american farm bureau federation · 2018-01-09 · npb cme-group canadian consortium noble research...

Livestock Outlook

American Farm Bureau Federation Annual Meeting

Nashville, Tennessee

January 7-8, 2018

James G. Robb Director, LMIC

Website: www.lmic.info

7 USDA Agencies: AMS (Market News), APIS, ERS, GIPSA (Packers & Stock.), NASS, FAS, and WAOB

12 Associate Members: AFBF ASI NCBA NPB CME-Group Canadian Consortium Noble Research Institute CoBank TCFA TCU NWFCS DLR

28 US Land Grant Universities:

USDA Data Sources – NASS, AMS, FAS, and ERS All Forecasts by LMIC

Topics: Economic Drivers and ….

•  LMIC’s Forecasts •  Where Prices Are •  Price Outlook

•  Economic Environment •  Perspective on Demand •  Packer and Retailer Margins

•  Feedstuffs •  Dairy Sector •  More on: Pork, Chicken, and Total •  More on Cattle and Beef

•  International Trade •  Cyclically – 2017/18 a Key Transition •  Returns (Cow-Calf and Feedlot) •  Management Environment Comments

•  Topical Issues ....

90

100

110

120

130

140

150

JAN APR JUL OCT

$PerCwt.

SLAUGHTER STEER PRICES 5MarketWeightedAverage,Weekly

Avg.2011-15 2016 2017

Data Source: USDA-AMS

120

130

140

150

160

170

180

190

200

210

220

JAN APR JUL OCT

$PerCwt.

MED. & LRG. #1 STEER CALF PRICES 500-600Pounds,SouthernPlains,Weekly

Avg.2011-15 2016 2017


0

10

20

30

40

50

60

JAN APR JUL OCT

$PerCwt.

FEEDER STEER vs FED STEER PRICES 700-800Lbs.MinusSlaughterSteer,S.Plains,Weekly

Avg.2011-15 2016 2017

Data Source: USDA-AMS, Compiled by LMIC

170

180

190

200

210

220

230

240

250

260

JAN APR JUL OCT

$PerCwt.

BOXED BEEF CUTOUT VALUE Choice600-900Lbs.,Carcass,Weekly

Avg.2011-15 2016 2017


50

75

100

125

150

175

200

225

250

275

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

$PerCwt

AVERAGE ANNUAL CATTLE PRICES SouthernPlains

500-600lbSteerCalves 700-800lbFeederSteers FedSteers

Data Source: USDA-AMS, Compiled and Forecasts by LMIC

75

100

125

150

175

200

225

250

275

300

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

$PerCwt

AVERAGE CALF PRICES 500-600lbSteerCalves,SouthernPlains

AnnualAverage 4thQuarter

Data Source: USDA-AMS, Compiled and Forecasts by LMIC

Live Sltr. % Chg. Feeder Steer PriceYear Steer Price from Southern Plains d

Quarter 5-Mkt Avg Year Ago 7-800# 5-600#($/Cwt.) ($/Cwt.)

2016I 134.81 -17.0 160.06 195.73

II 127.68 -19.2 149.22 173.86 III 113.22 -21.5 144.10 157.12 IV 107.69 -15.7 129.07 138.44

Year 120.85 -18.4 145.61 166.29 2017

I 122.96 -8.8 132.88 157.38 II 132.76 4.0 149.30 170.49

III 112.47 -0.6 153.36 165.47 IV b 117.88 9.1 157.13 170.66

Year 121.52 0.5 148.17 166.00 2018

I c 119-121 -2.4 149-152 164-168II 121-124 -7.7 145-149 164-169

III 107-111 -3.1 138-143 156-162IV 110-115 -4.6 135-141 148-155

Year 115-117 -4.5 142-146 158-1642019

I 113-119 -3.3 136-143 151-159II 116-123 -2.4 135-143 152-161

III 106-114 0.9 130-139 148-158IV 107-116 -0.9 127-137 143-154

Year 112-116 -1.7 133-139 149-157

d Average of Kansas and Oklahoma Weekly Combined reports

65

70

75

80

85

90

95

100

105

110

JAN APR JUL OCT

$PerCwt.

PORK CUTOUT VALUE (Voluntarydatapriorto2013),Weekly

Avg.2011-15 2016 2017

Data Source: USDA-AMS, Compiled by LMIC

20

25

30

35

40

45

50

55

60

JAN APR JUL OCT

$PerHead

EARLY WEANED PIG PRICES National,10-12Lbs,Delivered,Weekly

Avg.2011-15 2016 2017


40

50

60

70

80

90

100

110

JAN APR JUL OCT

$PerCwt

BASE SLAUGHTER HOG PRICES National,WeightedAverageCarcassPrice,Weekly

Avg.2011-15 2016 2017


Carcass PriceYear National Wtd

Quarter Avg Base($/Cwt.)

2016I 62.15

II 73.38 III 68.31 IV 53.15

Year 64.24 2017

I 67.79 II 71.13

III 75.72 IV a 63.06

Year 69-702018

I b 64-67II 69-73

III 70-75IV 55-61

Year 66-682019

I 61-67II 67-74

III 67-75IV 51-60

Year 63-68

12.00

13.00

14.00

15.00

16.00

17.00

18.00

19.00

20.00

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

$PerPound

CLASS III MILK PRICES FMMO,Monthly

Avg.2011-15 2016 2017

Data Source: USDA-AMS, Dairy Market News

% Chg. US AllYear Class III from Milk

Quarter Price Year Ago Price($/Cwt.) ($/Cwt.)

2016I 13.75 (12.6) 15.70

II 13.20 (18.7) 14.80 III 16.18 0.2 16.90 IV 16.33 8.4 17.80

Year 14.87 (5.9) 16.30 2017

I 16.49 19.9 18.23 II 15.74 19.2 16.83

III 16.13 (0.3) 17.70 IV b 16.70-16.90 2.9 17.85-18.05

Year 16.25-16.35 9.6 17.65-17.752018

I c 15.45-15.95 (4.8) 17.00-17.50II c 15.35-16.35 0.7 16.90-17.90

III c 16.25-17.25 3.9 17.75-18.75IV c 16.25-17.75 1.2 18.00-19.50

Year 15.83-16.83 0.2 17.41-18.41

Economic Environment (Demand)

95

96

97

98

99

100

101

102

2009 2010 2011 2012 2013 2014 2015 2016 2017

Index

North America Consumer Confidence Monthly,LongTermAverage=100

UnitedStates Canada Mexico

Data Source: OECD

94

96

98

100

102

104

106

2009 2010 2011 2012 2013 2014 2015 2016

Index

Asia Consumer Confidence Monthly,LongTermAverage=100

Japan Korea China MajorFiveAsia

Data Source: OECD

50

55

60

65

70

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Pounds

US BEEF CONSUMPTION PerCapita,RetailWeight,Annual

Data Source: USDA-NASS, Compiled & Analysis by LMIC

1009991898684

7573757782828385

9287

838378

7475767879

8693

8889

0

20

40

60

80

100

120

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

IndexValue

RETAIL ALL FRESH BEEF DEMAND INDEX ThirdQuarter,UsingCPI1990=100

Data Source: Bureau of Labor Statistics, USDA-ERS, Compiled & Analysis by LMIC

40

90

140

190

240

290

340

390

440

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

$Per1000lbs

LIVE TO CUTOUT BEEF PRICE SPREAD Monthly

Avg.2011-15 2016 2017

Data Source: USDA-AMS & USDA-ERS, Compiled & Analysis by LMIC

900

950

1000

1050

1100

1150

1200

1250

1300

1350

1400


$Per1000lbs

CUTOUT TO RETAIL BEEF PRICE SPREAD Monthly

Avg.2011-15 2016 2017


20

25

30

35

40

45

50

55

60

65

70


$PerHead

LIVE TO CUTOUT PORK PRICE SPREAD Monthly

Avg.2011-15 2016 2017


Note: Prior to 2013 pork cutout was voluntary

Feedstufffs

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

4

6

8

10

12

14

16

18

1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

$PerBushelBil.Bushels

US TOTAL CORN SUPPLY AND PRICE CropYear

Supply Price

Data Source: USDA-NASS, Compiled & Forecasts by LMIC

9100

9150

9200

9250

9300

9350

9400

9450


Thou.Head

DAIRY COW INVENTORY USTotal,Monthly

Avg.2011-15 2016 2017

Data Source: USDA-NASS

Sequestration suspended data from March to July of 2013 from USDA-NASS. These graphs use LMIC estimates during this time.

40

45

50

55

60

65

70

JAN APR JUL OCT

Thou.Head

DAIRY COW SLAUGHTER FederallyInspected,Weekly

Avg.2011-15 2016 2017

Data Source: USDA-AMS & USDA-NASS

1600

1650

1700

1750

1800

1850

1900

1950

2000

2050


Pounds

MILK PRODUCED PER COW USTotal,Monthly

Avg.2011-15 2016 2017


Sequestration suspended data from March to July of 2013 from USDA-NASS. These graphs use LMIC estimates during this time.

25

30

35

40

45

50


1000MT

WHEY AND NATURAL MILK EXPORTS Monthly

Avg.2011-15 2016 2017

Data Source: USDA-FAS

1.60

1.80

2.00

2.20

2.40

2.60

2.80


$PerPound

BUTTER PRICES GradeAA,CME,Monthly

Avg.2011-15 2016 2017


0.60

0.80

1.00

1.20

1.40

1.60

1.80


$PerPound

NONFAT DRY MILK PRICES CentralandEast,Monthly

Avg.2011-15 2016 2017


Pork, Chicken, and Total Red Meat and Poultry Output

40

45

50

55

60

65

70

1992 1995 1998 2001 2004 2007 2010 2013 2016

Mil.Head

DECEMBER 1 MARKET HOGS U.S.Inventory


5.0

5.5

6.0

6.5

7.0

7.5

JAN-MAR APR-JUN JUL-SEP OCT-DEC

Bil.Pounds

Thou

sand

s

COMMERCIAL PORK PRODUCTION US, Quarterly

Avg.2012/16 2017 2018 2019

Data Source: USDA-NASS, Forecasts by LMIC

350

375

400

425

450

475

500

525

550


Mil.Pounds

US PORK EXPORTS CarcassWeight,Monthly

Avg.2011-15 2016 2017

Data Source: USDA-ERS & USDA-FAS

-60

-40

-20

0

20

40

60

80

100

120

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

$/Head

IOWA MARKET HOG PROFIT Farrow/Finish,Monthly

Data Source: Iowa State University

Latest Data: November 2017

8.5

9.0

9.5

10.0

10.5

11.0

11.5


Bil.Pounds

Thou

sand

s

RTC BROILER PRODUCTION US, Quarterly

Avg.2012/16 2017 2018 2019


450

500

550

600

650

700


Mil.Pounds

US BROILER EXPORTS RTCWeight,Monthly

Avg.2011-15 2016 2017


21.522.022.523.023.524.024.525.025.526.026.527.027.5


Bil.Pounds

Thou

sand

s

TOTAL RED MEAT & POULTRY PRODUCTION US, Quarterly

Avg.2012/16 2017 2018 2019


2018 Annual Per Person Dis. 219.0 Lb. Retail. Largest Since 2007

Cattle

820

840

860

880

900

920

940

JAN APR JUL OCT

Pounds

STEER DRESSED WEIGHT FederallyInspected,Weekly

Avg.2011-15 2016 2017


60

70

80

90

100

110

120

130

140

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Mil.Head

TOTAL CATTLE INVENTORY BY CYCLE U.S.,January1

1938-49 1949-58 1958-67 1967-791979-90 1990-04 2004-14 2014-17


33

34

35

36

37

38

39

40

41

1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017

Mil.Head

CALF CROP JulyEstimates,U.S.,Annual


+3.5 Percent2017 = 36.3 Million Head

30

35

40

45

50

55

60

65

70

JAN APR JUL OCT

Thou.Head

BEEF COW SLAUGHTER FederallyInspected,Weekly

Avg.2011-15 2016 2017


100

120

140

160

180

200

220

JAN APR JUL OCT

Thou.Head

HEIFER SLAUGHTER FederallyInspected,Weekly

Avg.2011-15 2016 2017


80

90

100

110

120

130

140

1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017

Mil.Head

JANUARY 1 TOTAL CATTLE INVENTORY U.S.,Annual

Data Source: USDA-NASS; Forecasts by LMIC

0

100

200

300

400

500

600

700

800

900

1000

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

$PerCow

ESTIMATED AVERAGE COW CALF COSTS TotalCashCostPlusPastureRent,Annual

Data Source: USDA & LMIC, Compiled by LMIC

1.3

1.5

1.7

1.9

2.1

2.3

2.5


Mil.Head

FEEDLOT PLACEMENTS USTotal,Monthly

Avg.2011/15 2016 2017


5.55.75.96.16.36.56.76.97.17.37.5


Bil.Pounds

Thou

sand

s

COMMERCIAL BEEF PRODUCTION US, Quarterly

Avg.2012/16 2017 2018 2019


2018 Annual Per Person Dis. 58.1 Lb. Retail. Largest Since 2010

Beef Exports and Imports

150

175

200

225

250

275


Mil.Pounds

US BEEF AND VEAL EXPORTS CarcassWeight,Monthly

Avg.2011-15 2016 2017


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1994 1997 2000 2003 2006 2009 2012 2015 2018

Bil.Pounds

US BEEF AND VEAL EXPORTS CarcassWeight,Annual


1.5

2.0

2.5

3.0

3.5

4.0

1994 1997 2000 2003 2006 2009 2012 2015 2018

Bil.Pounds

US BEEF AND VEAL IMPORTS CarcassWeight,Annual


-100

0

100

200

300

400

500

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

$PerCow

ESTIMATED AVERAGE COW CALF RETURNS ReturnsOverCashCost(IncludesPastureRent),Annual

Data Source: USDA & LMIC, Compiled by LMIC

75

100

125

150

175

200

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$PerCwt

CHOICE STEER PRICE vs BREAKEVEN CattleFeeding,S.Plains,Monthly

SteerPrice Breakeven ProjectedBreakeven

Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC

Latest Data: December 2017

Economic Environment and Managing .…

•  A Lot Went Right for Cattle Prices in 2017, but Still Marketing Calves Against Larger Supplies

•  Financial Management Critical -- Marketing Plan Tied to Monthly Cash Flow Statement

60

62

64

66

68

70

72

74

76

JAN APR JUL OCT

Percent

BEEF GRADED CHOICE AsaPercentofBeefGraded

Avg.2011-15 2016 2017


Cost of Production is Important, But

Don’t Forget Quality

In The News ....

•  U.S. Beef Exports to China •  JBS Corruption Scandal •  Japanese Beef Safeguard •  NAFTA Renegotiation •  Federal Government Shutdown and Debt Ceiling •  Geopolitical Environment in Asia •  Korean Free Trade Agreement •  Grading, Cattle and Hogs (Quality Grade) •  Tax Cuts Impact on Consumer Demand •  …..

Thank You! www.lmic.info

american farm bureau federation · 2018-01-09 · npb cme-group canadian consortium noble research...

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