Livestock and Dairy Market Outlook August 9, 2018 Missouri Farm Bureau Commodity Conference Dr. Scott Brown Agricultural Markets and Policy Division of Applied Social Sciences brownsc@missouri.edu http://amap.missouri.edu
Cattle Outlook: Can Demand Save the Day? Since 2016: Supply pressure Economics and weather pointed to beef cow expansion Other meat supplies have followed suit Prices resilient thus far 2017 a rare year with supplies and prices up High-quality beef is still a growth market in 2018 Changes coming? Cow herd expansion slowing or coming to an end? Domestic demand at a new level? Trade concerns?
Hog Outlook: Looks Like a Rough Ride Ahead We know 2 major problems on supply/demand balance Production: faster growth than population 13 of 14 quarters Exports: have helped offset production growth until now? Cold Storage: pork stocks have surpassed year ago lately Domestic demand strength has performed well Good meat demand has moderated price pain Demand for pork products has been mixed Feed prices may moderate cost increases
Billion Pounds Meat Production 44 40 36 32 28 24 20 16 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Beef Pork Chicken (p)
Pounds per Person More Meat for U.S. Consumers Still to Come 224 220 216 212 208 204 200 196 1996 1999 2002 2005 2008 2011 2014 2017 Domestic Meat Availability
Percent Change vs. Year Ago Beef Availability per U.S. Resident 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)
Pounds (retail weight) Pork Availability per U.S. Resident 54 53 52 51 50 49 48 47 46 45 1986-2016 hog prices: AVG MAX MIN 8 years with <49 lbs. 60.96 76.03 54.30 11 years with 49-51 lbs. 49.09 57.75 41.24 12 years with >51 lbs. 42.73 52.50 34.00 1986 1990 1994 1998 2002 2006 2010 2014 2018 (p)
Weather Had Cooperated in Growing the Beef Cow Herd
Weather Had Cooperated in Growing the Cow Herd, But Conditions Deteriorating
Percent US RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly 35 30 25 20 15 10 5 0 May Jul Sep Avg. 2012-16 2017 2018 Data Source: USDA-NASS, Compiled & Analysis by LMIC Livestock Marketing Information Center G-NP-30 08/06/18
45 40 35 30 25 20 15 10 Percent 5 0 SOUTHERN PLAINS REGION RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly May Jul Sep Avg. 2012-16 2017 2018 Data Source: USDA-NASS, Compiled & Analysis by LMIC Livestock Marketing Information Center G-NP-33 08/06/18
35 Percent CORNBELT REGION RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly 30 25 20 15 10 5 0 May Jul Sep Avg. 2012-16 2017 2018 Data Source: USDA-NASS, Compiled & Analysis by LMIC Livestock Marketing Information Center G-NP-34 08/06/18
Million Head Cumulative Missouri Feeder Cattle Sales 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 1 5 9 13 17 21 25 29 33 37 41 45 49 2018 2017 2016 2015
Thou. Head BEEF COW SLAUGHTER Federally Inspected, Weekly 65 60 55 50 45 40 35 JAN APR JUL OCT Avg. 2012-16 2017 2018 Data Source: USDA-AMS & USDA-NASS Livestock Marketing Information Center C-S-34 08/06/18
Dollars per Ton Hay Prices 220 200 180 160 140 120 100 80 60 40 2010 2011 2012 2013 2014 2015 2016 2017 2018 U.S. Missouri
Million Head Beef Cow Growth Grinding to a Halt? 36 35 34 33 32 31 30 29 28 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 (p)
Million Head Cattle on Feed, 1000+ Capacity Lots 12.0 11.8 11.6 11.4 11.2 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
Million Head U.S. Hog Breeding Herd Inventory 6.4 6.3 6.2 6.1 6.0 5.9 5.8 5.7 5.6 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Breeding Herd Growth by State Other states combined Pennsylvania Ohio Oklahoma Nebraska Iowa Texas N. Carolina S. Dakota Missouri Illinois -10 0 10 20 30 40 50 60 70 80 90 Thousand Head, June 2018 vs. June 2014
Thou. Head BARROW AND GILT SLAUGHTER Federally Inspected, Weekly 2600 2500 2400 2300 2200 2100 2000 1900 1800 1700 JAN APR JUL OCT Avg. 2012-16 2017 2018 Data Source: USDA-AMS & USDA-NASS Livestock Marketing Information Center H-S-13 08/06/18
Mil. Pounds US BEEF AND VEAL EXPORTS Carcass Weight, Monthly 290 270 250 230 210 190 170 150 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Avg. 2012-16 2017 2018 Data Source: USDA-ERS & USDA-FAS Livestock Marketing Information Center I-N-16 08/06/18
1000 MT TOTAL U.S. EXPORTS OF BEEF MUSCLE CUTS Weekly 24 22 20 18 16 14 12 10 8 6 4 1/10/15 7/11/15 1/9/16 7/9/16 1/7/17 7/8/17 1/6/18 7/7/18 Data Source: USDA-FAS Livestock Marketing Information Center 07/26/18
Mil. Pounds US PORK EXPORTS Carcass Weight, Monthly 575 550 525 500 475 450 425 400 375 350 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Avg. 2012-16 2017 2018 Data Source: USDA-ERS & USDA-FAS Livestock Marketing Information Center I-N-30 08/06/18
1000 MT TOTAL US EXPORTS OF PORK MUSCLE CUTS Weekly 45 40 35 30 25 20 15 10 5 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Sep-17 Mar-18 Data Source: USDA-FAS Livestock Marketing Information Center 07/26/18
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 Jan-Jun 2018 vs. 2017: -3.5% -4.1% +4.7% -3.0% -1.7% +4.5% -1.2% N/A -0.6% -1.2% +2.8% -20 0 20 40 60 Percent Change, 2017 vs. 2010
$ 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 08/06/18
$ Per Cwt. SLAUGHTER STEER PRICES 5 Market Weighted Average, 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 08/06/18
Dollars per Cwt. Cattle Prices 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) 2020 (p)
Dollars per Cwt Hog Price (Quarterly) 90 80 70 60 50 40 30 2012 2013 2014 2015 2016 2017 2018 2019 (p)
$ per cwt Quarterly U.S. All Milk Prices 26 24 22 20 18 16 14 12 10 1997 2001 2005 2009 2013 2017 USDA July Forecast
Dollars per Cwt. / Million Head What s Wrong With This Picture? 26 24 22 20 18 16 14 12 10 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 All Milk Price Dairy Cows (right axis) 9.42 9.36 9.30 9.24 9.18 9.12 9.06 9.00 8.94
Dollars per hundredweight MPP Margin 18 16 14 12 10 8 6 4 2 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Dollars per Pound Global Dairy Product Prices 3.0 2.5 2.0 1.5 1.0 0.5 0.0 7 Jan 2014 1 Jul 2014 6 Jan 2015 1 Jul 2015 Jan-16 Jul-16 Jan-17 Jul-17 Dec-17 Jun-18 Butter Cheese SMP
Know What to Look For Moving Forward Average profitability will struggle through 2019 Heavy supplies weigh on prices and limit any rallies The market will struggle to assess tariff impacts Feed prices will move on weather and tariff news Locking in positive profits will be difficult Domestic demand could offset a lot of other negatives Economic projections still bright The majority of our meat and dairy is consumed in this country Trade Assistance Package International market development Direct payments hogs, dairy Domestic market purchases
Questions Dr. Scott Brown University of Missouri 222 Mumford Hall Columbia, MO 65211 (573) 882 3861 @MUScottBrown Weekly Livestock Update, Brownfield Ag News https:/brownfieldagnews.com/brownfield-livestock-market-updates/