMS & USDA NASS C-S-35 10/02/15 Data Source: USDA NASS M-S-02 09/25/15 6

7 Mil. Pounds COMMERCIAL PORK PRODUCTION Monthly JAN MAR MAY JUL SEP NOV Mil. Pounds BEEF IN COLD STORAGE End of the Month JAN MAR MAY JUL SEP NOV Data Source: USDA NASS, Compiled & Analysis by LMIC M-S-05 09/25/15 Data Source: USDA/NASS M-S-09 09/22/15 Mil. Pounds 750 PORK IN COLD STORAGE Frozen and Cured, End of the Month Mil. Pounds 800 CHICKEN IN COLD STORAGE End of the Month JAN MAR MAY JUL SEP NOV 550 JAN MAR MAY JUL SEP NOV Data Source: USDA/NASS M-S-10 09/22/15 Data Source: USDA/NASS P-S-05 09/22/15 7

8 Mil. Pounds TURKEY IN COLD STORAGE End of the Month JAN MAR MAY JUL SEP NOV Mil. Pounds TOTAL CHEESE IN COLD STORAGE End of the Month JAN MAR MAY JUL SEP NOV Data Source: USDA/NASS P-S-04 09/22/15 Data Source: USDA/NASS 09/22/15 DEC 2015 Live Cattle Contract APR 2016 Live Cattle Contract 8

9 NOV 2015 Feeder Cattle Contract MAR 2016 Feeder Cattle Contract Cents Per Pound 650 RETAIL BEEF PRICE All Fresh, Monthly Cents Per Pound 440 RETAIL PORK PRICE Monthly JAN MAR MAY JUL SEP NOV 300 JAN MAR MAY JUL SEP NOV Data Source: Bureau of Labor Statistics & USDA ERS M-P-11 09/17/15 Data Source: Bureau of Labor Statistics & USDA ERS M-P-05 09/17/15 9

10 Cents Per Pound RETAIL CHICKEN PRICE Whole Fresh, Monthly JAN MAR MAY JUL SEP NOV Cents Per Pound RETAIL PRICE COMPARISON Monthly Retail Pork Price Retail Chicken Price, Whole Fresh Retail Beef Price Data Source: Bureau of Labor Statistics & USDA ERS M-P-06 09/17/15 Data Source: Bureau of Labor Statistics & USDA ERS M-P-11 09/17/15 $ Per 0 lbs LIVE TO CUTOUT BEEF PRICE SPREAD Monthly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC $ Per 0 lbs CUTOUT TO RETAIL BEEF PRICE SPREAD Monthly Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data Source: USDA AMS & USDA ERS, Compiled & Analysis by LMIC C-P-02 09/17/15 Data Source: USDA AMS & USDA ERS, Compiled & Analysis by LMIC C-P-04 09/17/15 10

11 $ Per Cwt 200 CHOICE STEER PRICE vs BREAKEVEN Cattle Feeding, S. Plains, Monthly $ Per 0 lbs 250 AVERAGE RETURNS TO CATTLE FEEDERS Feeding 725 Lb. Steers. S. Plains, Monthly Latest Data: August Latest Data: August Steer Price Breakeven Projected Breakeven Data Source: USDA AMS & USDA NASS, Compiled & Analysis by LMIC C-P-21 09/17/15 Data Source: USDA AMS & USDA NASS, Compiled & Analysis by LMIC C-P-22 09/17/15 $ Per Cwt SLAUGHTER STEER PRICES 5 Market Weighted Average, Weekly $ Per Cwt MED. & LRG. #1 FEEDER STEER PRICES Pounds, Southern Plains, Weekly Data Source: USDA AMS 09/28/15 Data Source: USDA AMS, Compiled and Analysis by LMIC C-P-49 09/28/15 11

12 $ Per Cwt MED. & LRG. #1 STEER CALF PRICES Pounds, Southern Plains, Weekly $ Per Cwt SLAUGHTER COW PRICES Southern Plains, 85 90% Lean, Weekly Data Source: USDA AMS, Compiled & Analysis by LMIC C-P-54 09/28/15 Data Source: USDA AMS C-P-35 09/28/15 $ Per Cwt. 280 BOXED BEEF CUTOUT VALUE Choice Lbs., Carcass, Weekly $ Per Cwt STEER HIDE AND OFFAL VALUE Live Animal Basis, Weekly Data Source: USDA AMS C-P-62 09/28/15 Data Source: USDA AMS C-P-39 09/28/15 12

13 Cents Per Pound WHOLESALE BEEF RIBEYE PRICES Boneless, Light, Weekly Cents Per Pound WHOLESALE BEEF LOIN STRIP PRICES Boneless 0x1, Weekly Data Source: USDA AMS M-P-21 09/28/15 Data Source: USDA AMS 09/28/15 Cents Per Pound 1400 WHOLESALE BEEF FULL TENDER PRICES Musl On, 5 Pounds and Up, Weekly WHOLESALE BEEF BOTTOM ROUND PRICES Pounds, Weekly Cents Per Pound Data Source: USDA AMS M-P-23 09/28/15 Data Source: USDA AMS M-P-22 09/28/15 13

14 Cents Per Pound 320 WHOLESALE BONELESS BEEF PRICES Fresh, 90% Lean, Weekly Cents Per Pound 170 WHOLESALE BONELESS BEEF PRICES Fresh, 50% Lean, Weekly Data Source: USDA AMS M-P-24 09/28/15 Data Source: USDA AMS M-P-25 09/28/15 Cents Per Pound 160 WHOLESALE HAM PRICES Trimmed Selected, Pounds, Weekly Cents Per Pound 200 WHOLESALE PORK LOIN PRICES ¼ Inch Trim, Vacuum Sealed, Weekly Data Source: USDA AMS M-P-27 09/28/15 Data Source: USDA AMS M-P-28 09/28/15 14

15 Index Value 120 RETAIL ALL FRESH BEEF DEMAND INDEX Annual, Using CPI 1990= Index Value 120 RETAIL ALL FRESH BEEF DEMAND INDEX Third Quarter, Using CPI 1990= Data Source: Bureau of Labor Statistics, USDA ERS, Compiled & Analysis by LMIC Data Source: Bureau of Labor Statistics, USDA ERS, Compiled & Analysis by LMIC Index Value 120 RETAIL ALL FRESH BEEF DEMAND INDEX Fourth Quarter, Using CPI 1990= Index Value 120 RETAIL ALL FRESH BEEF DEMAND INDEX First Quarter, Using CPI 1990= Data Source: Bureau of Labor Statistics, USDA ERS, Compiled & Analysis by LMIC Data Source: Bureau of Labor Statistics, USDA ERS, Compiled & Analysis by LMIC 15

16 Index Value RETAIL ALL FRESH BEEF DEMAND INDEX Second Quarter, Using CPI 1990= Cattle & Beef Going Forward? Tight numbers & softening protein markets. Strong demand but cannot strengthen. Strong dollar & weak trade. Herd expansion, increased future production, & normal feeding costs. Pressured by pork & poultry prices beef will lose market share. Data Source: Bureau of Labor Statistics, USDA ERS, Compiled & Analysis by LMIC Mil. Pounds US BEEF AND VEAL IMPORTS Carcass Weight, Monthly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Mil. Pounds US BEEF AND VEAL EXPORTS Carcass Weight, Monthly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Data Source: USDA ERS & USDA FAS I-N-15 09/04/15 Data Source: USDA ERS & USDA FAS I-N-16 09/04/15 16

17 Mil. Pounds US NET BEEF IMPORTS Carcass Weight, Monthly JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Mil. Pounds US BEEF EXPORTS TO MAJOR MARKETS Carcass Weight, Monthly Japan Canada Mexico South Korea Data Source: USDA ERS & USDA FAS, Compiled & Analysis by LMIC I-N-31 09/04/15 Data Source: USDA ERS & USDA FAS I-N-35 09/04/15 Bil. $ US BEEF INDUSTRY EXPORT VALUES Annual Live Cattle Beef & Veal Hides & Skins Variety Meats Tallow & Greases Bil. $ US BEEF INDUSTRY IMPORT VALUES Annual Live Cattle Beef & Veal Hides & Skins Variety Meats Tallow & Greases Data Source: USDA FAS, Compiled & Analysis by LMIC I-N-70 02/25/15 Data Source: USDA FAS, Compiled & Analysis by LMIC I-N-71 02/25/15 17

18 Bil. $ 4 US BEEF INDUSTRY NET EXPORT VALUES Annual Mill MT FORECAST BEEF AND VEAL PRODUCTION Carcass Weight Live Cattle Beef & Veal Hides & Skins Tallow, Grease & Var Meat Total 2 0 Canada China Mexico Australia India Argentina Russian Federation European Union Brazil US Data Source: USDA FAS, Compiled & Analysis by LMIC I-N-72 02/25/15 Data Source: USDA FAS 2015 Mill MT 1.4 BEEF AND VEAL IMPORTS Carcass Weight, Annual Mill MT 2.5 BEEF AND VEAL EXPORTS Carcass Weight, Annual Japan Russian Federation Mexico South Korea US Brazil Argentina Uruguay US Data Source: USDA FAS 11/03/14 Data Source: USDA FAS 11/03/14 18

19 Mill MT BEEF AND VEAL EXPORTS Carcass Weight, Annual Australia Canada New Zealand US Mill MT BEEF EXPORTS: MAJOR WORLD Carcass Weight, Annual Major World US Data Source: USDA FAS 11/03/14 Data Source: USDA FAS 11/03/14 Mil. Head JANUARY 1 TOTAL COW INVENTORY U.S., Annual Mil. Head CALF CROP July Estimates, U.S., Annual 2015 = 34.3 Million Head +1.2 Percent Data Source: USDA NASS C-N-02A 07/28/15 Data Source: USDA NASS C-N-18B 07/28/15 19

20 Mil. Head 7.0 HEIFERS HELD AS BEEF COW REPLACEMENTS January 1, U.S. Mil. Head 6.0 HEIFERS HELD AS BEEF COW REPLACEMENTS July 1, U.S % % Data Source: USDA NASS C-N-38 07/28/15 Data Source: USDA NASS C-N-37 07/28/15 Mil. Head 135 TOTAL CATTLE INVENTORY BY CYCLE U.S., January 1 3 PERCENT CHANGE IN CATTLE INVENTORY U.S., January Data Source: USDA NASS C-N-40 07/28/15 Data Source: USDA NASS, Analysis by LMIC C-N-48 07/28/15 20

21 $ Per Cwt AVERAGE ANNUAL CATTLE PRICES Southern Plains lb Steer Calves lb Feeder Steers Fed Steers $ Per Cow ESTIMATED AVERAGE COW CALF RETURNS Returns Over Cash Cost (Includes Pasture Rent), Annual Data Source: USDA AMS, Compiled and Forecasts by LMIC C-P-06 09/24/15 Data Source: USDA & LMIC, Compiled by LMIC C-P-66 09/24/15 $ Per Cow ESTIMATED AVERAGE COW CALF COSTS Total Cash Cost Plus Pasture Rent, Annual Cattle Outlook Expansion this year and next and next. Reasonable feed costs. Worst case scenario softening demand & strong competing meat production hard fall. Best case scenario last year was it not again need to see increased trade. Data Source: USDA & LMIC, Compiled by LMIC 09/24/15 21

22 Corn Outlook Short term & Long term Price Outlook Soft market for two years now how much is stored & price improvements needed to market? Reasonably firm basis. Demand & usage increases? Next year s acres? Management Strategies Aggressive purchases & slow sales. DEC15 $4.00 & DEC16 $4.00/bu. 22

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25 Weekly Corn Contract $8.00 $5.00 The trading range for corn is $3.00-$4.50/bu. Except 25

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27 DEC 2015 Corn Contract Forecast $ /bu 27

28 DEC 2016 Corn Contract Forecast $ /bu 28

29 Corn Outlook Currently, market price is right in line with where fundamentals say it should be. Acreage next year? Rotation? Cash flow & debt? Demand? Trade? Storage? Price outlook $3.85 $4.15/bu. And we ve had the three big crops. $ /bu. 29

30 Mil. Tons US ALL HAY SUPPLY & DISAPPEARANCE Crop Year Hay Supply Disap. Mil. Tons US ALL HAY STOCKS December Data Source: USDA NASS, Compiled & Forecasts by LMIC G-NP-20 08/12/15 Data Source: USDA NASS, Compiled & Forecasts by LMIC G-NP-22 08/12/15 Mil. Tons 30 US ALL HAY STOCKS May 1 (Beginning of Crop Year) 2014 ALL HAY ACRES (0 Acres) U.S. Total: 57,029 Data Source: USDA NASS, Compiled & Forecasts by LMIC G-NP-21 08/12/15 Data Source: USDA-NASS 2/2/

31 PERCENT CHANGE ALFALFA HAY ACRES ( ) PERCENT CHANGE OTHER HAY ACRES ( ) U.S. Total: 4.4% U.S. Total: 4% Data Source: USDA-NASS 2/2/2015 Data Source: USDA-NASS 2/2/2015 PERCENT CHANGE ALL HAY ACRES ( ) Percent US RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly U.S. Total: 1% 5 May Jul Sep Data Source: USDA-NASS 2/2/2015 Data Source: USDA NASS, Compiled & Analysis by LMIC G-NP-30 09/28/15 31

32 GL_GR310 Greeley, CO Thu Oct USDA-CO Dept of Ag Market News Colorado Hay Report Compared to last week, market activity is inactive with prices trending weak on very light demand. Limited trading moving hay out of the state. All prices reported are FOB at the stack or barn unless otherwise noted. Prices reflect load lots of hay. Northeast Colorado Areas Grass Small Squares: Premium (7.00 per bale). Oat Hay Large Squares: Good No reported quotes for all other classes of hay. Southeast Colorado Areas No reported quotes for all other classes of hay. San Luis Valley Area No reported quotes for all other classes of hay. Southwest Colorado Areas Alfalfa Large Squares: Premium Grass 3 Tie Mixed Grass: Good ( per bale). No reported quotes from all other classes of hay. Mountains and Northwest Colorado Areas Grass Large Squares: Good ; Fair Rain Damaged. Small Squares: Premium (5.75 per bale). No reported quotes for all other classes of hay. GL_GR310 Greeley, CO Thu Oct USDA-CO Dept of Ag Market News Colorado Hay Report Compared to last week, market activity is slow with prices trending weak on light demand. Trading is spotty with interest mostly from out-of-state. All prices reported are FOB at the stack or barn unless otherwise noted. Prices reflect load lots of hay. Northeast Colorado Areas Alfalfa Large Squares: Supreme ; Premium/Supreme DEL; Premium ; Utility Small Squares: Supreme (10.00 per bale). Grass Small Squares: Premium ( per bale). No reported quotes for all other classes of hay. Southeast Colorado Areas Alfalfa Large Squares: Fair Small Squares: Good Alfalfa/Grass Mix Large Squares: Premium Timothy Grass Large Squares: Good No reported quotes for all other classes of hay. San Luis Valley Area No reported quotes for all other classes of hay. Southwest Colorado Areas No reported quotes from all other classes of hay. Mountains and Northwest Colorado Areas Grass Large Squares: Good Small Squares: Premium (5.75 per bale). No reported quotes for all other classes of hay. Forage Outlook Weekly Soybean Contract Hay prices will continue to soften. Demand is soft so? It s plentiful. East v. West? Excellent hay: $90 $140/T. Low quality hay: <$60 $80/T. Back to more small bales 32

33 Weekly Soybean Meal Contract NOV 2016 Soybean Contract Forecast $ /bu. Oilseeds Outlook Weekly KC Wheat Contract World production & consumption of oilseeds grows. Foreign production & trade of oilseeds grows. U.S. production & stocks are abundant. Strong soybean meal and weak soybean oil. Downside and upside risk for price. How many acres in 2016? $8.50 $10.00/bu. soybeans. And volatility with the most downside risk 33

34 JUL 2016 KC Wheat Contract Wheat Outlook Forecast $ ¼/bu Strong world production & usage. Building stocks. U.S.: good production & soft use. Substantial building stocks. Uncertainty about regional U.S. plantings? Weak prices but strong basis upside potential? Forecasts JUL $5.00 with range $ ¼/bu. 34

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36 Other Crops Potatoes: Increased acres (modest) & production (due to yields) especially in Colorado. Not strong trade or domestic demand difficult to find current market data. Soft prices until next summer. Malting barley: Good premiums but data vacuum. Weather related but weather other places. If plenty of barley then good premium for high quality and if weak supply then poor premium. Input Market Outlook Summary Soft everything. Even land valuations Risks moderating. Softening fuel costs with no volatility Fertilizer Chemicals Supply industries remain operating undercapacity & unwilling to take risk. We haven t had this much cheap energy in a while. Let s see what happens. Weekly Crude Oil Contract $150 $35 $40-$60 36

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38 Percent Change QTRLY GROSS DOMESTIC PRODUCT (GDP) Real Dollar (2005) Change from Previous Quarter Data Source: Bureau of Economic Analysis, Compiled & Analysis by LMIC Bil. Dollars TOTAL DISPOSABLE PERSONAL INCOME Quarterly Data Source: Bureau of Economic Analysis Current Dollars 2009 Dollars 07/30/15 07/30/ Dollars Calculated 38

39 Percent PERSONAL SAVINGS AS A PERCENT OF DISPOSABLE PERSONAL INCOME Current Dollars, Quarterly Current Dollars Dollars PER CAPITA DISPOSABLE PERSONAL INCOME Quarterly Current Dollar 2009 Dollar Data Source: Bureau of Economic Analysis 07/30/15 Data Source: Bureau of Economic Analysis 07/30/ Dollars Calculated Percent U.S. UNEMPLOYMENT RATE Seasonally Adjusted, Quarterly Data Source: Bureau of Labor Statistics, Compiled & Analysis by LMIC 07/30/15 Index Domestic U.S. Consumer Confidence Monthly, Index year 1966 = Jan 78 Jan 81 Jan 84 Jan 87 Jan 90 Jan 93 Jan 96 Jan 99 Jan 02 Jan 05 Jan 08 Jan 11 Jan 14 Data Source: Thomson Reuters/University of Michigan 08/11/

40 Index North America Consumer Confidence Monthly, Long Term Average = Jan 2008 Jul 2008 Jan 2009 Jul 2009 Jan 2010 Jul 2010 Jan 2011 Jul 2011 Jan 2012 Jul 2012 Jan 2013 Jul 2013 United States Canada Mexico Index Asia Consumer Confidence Monthly, Long Term Average = Jan 2008 Jul 2008 Jan 2009 Jul 2009 Jan 2010 Jul 2010 Jan 2011 Jul 2011 Jan 2012 Jul 2012 Jan 2013 Jul 2013 Japan Korea China Major Five Asia Data Source: OECD 08/11/2014 Data Source: OECD 08/11/2014 % of growth Asia Household Final Consumption Expenditure Annual Growth Percentage Japan China Korea Value NATIONAL RESTAURANT NEWS STOCK MARKET INDEX Weekly Data Source: World Bank 08/11/2014 Data Source: National Restaurant News, Compiled & Analysis by LMIC 09/28/15 40

41 Index 240 CONSUMER PRICE INDEX ALL ITEMS Base, Monthly Index 250 CPI FOOD AND BEVERAGES Base, Monthly Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 215 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data Source: Bureau of Labor Statistics 07/17/15 Data Source: Bureau of Labor Statistics 07/17/15 Index CPI ENERGY Base, Monthly Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Index CPI ALL ITEMS LESS FOOD & ENERGY Base, Monthly Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data Source: Bureau of Labor Statistics 07/17/15 Data Source: Bureau of Labor Statistics 07/17/15 41

42 Exchange Rate EXCHANGE RATE US Dollar base, Monthly Canada EU Australia EXCHANGE RATE US Dollar base, Monthly Australia South Korea S. Korea Data Source: Pacific Exchange Rate Service, Univ. of B.C., Compiled by LMIC 10/02/15 Data Source: Pacific Exchange Rate Service, Univ. of B.C., Compiled by LMIC 10/02/15 Exchange Rate EXCHANGE RATE US Dollar base, Monthly China Mexico Exchange Rate EXCHANGE RATE US Dollar base, Monthly Japan Data Source: Pacific Exchange Rate Service, Univ. of B.C., Compiled by LMIC 10/02/15 Data Source: Pacific Exchange Rate Service, Univ. of B.C., Compiled by LMIC 10/02/15 42

43 Short Term Outlook Fed cattle if we had more feet we d have more gunshot wounds. Down from records. Trade? Feeder cattle & calves that was fun. The fun is over. Not the good times but for sure the fun. Herd expansion. Feed prices inline with fundamentals. Next year? Forage plentiful. Wheat weak prices but also inline with fundamentals. Plantings? Long Term Outlook For cattle & calves, it depends on demand (domestic & trade) & supply (herd expansion). And competing meats and feed costs. Corn and oilseeds acres going forward. Domestic economy v. international economies. Low interest rates and inflation. Back to cost control knitting. Outlook Summary Cattle: A different kind of wow Fed: $ /cwt. Feeders: $ /cwt. Calves: $ ¾/cwt. Corn: $ /bu. for 2015/16 & $ /bu. into next year. Acres? Hay: if you have a bidder then sell it Wheat: $ /bu. for next harvest. 43

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