Beef Outlook Regional Dealer Event February 9, 2018 Dr. Scott Brown Agricultural Markets and Policy Division of Applied Social Sciences brownsc@missouri.edu http://amap.missouri.edu
$ Per Cwt. MED. & LRG. #1 STEER CALF PRICES 400-500 Pounds, Southern Plains, Weekly 240 230 220 210 200 190 180 170 160 150 140 JAN APR JUL OCT Avg. 2012-16 2017 2018 Data Source: USDA-AMS Livestock Marketing Information Center C-P-49A 01/29/18
$ Per Cwt. SLAUGHTER STEER PRICES Southern Plains, Weekly 150 140 130 120 110 100 90 JAN APR JUL OCT Avg. 2012-16 2017 2018 Data Source: USDA-AMS Livestock Marketing Information Center C-P-52 01/29/18
U.S. Corn Supply and Use, Feb. 2018 Projected 2015/16 2016/17 2017/18 Planted area (mil. ac.) 88.0 94.0 90.2 Harvested area (mil. ac.) 80.8 86.7 82.7 Yield (bu./ac.) 168.4 174.6 176.6 Beginning stocks (mil.bu.) 1,731 1,737 2,293 Production 13,602 15,148 14,604 Imports 68 57 50 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
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?
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 -20 0 20 40 60 Percent Change, 2017 (YTD) vs. 2010
Meat Production Billion Pounds 44 40 36 32 28 24 20 16 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Beef Pork Chicken (p) 2019 (p)
More Meat for U.S. Consumers Still to Come 224 220 Pounds per Person 216 212 208 204 200 196 1996 1999 2002 2005 2008 2011 2014 2017 (p) Domestic Meat Availability
Beef Availability per U.S. Resident Percent Change vs. Year Ago 5 4 3 2 1 0-1 -2-3 -4-5 1991-2016 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% 1991 1995 1999 2003 2007 2011 2015 2019 (p)
Economies of Scale Are Present In All Agricultural Sectors
$ Per Cow ESTIMATED AVERAGE COW CALF RETURNS Returns Over Cash Cost (Includes Pasture Rent), Annual 500 400 300 200 100 0-100 19861988199019921994199619982000200220042006200820102012201420162018 Data Source: USDA-AMS, Compiled and Analysis by LMIC Livestock Marketing Information Center C-P-66 12/03/17
How Many More Beef Cows? 36 35 34 Million Head 33 32 31 30 29 28 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Beef Cow Inventory (p)
Weather Has Cooperated in Growing the Beef Cow Herd???
Beef Cow Slaughter 300 280 Thousand Head 260 240 220 200 180 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2017 2016 2011-15 avg.
Beef Cow Slaughter / Jan. 1 Inventory 13 12 11 Percent 10 9 8 7 6 1990 1994 1998 2002 2006 2010 2014
Cattle on Feed, 1000+ Capacity Lots 11.6 11.4 11.2 Million Head 11.0 10.8 10.6 10.4 10.2 10.0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2017 2016 2011-15 avg. 2018
Heifers / Total on Feed Percent 39 38 37 36 35 34 33 32 31 30 2006 2008 2010 2012 2014 2016 2018
F.I. Dressed Cattle Weight 850 840 830 Pounds 820 810 800 790 780 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2017 2016 2011-15 avg.
U.S. Meat Markets: How Does Trade Figure In? Change in Total Meat, Billion Lbs. 10 8 6 4 2 0-2 1993-96 1996-99 1999-02 2002-05 2005-08 2008-11 2011-14 2014-17 2017-20 (p) Production Net Trade
Trade: Why is it Important? 1.8 Index, 1990-95 avg. = 1.0 1.7 1.6 1.5 1.4 1.3 1.2 1.1 1.0 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Corn+Soy+Wheat Prod. Beef+Pork+Chicken Prod. U.S. Population
Trade: Why is it Important? 1.40 Index, 1990-95 avg. = 1.00 1.35 1.30 1.25 1.20 1.15 1.10 1.05 1.00 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 U.S. Population ROW Population
Trade: Why is it Important? 2.2 Index, 1990-95 avg. = 1.0 2.0 1.8 1.6 1.4 1.2 1.0 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 U.S. Real GDP ROW Real GDP
Beef Trade 400 350 Million Pounds 300 250 200 150 100 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Exports Imports
Growth Potential in China! Beef Consumption, Lbs./Person 90 80 70 60 50 40 30 20 10 0 U.S. Canada EU S. Korea Japan China/HK/TW
Beef Values: Domestic vs. International 9 8 Dollars per Unit 7 6 5 4 3 2004 2006 2008 2010 2012 2014 2016 Export Value (per kg) All Fresh Retail (per lb.)
Beef Production Growth Percent Change vs. Previous Year 8 6 4 2 0-2 -4-6 -8 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 U.S. Rest of World (p)
Premiums Available for Beef Carcass Quality 30 Dollars per Hundredweight 25 20 15 10 5 0 10/27/03 10/27/06 10/27/09 10/27/12 10/27/15 Prime Over Choice Choice Over Select
Range around SW MO Feeder Prices
Cattle Prices Dollars per Cwt. 260 240 220 200 180 160 140 120 100 80 60 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Fed Steer Feeder Steers (500-550 lb) (p)
Cattle Prices Dollars per Cwt. 240 220 200 180 160 140 120 100 80 60 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 Fed Steer Feeder Steer (p)
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?
Questions Dr. Scott Brown University of Missouri 222 Mumford Hall Columbia, MO 65211 (573) 882 3861 Twitter @MUScottBrown Weekly Livestock Update, Brownfield Ag News https://brownfieldagnews.com/brownfield-livestock-market-updates/