price outlook, 2015 and beyond 2015 great lakes professional cattle feeding and marketing...

Price Outlook, 2015 and Beyond

2015 GREAT LAKES PROFESSIONALCATTLE FEEDING AND MARKETING SHORTCOURSE

East Lansing, MI Bowling Green, OH Wyoming, ON

Jim Hilker Agricultural, Food, and Resource Economics Department Michigan State UniversityFebruary 10, 11, 12, 2015

Topics: Cattle Price Drivers and …

• Beef Demand– Domestic– Foreign Markets and Competition

• Some Feedstuffs Comments• Poultry and Pork Production• More on Cattle Markets

– Review Price Levels– U.S. Cattle Inventory– Cost and Return Prospects– Price Outlook

• Summary: The Economic Environment

USDA Data Sources – NASS, AMS, FAS, and ERS

Most Forecasts – LMIC

US Consumer Demand and Consumption (Disappearance)

-2.50

-2.00

-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50

2.00

2.50

QTRLY GROSS DOMESTIC PRODUCT (GDP)Real Dollar (2005) Change from Previous QuarterPercent Change

Data Source: Bureau of Economic Analysis, Compiled & Analysis by LMIC

Livestock Marketing Information Center

2005

2005.52006

2006.52007

2007.52008

2008.52009

2009.52010

2010.52011

2011.52012

2012.52013

2013.52014

2014.530000

32000

34000

36000

38000

40000

42000

PER CAPITA DISPOSABLE PERSONAL INCOMEQuarterly

Current Dollar 2009 Dollar

Dollars

Data Source: Bureau of Economic Analysis


2009 Dollars Calculated

2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 23.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

U.S. UNEMPLOYMENT RATESeasonally Adjusted, QuarterlyPercent

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


1991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320142015201650

55

60

65

70

US BEEF CONSUMPTIONPer Capita, Retail Weight, AnnualPounds

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


19901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320140

20

40

60

80

100

120

100 9991 89 86 84

75 73 75 7782 82 83 85

9287

83 8378

74 75 76 78 7987

RETAIL ALL FRESH BEEF DEMAND INDEXThird Quarter, Using CPI 1990=100Index Value

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


19901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320140

20

40

60

80

100

120

10094 96

88 8979

84 8491 93 91 89 89 88 91

8277 80

7680 80 77 76

8388

RETAIL PORK DEMAND INDEXThird Quarter, Using CPI 1990=100Index Value

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


International Perspective

199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520160.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

US BEEF AND VEAL EXPORTSCarcass Weight, AnnualBil. Pounds

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


2006 2007 2008 2009 2010 2011 2012 2013 20140

10000

20000

30000

40000

50000

60000

70000

80000

90000

US BEEF EXPORTS TO MAJOR MARKETSCarcass Weight, Monthly

Japan Canada Mexico South Korea

Mil. Pounds

Data Source: USDA-ERS & USDA-FAS


199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520161,500.0

2,000.0

2,500.0

3,000.0

3,500.0

4,000.0

US BEEF AND VEAL IMPORTSCarcass Weight, AnnualBil. Pounds

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


JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC30000

50000

70000

90000

110000

130000

150000

170000

US CATTLE IMPORTS FROM CANADAMonthly

Avg. 2008-12 2013 2014

Thou. Head




50000

70000

90000

110000

130000

150000

170000

US CATTLE IMPORTS FROM MEXICOMonthly

Avg. 2008-12 2013 2014

Thou. Head



U.S. Meat TradeMillion Pounds

February 10, 2015

2014 estimate

2015 forecast

Change from January 12

Change from 2014

Exports Percent PercentBeef 2,573 2,450 -3.0 -4.8Pork 4,858 4,820 -8.2 -0.8Broilers 7,304 7,115 -3.3 -2.6Turkey 804 775 -5.5 -3.7Mature Chickens 110 125 0.0 13.5

Total meat 15,656 15,295 -4.9 -2.3Imports

Beef 2,947 2,810 1.4 -4.6

Feedstuffs -- Corn

May Jul Sep10

15

20

25

30

35

40

US RANGE AND PASTURE CONDITIONPercent Poor and Very Poor, Weekly

Avg. 2008-12 2013 2014

Percent

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


JAN APR JUL OCT1.50

2.50

3.50

4.50

5.50

6.50

OMAHA CORN PRICESWeekly

Avg. 2009-13 2014 2015

$ Per Bu.

Data Source: USDA-AMS


JAN APR JUL OCT300

350

400

450

500

550

600

650

CENTRAL ILLINOIS SOYBEAN MEAL (48%) PRICESWeekly

Avg. 2009-13 2014 2015

$ Per Ton



8000

9000

10000

11000

12000

13000

14000

15000

16000

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

US TOTAL CORN SUPPLY AND PRICECrop Year

Supply Price

Bil. Bushels $ Per Bushel



0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

14,000.0

16,000.0

18,000.0

US CORN DISAPPEARANCE AND STOCKSCrop Year

Feed & Residual Food, Seed & IndustrialExports Stocks

Bil. Bushels



Five Year Price Forecasts for the 2014 Farm Bill

Corn2014/15 2015/16 2016/17 2017/18 2018/19

FAPRI (1/16/15) 3.63 3.81 3.83 3.84 3.92USDA (1/12/15) 3.65 3.40 3.50 3.50 3.50Futures (1/16/15) 3.60 3.90 4.00 3.95 3.95Hilker (1/16/15) 3.55 3.60 3.80 4.00 4.10Composite 3.61 3.68 3.78 3.82 3.87

Soybeans2014/15 2015/16 2016/17 2017/18 2018/19


Wheat2014/15 2015/16 2016/17 2017/18 2018/19


FAPRI - Food and Agricultural Policy Research Institute (http://www.fapri.missouri.edu/)USDA's Agricultural Projections to 2024

http://www.usda.gov/oce/commodity/projections/index.htmFutures - Hilker's Interpretation of what the Futures Markets are suggestingHilker - MSU Extension EconomistComposite - Average of the FAPRI, USDA, Futures, & Hilker Forecasts

Poultry and Pork

JAN APR JUL OCT140

160

180

200

220

240

260

280

BOXED BEEF CUTOUT VALUEChoice 600-900 Lbs., Carcass, Weekly

Avg. 2009-13 2014 2015

$ Per Cwt.



JAN 0 0 0 0 0 0 0 0 0 0 0 0

JUL 0 0 0 0 0 0 0 0 0 0 0 0

110

120

130

140

150

160

170

180

190

200

210

WHOLESALE CHICKEN BREAST PRICESSkinless/Boneless, Northeast, Truckload, Weekly

Avg. 2008-12 2013 2014

Cents Per Pound



JAN-MAR APR-JUN JUL-SEP OCT-DEC8,600.0

8,800.0

9,000.0

9,200.0

9,400.0

9,600.0

9,800.0

10,000.0

10,200.0

10,400.0

RTC BROILER PRODUCTIONQuarterly

Avg. 2009/13 2014 2015 2016

Bil. Pounds




500000

550000

600000

650000

700000

US BROILER EXPORTSRTC Weight, Monthly

Avg. 2008-12 2013 2014

Mil. Pounds



JAN APR JUL OCT65

75

85

95

105

115

125

135

145

PORK CUTOUT VALUE(Voluntary data prior to 2013), Weekly

Avg. 2009-13 2014 2015

$ Per Cwt.

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


JAN-MAR APR-JUN JUL-SEP OCT-DEC5000

5200

5400

5600

5800

6000

6200

6400

6600

6800

COMMERCIAL PORK PRODUCTIONQuarterly

Avg. 2009/13 2014 2015 2016

Bil. Pounds




350000

375000

400000

425000

450000

475000

500000

US PORK EXPORTSCarcass Weight, Monthly

Avg. 2008-12 2013 2014

Mil. Pounds



JAN-MAR APR-JUN JUL-SEP OCT-DEC21,500.0

22,000.0

22,500.0

23,000.0

23,500.0

24,000.0

24,500.0

25,000.0

TOTAL RED MEAT & POULTRY PRODUCTIONQuarterly

Avg. 2009/13 2014 2015 2016

Bil. Pounds



Cattle

C-M-1101/23/15

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC1,450.0

1,550.0

1,650.0

1,750.0

1,850.0

1,950.0

2,050.0

FED CATTLE MARKETINGSUS Total, Monthly

Avg. 2008/12 2013 2014

Mil. Head

Data Source: USDA-NASS


C-M-2301/23/15


14

15

16

17

18

19

20

FED CATTLE MARKETINGSAs a Percent of Cattle on Feed, Monthly

Avg. 2008/12 2013 2014

Percent

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


C-N-0801/23/15


1500

1700

1900

2100

2300

2500

FEEDLOT PLACEMENTSUS Total, Monthly

Avg. 2008/12 2013 2014

Mil. Head



C-N-08A01/23/15


500

600

700

800

900

1000

1100

1200

1300

1400

CATTLE PLACED WEIGHING LESS THAN 700 POUNDS1,000 Plus Capacity Feedlots, U.S., Monthly

Avg. 2008/12 2013 2014

Mil. Head



C-N-08B01/23/15


700

800

900

1000

1100

1200

1300

1400

CATTLE PLACED WEIGHING MORE THAN 700 POUNDS1,000 Plus Capacity Feedlots, U.S., Monthly

Avg. 2008/12 2013 2014

Mil. Head



C-N-1001/23/15


10000

10500

11000

11500

12000

CATTLE ON FEEDUS Total, Monthly

Avg. 2009/13 2014 2015

Mil. Head



C-S-1802/06/15

JAN APR JUL OCT810

820

830

840

850

860

870

880

890

900

910

STEER DRESSED WEIGHTFederally Inspected, Weekly

Avg. 2009-13 2014 2015

Pounds

Data Source: USDA-AMS & USDA-NASS



600

700

800

900

1000

1100

CATTLE ON FEEDAlberta & Saskatchewan Total, Monthly

Avg. 2009-013 2014 2015

Thou. Head

Data Source: CanFax

Livestock Marketing Information Center02/09/15


50

100

150

200

250

300

350

FEEDLOT PLACEMENTSAlberta & Saskatchewan Total, Monthly

Avg. 2008-013 2013 2014

Thou. Head

Data Source: CanFax

Livestock Marketing Information Center02/09/15

C-S-1702/06/15

JAN APR JUL OCT190

210

230

250

270

290

310

330

350

370

STEER SLAUGHTERFederally Inspected, Weekly

Avg. 2009-13 2014 2015

Thou. Head



Cutout Value Rib Loin Cutout Value Rib Loin125

175

225

275

325

375

425

475

PRIMAL VALUEMonthly

Prime Branded Choice Select Ungraded

$/Cwt

Jan-14



Jan-15

Chuck Round Brisket Chuck Round Brisket110

130

150

170

190

210

230

250

PRIMAL VALUEMonthly

Prime Branded Choice Select Ungraded

$/Cwt

Jan-15Jan-14



C-P-6802/02/15

JAN APR JUL OCT0

2

4

6

8

10

12

14

16

CHOICE MINUS SELECT BEEF PRICESCarcass Cutout Value 600-900 Lbs., Weekly

Avg. 2009-13 2014 2015

$ Per Cwt.



JAN APR JUL OCT85

95

105

115

125

135

145

155

165

175

185

SLAUGHTER STEER PRICES5 Market Weighted Average, Weekly

Avg. 2009-13 2014 2015

$ Per Cwt.



C-P-4902/05/15

JAN APR JUL OCT100

120

140

160

180

200

220

240

260

MED. & LRG. #1 FEEDER STEER PRICES700-800 Pounds, Southern Plains, Weekly

Avg. 2009-13 2014 2015

$ Per Cwt.

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


JAN APR JUL OCT110

130

150

170

190

210

230

250

270

290

310

MED. & LRG. #1 STEER CALF PRICES500-600 Pounds, Southern Plains, Weekly

Avg. 2009-13 2014 2015

$ Per Cwt.



JAN APR JUL OCT45

55

65

75

85

95

105

115

125

135

145

SLAUGHTER COW PRICESSouthern Plains, 85-90% Lean, Weekly

Avg. 2009-13 2014 2015

$ Per Cwt.



JAN APR JUL OCT100

120

140

160

180

200

220

HEIFER SLAUGHTERFederally Inspected, Weekly

Avg. 2009-13 2014 2015

Thou. Head



JAN APR JUL OCT30

40

50

60

70

80

90

BEEF COW SLAUGHTERFederally Inspected, Weekly

Avg. 2009-13 2014 2015

Thou. Head



4,500.0

5,000.0

5,500.0

6,000.0

6,500.0

7,000.0

HEIFERS HELD AS BEEF COW REPLACEMENTSJanuary 1, U.S.Mil. Head

+4.1 %



0

100

200

300

400

500

600

700

800

900

1000

ESTIMATED AVERAGE COW CALF COSTSIncludes Pasture Rent, Annual$ Per Cow

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


80000

82000

84000

86000

88000

90000

92000

94000

96000

98000

100000

JANUARY 1 TOTAL CATTLE INVENTORYU.S., AnnualMil. Head



20032004200520062007200820092010201120122013201420150

50

100

150

200

250

300

350

Beef Cows MI and OH Jan. 1

Beef Cows MIBeef Cows OH

Years

Beef

Cow

s 10

00's

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

50

100

150

200

250

300

350

400

450

Dairy Cows MI and OH

Dairy Cows MichiganDairy Cows Ohio

Years

Dai

ry C

ows

1000

's

2007 2008 2009 2010 2011 2012 2013 2014 20150

50

100

150

200

250

300

350

400

450

How Many Michigan Calves Available?

Calf Crop MichiganBeef Heifers KeptDairy Heifers Kept

Years

1000

's

2007 2008 2009 2010 2011 2012 2013 2014 20150

100

200

300

400

500

600

How Many Ohio Calves Available?

Calf Crop Ohio

Beef Heifers Kept

Dairy Heifers Kept

Years

1000

's

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

50

100

150

200

250

Michigan and Ohio Cattle on Feed, January 1

Michigan COF

Ohio COF

Years

COF 1000s

JAN-MAR APR-JUN JUL-SEP OCT-DEC5300

5500

5700

5900

6100

6300

6500

6700

6900

COMMERCIAL BEEF PRODUCTIONQuarterly

Avg. 2009/13 2014 2015 2016

Bil. Pounds



JAN APR JUL OCT6

8

10

12

14

16

18

20

CALF SLAUGHTERFederally Inspected, Weekly

Avg. 2009-13 2014 2015

Thou. Head



-100

0

100

200

300

400

500

600

80000

85000

90000

95000

100000

105000

110000

115000

COW-CALF RETURNS AND CATTLE INVENTORYU.S., Annual

Cow-Calf Returns Cattle Inventory Jan 1

$ Per Cow Mil. Head

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


-200

-150

-100

-50

0

50

100

150

AVERAGE RETURNS TO CATTLE FEEDERSFeeding 725 Lb. Steers, S. Plains, Annual$ Per Head



19861987

19881989

19901991

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20102011

20122013

20142015

201650

75

100

125

150

175

200

225

250

275

300

AVERAGE ANNUAL CATTLE PRICESSouthern Plains

500-600lb Steer Calves 700-800lb Feeder Steers Fed Steers

$ Per Cwt



LMIC QUARTERLY CATTLE FORECASTS

% Chg. Comm'l % Chg. Live Sltr. % Chg. Feeder Steer Price

Year Comm'l from Beef from Steer Price from Southern Plains d

Quarter Slaughter Year Ago Production Year Ago 5-Mkt Avg Year Ago 7-800# 5-600#(1,000 Head) (Mil. Lbs.) ($/Cwt.) ($/Cwt.)

2014I 7375 -5.2 5868 -5.0 146.34 16.6 171.77 209.30

II 7836 -5.9 6183 -5.1 147.82 18.3 193.16 227.67 III 7630 -8.3 6178 -6.5 158.49 29.6 225.93 263.14 IV b 7328 -8.8 6023 -6.2 165.59 26.6 239.81 285.63

Year 30169 -7.1 24248 -5.7 154.56 22.8 207.67 246.44 2015

I c 7142 -3.2 5834 0.7 163-166 12.4 226-230 276-282II 7614 -2.8 6141 -0.4 163-167 11.6 228-234 280-287

III 7488 -1.9 6141 -0.6 159-164 1.9 226-233 273-282IV 7291 -0.5 5995 -1.4 160-166 -1.6 222-230 266-275

Year 29535 -2.1 24111 -0.4 162-165 5.8 226-231 274-2812016

I 7159 0.2 5786 1.2 161-168 0.0 221-230 270-283II 7348 -3.5 5938 -2.6 162-170 0.6 224-233 274-287

III 7652 2.2 6352 3.0 158-167 0.6 221-232 268-282IV 7343 0.7 6081 1.4 158-168 0.0 216-228 261-276

Year 29502 -0.1 24157 0.7 161-167 0.3 222-229 270-280

a Totals may not add due to rounding. c Forecasted quarters d Average of Kansas and Oklahoma Weekly Combined reports

Sources: Livestock Slaughter - USDA/NASS; Steer Prices - USDA/AMS Livestock Market News; Projections and Forecasts by LMIC

U.S. Meat Production and Prices

February 10, 2015

2014 estimate

2015 forecast

Change from January 12

Change from 2014

Production Billion pounds Percent PercentBeef 24.25 24.22 1.6 -0.1Pork 22.84 24.09 0.8 5.5Broilers 38.55 39.95 0.8 3.6Turkey 5.76 6.08 2.5 5.6Total meat 92.17 95.13 1.1 3.2

Prices Dollars/cwtSteers 154.56 162.00 -1.8 4.8Hogs 76.03 56.00 -10.4 -26.3

Cents/lbBroilers 104.9 100.3 -2.9 -4.4Turkey 107.6 105.0 -1.9 -2.4

August Cattle Futures 2-9-15

Economic Environment …

• Domestic Consumer Meat Demand Strong, Foreign Demand ????• Chicken and Pork Output Ramping-Up• Summer of 2014: Cyclical Turn-up in U.S. Cattle Numbers Began• Feedstuffs ????• Annual Cattle Price Peak: 2014, 2015, or 2016?• Cattle -- Slow Herd Expansion, Prices Erode Not Collapse• Expect More Normal Price Seasonality• Producer Profitability in 2015 Compared to 2014:

• Very Profitable (Slight Slip): Cow-calf; Breeding Stock Providers• Profitable, Small Year-Over-Year Increase: Lamb• Profitable, But Well Less: Hogs, Chicken, and Dairy.• Likely Not Profitable Up To Breakeven: Cattle Feeding (after best year

since 2003 in 2014), and Stockers (????).

Jim Hilker’s Web Page

http://firm.msue.msu.edu/Market Outlook & Probabilistic Price Forecasts for

Grain & Livestockor

http://www.msu.edu/user/hilker/

ThanksQuestions/Discussion

http://firm.msue.msu.edu/

http://firm.msue.msu.edu/

http://www.msu.edu/user/hilker/

price outlook, 2015 and beyond 2015 great lakes professional cattle feeding and marketing...

Documents

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usdanass livestock

pork slide

corn slide

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compiled forecasts

bureau of labor statistics