Photo courtesy of Judy Jacobson, Watford City Cattle Situation and Outlook Tim Petry Livestock Economist www.ndsu.edu/livestockeconomics September 2, 2015 Washburn Livestock Outlook-9-1-15.pptx
TO ALL LIVESTOCK IN-SERVICE ATTENDEES
Record Breaking Prices! 2014 A Year to Remember
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 Average Projected High 20% Low 20%
What Happened? SEP FDR CAT
AUG LV CAT DEC CORN
WHAT IS HAPPENING? 2015 Record pork production Record weights, breeding up 2.1%, WASDE Record chicken production Beef, pork, chicken exports struggling High $US value West Coast dock workers Bird flu Russia & world unrest Byproducts East Coast weather Fewer acres of corn? Continued short cattle supply, but increasing Lower gas prices
WASDE U.S. Meat Production and Prices 2014 2015 forecast Change from 2014 2016 forecast Change from 2015 Production Billion Pounds Percent Pounds Percent Beef 24.25 23.76-2.02 24.84 4.5 Pork 22.84 24.58 7.6 24.71 0.5 Broilers 38.55 40.25 4.04 41.38 2.8 Turkey 5.76 5.63-2.26 6.01 6.7 Total meat 92.17 94.97 3.03 97.70 2.9 Prices Dollars/cwt Dollars/cwt Steers 154.56 155.89 0.9 156.00 0.07 Hogs 76.03 49.92-34.3 47.50-4.85 Cents/lb Cents/lb Broilers 104.9 95.8-8.67 98.30 2.6 Turkey 107.6 116 7.8 114.5-1.3 Aug. 12, 2015
U.S. Ranking in World Production Exports Beef 1 4 Pork 2 1 Chicken 1 2 Turkey 1 1 Eggs 2 2
Data Source: USDA-AMS & USDA-NASS Livestock Marketing Information Center
U.S. Drought Monitor August 5, 2014 August 6, 2013 August 7, 2012 August 2, 2011
Data Source: USDA-NASS, Compiled & Analysis by LMIC Livestock Marketing Information Center
Livestock Marketing Information Center; Data Source: USDA/NASS C-N-37 07/28/15
HEIFERS HELD AS BEEF COW REPLACEMENTS January 1, ND Thousand Head 250 200 150 100 50 0 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Steer Carcass Weights 1960-2014 C-S-18 08/28/15
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 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 5 0 Cow Inventory Beef Production
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 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 2016 Futures 2015 Futures 2015 2014 2009-2013 Ave
SF_LS766 Sioux Falls, SD Thu Aug 27, 2015 USDA-ND Dept Ag Market News Stockmens Livestock Exchange - Dickinson, ND Feeder Cattle Weighted Average Report for 08/27/2015 Receipts: 1116 Last Week: Not Reported Year Ago: Not Reported Feeder Steers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price 9 717 717 220.25 220.25 6 743 743 205.50 205.50 Full 14 780-799 791 205.00-209.00 207.31 37 804-831 819 204.00-205.50 204.82 14 835 835 203.50 203.50 Full 10 863-871 866 195.50-197.50 196.70 67 924-949 934 193.25-195.00 194.28 57 990 990 190.85 190.85 Feeder Heifers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price 5 620 620 216.00 216.00 16 739-746 742 190.50-193.50 191.82 Full 23 773-777 776 192.00-194.00 193.74 18 805-834 813 192.50-196.50 195.36 9 836 836 190.50 190.50 Full 40 867-898 873 181.00-189.50 187.48 17 900 900 192.75 192.75 Fancy 63 950-957 951 184.75-185.75 185.54
$ 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 Fut 2015 2015 Fut 2016
LM_CT153 St. Joseph, MO Mon Aug 31, 2015 USDA Market News NATIONAL WEEKLY DIRECT SLAUGHTER CATTLE - PRIOR WEEK SLAUGHTER AND CONTRACT PURCHASES For Week Ending Sunday, 08/30/2015 D: BASIS DISTRIBUTION Delivery Mo./Basis Mo. Sep '15/Oct 81 head = 0.00 500 head = +1.00 4,046 head = +4.00 25,415 head = +4.50 Oct '15/Oct 70 head = -10.50 78 head = -7.50 200 head = 0.00 500 head = +1.00 8,538 head = +4.00 21,763 head = +4.50 Nov '15/Dec 75 head = -9.00 156 head = -7.50 1,410 head = 0.00 292 head = +0.50 1,500 head = +2.00 3,046 head = +4.00 8,921 head = +4.50 Dec '15/Dec 800 head = -1.00 325 head = 0.00 1,500 head = +2.00 184 head = +3.00 Jan '16/Feb 36 head = -8.00 78 head = -7.50 595 head = 0.00 2,440 head = +2.00
Livestock Marketing Information Center Data Source: USDA-AMS
AVERAGE ANNUAL CATTLE PRICES $ Per Cwt 275 250 225 200 175 150 125 100 75 50 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 500-600lb Steer Calves 700-800lb Feeder Steers Fed Steers Data Source: USDA-AMS, Compiled and Analysis by LMIC Livestock Marketing Information Center C-P-06 12/19/14
Cattle Cycle Marketing Strategies P - Sell high priced heifers - Retain calves longer (background, summer graze, feed to slaughter weight, replacement heifers) - Pre-price a floor price to protect from catastrophic price decline and leave top side price potential open P - Sell more cows, keep or buy low priced heifers - Evaluate retention programs closely - Active pre-pricing plan
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?
Competing Meats H-P-09 08/31/15 Data Source: USDA-AMS Livestock Marketing Information Center
S-P-06 08/31/15 Data Source: USDA-AMS Livestock Marketing Information Center S-P-05 08/31/15
07/27/15 Data Source: USDA-AMS Livestock Marketing Information Center 07/27/15
Volatile Prices Will Continue! Questions!