Photo courtesy of Judy Jacobson, Watford City Cattle Situation and Outlook Ag Lenders Conference Tim Petry Livestock Economist www.ndsu.edu/livestockeconomics Oct. 31, 2016 AGL16-Outlook 10-31-2016
TO ALL AG LENDER ATTENDEES
What Happened?
WASDE U.S. Meat Production and Prices 2014 2015 Change from 2014 2016 forecast Change from 2015 2017 forecast Change from 2016 Production Billion Pounds Percent Pounds Percent Pounds Percent Beef 24.25 23.70-2.3 24.97 5.4 25.88 3.7 Pork 22.84 24.50 7.3 24.91 1.7 25.87 3.8 Broilers 38.55 40.05 3.9 40.74 1.7 41.65 2.2 Turkey 5.76 5.63-2.3 6.06 7.6 6.14 1.2 Total meat 92.17 94.63 2.7 97.44 3.0 100.32 3.0 Prices Dollars/cwt Dollars/cwt Steers 154.56 148.12-4.2 121.94-17.7 116.25-4.7 Hogs 76.03 50.23-33.19 46.15-8.1 41.00-11.2 Cents/lb Cents/lb Broilers 104.9 90.5-13.7 83.8-7.4 81.5-2.8 Turkey 107.6 116.2 8.0 118.5 2.0 115.5-2.5 Oct. 12, 2016
Mountains of Meat M-S-11 10/21/16 P-S-03 10/21/16
Thou. Head 90 BEEF COW SLAUGHTER Federally Inspected, Weekly 80 70 60 50 40 30 JAN APR JUL OCT Avg. 2010-14 2015 2016 Data Source: USDA-AMS & USDA-NASS Livestock Marketing Information Center C-S-34 10/21/16
C-N-38 02/01/16 HEIFERS HELD AS BEEF COW REPLACEMENTS January 1, ND Livestock Marketing Information Center; Data Source: USDA/NASS
How much expansion is needed? 60 Cow Inventory and Beef Production 30 55 25 Million Head 50 45 40 20 15 10 Billion Pounds 35 5 30 Source: USDA compiled by LMIC 1930 1933 1936 1939 1942 1945 1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 0 Cow Inventory Beef Production
$ Per Cwt. 175 165 155 145 135 125 115 105 95 85 SLAUGHTER STEER PRICES 5 Market Weighted Average, Weekly JAN APR JUL OCT Avg. 2008-12 2013 2014 2015 2016 Fut 2016 Fut 2017
LV CAT DEC LN HOG -$23-19% -$27-40%
Retail Beef Price / Fed Steer Price Cents Per Pound 700 200 +20% 600 500 190 180 170-5% 400 160 +40% 300 150 140-40% 200 130 100 120 110 0 100 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Retail Beef Price Fed Steer Price Data Source: USDA-ERS, LMIC
I-N-16 10/06/16 I-N-50 10/06/16 Data Source: USDA-ERS & USDA-FAS, Livestock Marketing Information Center
U.S. Ranking in World Production Exports Beef 1 4 Pork 2 1 Chicken 1 2 Turkey 1 1 Eggs 2 2
Pounds 950 STEER DRESSED WEIGHT Federally Inspected, Weekly 930 910 890 870 850 830 810 JAN APR JUL OCT Avg. 2010-14 2015 2016 Data Source: USDA-AMS & USDA-NASS Livestock Marketing Information Center C-S-18 10/21/16
Competing Meats H-P-09 10/24/16 P-P-01 10/24/16 Data Source: USDA-AMS Livestock Marketing Information Center S-P-05 10/24/16
MED. FRAME #1 STEER CALF PRICES 550-600 Pounds, N.D., Weekly 300 280 260 240 220 200 180 160 140 120 100 JAN APR JUL OCT 2016 2015 2014 2009-2013 Ave
MED. & LRG. #1 FEEDER STEER PRICES 750-800 Pounds, N.D., Weekly 260 240 220 200 180 160 140 120 100 80 JAN APR JUL OCT 2017 Futures 2016 Futures 2016 2015 2014 2009-2013 Ave
Feeder Steers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price 5 383 383 134.00 134.00 162 403-446 432 130.00-154.75 146.42 429 452-499 475 125.50-150.00 141.27 617 500-548 525 126.00-146.75 136.26 1357 551-599 580 121.00-138.25 130.28 15 641 641 125.00 125.00 1385 600-649 623 117.00-134.00 128.78 Calves 10 651-698 670 121.50-122.00 121.71 991 650-699 672 119.50-135.00 126.40 Calves 39 724-736 732 114.00-130.75 125.23 283 703-748 716 118.00-129.75 123.94 Calves 68 760-789 770 123.00-129.75 128.24 57 751-792 769 115.00-123.50 120.27 Calves 71 804-846 824 116.50-127.00 123.12 44 841 841 120.75 120.75 Calves 71 860-887 880 116.50-126.00 124.26 23 855 855 117.50 117.50 Calves 25 918-943 925 120.50-124.00 122.73 42 964-984 982 119.50-123.00 122.59 SF_LS796 Sioux Falls, SD Fri Oct 28, 2016 USDA-ND Dept of Ag Market News North Dakota Weekly Auction Summary - For the week ending Oct 29, 2016 Receipts: 11,568 Last Week: 9,652 Year Ago: 12,595 Results of: Kist, Napoleon, and Stockmen's
SF_LS796 Sioux Falls, SD Fri Oct 28, 2016 USDA-ND Dept of Ag Market News North Dakota Weekly Auction Summary - For the week ending Oct 29, 2016 Receipts: 11,568 Last Week: 9,652 Year Ago: 12,595 Results of: Kist, Napoleon, and Stockmen's Feeder Heifers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price 25 358-390 377 121.00-138.00 128.01 162 402-444 431 118.00-127.50 122.26 323 451-495 476 111.00-127.00 121.64 814 500-549 527 113.50-124.50 119.37 818 552-598 572 110.00-124.50 118.25 33 563 563 137.50 137.50 Fancy 16 629 629 115.25 115.25 557 603-645 620 110.00-125.00 117.66 Calves 29 663-678 671 108.50-114.50 111.16 118 655-676 663 103.50-116.50 114.15 Calves 85 701-702 701 111.50-124.50 120.98 77 703-734 722 111.50-118.25 115.07 Calves 13 770-789 785 114.00-114.50 114.11 5 833 833 121.00 121.00 38 840 840 116.50 116.50 Fleshy 20 867-897 891 120.50-121.00 120.82 45 918-942 936 111.00-116.50 114.11
Backgrounding
Projected Calf Backgrounding Profit 550 lb. to 750 lb. $2.80 corn, $65 hay Calf Purchase Price ($/cwt) Sales Price 110 115 120 125 130 135 95 8 35 62 89 116 143 100 28 1 26 53 80 107 105 64 37 10 17 44 71 110 100 73 46 19 8 35 115 136 109 82 55 28 1 120 172 145 118 91 64 37 Jan FC Fut $120 Mar FC Fut $118 Current CME Cash Index $124
$ Per Cwt. 145 135 125 115 105 95 85 75 65 55 45 SLAUGHTER COW PRICES 85-90% Lean, Weekly JAN APR JUL OCT Avg. 2009-13 2014 2015 2016 Livestock Marketing Information Center Data Source: USDA-AMS C-P-35
$ Per Cwt 275 250 225 200 175 150 125 100 75 50 AVERAGE ANNUAL CATTLE PRICES 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 500-600lb Steer Calves 700-800lb Feeder Steers Fed Steers Data Source: USDA-AMS, Compiled and Forecasts by LMIC Livestock Marketing Information Center C-P-06 09/27/16
Average Net Return to Labor and Management Per Beef Cow N.D. Farm Business Mgmt., Excluding Red River Valley 1000 800 600 400 200 0-200 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Average Projected High 20% Low 20%
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?
Year Coverage Price Fall Steer Calf LRP Results July 15 to Nov 15 (17 wk) Premium Actual Price LRP Payment LRP Profit 2005 105.78 1.67 127.75 -- -1.67 2006 114.42 1.49 107.55 6.87 5.38 2007 123.20 2.58 119.27 3.93 1.35 2008 127.38 5.46 107.37 20.01 14.55 2009 112.18 3.73 102.94 9.24 5.51 2010 121.02 2.88 122.61 -- -2.88 2011 149.57 5.00 156.92 -- -5.00 2012 155.75 4.00 158.33 -- -4.00 2013 171.29 3.13 181.97 -- -3.13 2014 231.16 7.25 264.95 -- -7.25 2015 229 7.17 199.41 29.59 22.42 2016 145.46 4.97 133?
SF_LS766 Sioux Falls, SD Thu Nov 12, 2015 USDA-ND Dept of Ag Market News Stockmans Livestock Exchange Feeder Cattle Weighted Average Report for 11/12/2015 Receipts: 4101 Last Week: 4762 Year Ago: 4553 Feeder Steers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price 7 308-334 323 286.00-287.00 286.41 18 364-375 368 259.00-283.00 268.43 114 406-449 424 226.00-257.00 247.26 185 455-494 485 211.00-228.00 221.86 291 501-549 528 205.00-228.00 214.01 350 551-586 575 190.00-208.00 199.41 431 613-647 628 183.00-202.25 194.37 Calves 309 652-697 674 180.00-194.50 186.53 Calves 30 727 727 181.50 181.50 Calves
CME Cattle Contract Changes 1. Feeder Cattle (eff Nov 16) - prior: 650-849 lb. Med & Lrg #1 & 2 Steers - new: 700-899 - $ 3 - affects basis and LRP 2. Reduced hours: 8:30 a.m. 1:05 p.m. CT 3. Live Cattle Grades (eff Oct 17) - prior: 55% choice, 45% select - new: 60% choice, 40% select 4. Delay listing subsequent contracts - cash settlement?? 5. Worthing, SD delivery - 1.50 disc Oct delivery only
Volatile Prices Will Continue! Questions!