livestock situation and outlook dr. curt lacy extension economist-livestock
TRANSCRIPT
Livestock Situation and Outlook
Dr. Curt Lacy
Extension Economist-Livestock
Outline
• 2008 Recap and Overall Meat Complex• Beef Outlook• Poultry Outlook• Dairy Outlook• Aquaculture (catfish) Outlook
2008 Recap
• Record production in 2008.• Feed, fuel and fertilizer prices hit this sector
especially hard in 2008.• Weakened economy + record production =
lower prices in 2008.
TOTAL RED MEAT AND POULTRY IN COLD STORAGE
End of the Month
1,500
1,600
1,700
1,800
1,900
2,000
2,100
2,200
2,300
2,400
2,500
JAN MAR MAY JUL SEP NOV
Mil. Pounds
Avg.2003-07
2008
2009
M-S-1102/20/09
Increasing Amounts of Meat Stocks in Cold Storage Indicate Decreased Demand
Livestock Marketing Information Center
COMMERCIAL MEAT & POULTRY PRODUCTION
By Type of Meat, Annual
0
10
20
30
40
50
60
70
80
90
100
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
Bil. Pounds
Turkey
Chicken
Lamb &Veal
Pork
Beef
M-S-03A02/12/09
As a result, beef pork and poultry supplies will ALL be lower in 2009.
1st time EVER!
Overall Outlook for Livestock Products in 2009
• Lower production should be supportive of prices.
• Economy and input prices will the wild cards.• IF the economy stabilizes and IF feed prices
stay “lower” then profits should be no worse than/maybe even better in 2009.
Beef Cattle Production and
Supply
Drought and other factors had a major impact this past year
• Historically high:– Feed costs– Fertilizer
prices– Fuel prices
• Cow herd liquidation
• Herd reduction• No interest in
expansion
Impact of Fuel & Fertilizer Prices on Cost of Production
$20
$40
$60
$80
$100
$120
$140
2002 2008
500# Calf ($/ Cwt.) Hay ($/ ton)
MED. & LRG. #1 & 2 STEER CALF PRICES500-600 Pounds, Georgia, Weekly
75
80
85
90
95
100
105
110
115$ Per Cwt.
Avg.2003-07
2008
2009
Livestock Marketing Information Center 01/26/09
MED. & LRG. #1 & 2 FEEDER STEER PRICES700-800 Pounds, Georgia, Weekly
65
70
75
80
85
90
95
100$ Per Cwt.
Avg.2003-07
2008
2009
Livestock Marketing Information Center 01/26/09
Feed and Trucking Costs Change the Price Relationships Between Calves
and FeedersMED. & LRG. #1 & 2 STEER CALF PRICES500-600 Pounds & 700-800 Pounds, Georgia, Weekly
65
70
75
80
85
90
95
100
105
110
115
JAN
APRJU
LOCT
$ P
er C
wt.
700-800 500-600
Feeder and Fed Cattle Prices (Futures) Are Also Impacted by Other Factors
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
13,000
14,000
1/2/2008 2/14/2008 3/31/2008 5/12/2008 6/24/2008 8/6/2008 9/18/2008 10/30/2008 12/12/2008 1/28/2009
$50
$60
$70
$80
$90
$100
$110
$120
DJIA Feeder Fats
CHOICE MINUS SELECT BEEF PRICESCarcass Cutout Value 600-900 Lbs., Weekly
0
2
4
6
8
10
12
14
16
18
20
JAN APR JUL OCT
$ Per Cwt.
Avg.2003-07
2008
2009
C-P-6801/26/09Livestock Marketing Information Center
Narrow Ch-Sel Spread Indicates Weaker Beef Demand
Outlook for 2009
• Price Projections – equal to or slightly better than 2nd half of 2008– Calves - $90-$100 (Basis Mid-South)– Feeders - $85-$95 (Basis Mid-South)– Fed - $85-$95
• Depending on feed costs, could see another narrowing of calf vs. feeder prices.
• Cull cow prices should remain fairly strong in 2009, $48-$58/Cwt.
• Current market signals suggests adding as much “grass-weight” as economically feasible.
Summary of Jan 1 Cattle Inventory Report
• All cattle and calves 94.5 million head, -2%• Beef cows, at 31.7 million -2%• Milk cows, @ 9.33 million +1%• Cattle and calves on feed for slaughter in all
feedlots, 13.9 million -7%• Stockers/feeders outside of feedlots +6%• Stockers on winter pastures 1.65 mil. -6%
JANUARY 1 COW INVENTORYU.S., Annual
20
25
30
35
40
45
1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009
Mil. Head
Beef
C-N-0201/30/09
Livestock Marketing Information Center
Data Source: USDA/NASS
4th year in a row we have seen a decline.
2009 = 31.7 million beef cows, down 2.0% from last year
Beef Cow FactoryJanuary 1, U.S.
25.0
30.0
35.0
40.0
45.0
50.0
1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009
Mil. Head
C-N-3801/30/09
The Net Effect is Lower Beef Production through 2011
CHANGE IN BEEF COW NUMBERSJANUARY 1, 2000 TO JANUARY 1, 2009
(1000 Head)
2 to 140 (9)-5 to 2 (15)
-83 to -5 (13)-260 to -83 (13)
C-N-2901/30/09
Alaska
Hawaii
US Total
-1252
0 -37
-175-115
CT -2
DE 1
-52
-84
0
-37
-72 -44
16 64
26
1
MD -2
MA 2-3
-8
-88
-70
-88
-123-2
1
NJ -1
-80
5
-53
-85
22
140
-115
RI -0
-39
-118
-83
-260
-5
-2
-18
-33
2
45
-111
-1904
-100 -1
Long-Range Beef Cattle Outlook• Contraction of cow herd means lower supplies in
future years likely through 2011.• Price improvement will be sharp when economy
makes the turn.• Projections for continued high feed prices indicate
that heavy-weight feeders (700 # +) will be desired over lighter-weights.
• Don’t be surprised if in 5 years we see:– Fed cattle $110+– Feeders $105-$115– Calves $125-$150 (depending on weight)
• Trick is staying in the game that long!
Poultry Situation and Outlook
Poultry Situation & Outlook
• Poultry producers bore brunt of increased feed and fuel prices.
• Considerable financial uncertainty in the industry.
• Export markets are a moving target.• 2009 feed prices will be the difference.
Livestock Marketing Information Center
Best Cure for Low Prices??
WHOLESALE CHICKEN BREAST PRICESSkinless/Boneless, Northeast, Truckload, Weekly
90
100
110
120
130
140
150
160
170
180
JAN
APRJU
LOCT
Cents Per Pound
Avg.2003-07
2008
2009
P-P-0202/16/09
Livestock Marketing Information Center
Best Cure for Low Prices??Decrease Production!
P-P-0202/16/09
BROILER CHICKS PLACEDWeekly
150
155
160
165
170
175
180
185
JAN
APRJU
LOCT
Mil. Birds
2009 Poultry Outlook• Broilers
– Almost 2% decline in production will it stick?
– Slightly lower exports– Lower per capita consumption (marginal)– Lower supplies should increase price
(slightly)– Profits hopefully yes, depends on cost!
2009 Poultry Outlook• Eggs
– Slight INCREASE in production– Stable exports– Slightly less utilization– Lower prices than 2008 but still
favorable– Profits Maybe?
Dairy Situation & Outlook
Special thanks to Dr. Tommie Shepherd, CAED, UGA
Dairy Producers Have Experienced a Price Drop of Historical Proportion
$10.00
$12.00
$14.00
$16.00
$18.00
$20.00
$22.00
$24.00
Janua
ry
Febru
ary
Mar
chApr
ilM
ayJu
neJu
ly
August
Septe
mbe
r
Octob
er
Novem
ber
Decem
ber
Janua
ry
Febru
ary
Mar
ch
Monthly Class 1 Price-FO 7 (3.5%)
46% drop in 8 months!
Milk Price Drivers In 2009
• Milk Production (supply)– Fewer cows– Lower production per cow– Total production up 1% or less from 2008– Increasing Stocks of Manufactured Dairy Products (Cheese, Butter,
NFDM)– EU will increase production with the aid of export subsidies– AUS and NZ recovering from drought
• Milk Consumption (demand)– Strengthening U.S. Dollar makes our product more expensive
internationally– Weak world economy will slow demand U.S. and International– CCC already purchasing some products
Milk Price Forecast for 2009
• Continued lower prices • MILC payments coming in April• Accelerated culling likely coming later in the
year.
Aquaculture Situation & Outlook
Acres of Water for Aquaculture in LA More Stable than U.S.
Water Surface Acres Used for Production in US and LA2004-2009
50,000
70,000
90,000
110,000
130,000
150,000
170,000
190,000
2004 2005 2006 2007 2008 2009
US
Acr
es (
tho
u.)
0
2,000
4,000
6,000
8,000
10,000
12,000
LA
Acr
es (
tho
u.)
US La
Aquaculture (Catfish) Situation & Outlook
• Feed prices will continue to plague catfish producers.• Fewer operations, ↓20% U.S.• Fewer acres
– ↓10% U.S.– ↓1.5% LA– ↓12.5% MS/AR
• Stronger dollar will not deter imports (102 mil. lbs. in 2008).• Prices will likely remain at current levels. Significant increase
not likely.– Processing ($2.44/lbs. in 2008)– Producer ($0.79/lbs. in 2009)
Livestock Summary
• 2009 is going to be another difficult year for livestock producers.
• Supplies of meat will be lower which should help prices.
• However, economy and input prices will be the two biggest factors.
• Once the economy DOES turn the corner, prices for our products could recover very rapidly.
• The trick is making it from until then