What’s The What’s The Cattle Price Cattle Price

Outlook Outlook For 2006?For 2006?

Dr. Walter Prevatt Dr. Walter Prevatt

Dr. Deacue FieldsDr. Deacue Fields

Extension EconomistsExtension Economists

Auburn University Auburn University

Cattle Situation and Cattle Situation and OutlookOutlook

SupplySituation

U.S. Cattle and Calves Inventory, 1949-U.S. Cattle and Calves Inventory, 1949-20062006

0

20

40

60

80

100

120

140

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Cattle & Calves Inventory

Year

Million Head

U.S. Cattle and Calves Inventory, 1949-U.S. Cattle and Calves Inventory, 1949-20062006

0

20

40

60

80

100

120

140

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Cattle & Calves Inventory

Year

Million Head

1949-58 1958-67 1967-79 1979-90 1990-04

Length of U.S. Cattle Length of U.S. Cattle Cycles Cycles

70

80

90

100

110

120

130

140

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

1949-58

1958-67

Million Head

Number of Years

1967-79

1979-901990-04

2004-?

U.S. Cattle Inventory & Average Calf U.S. Cattle Inventory & Average Calf Price 1949-2006Price 1949-2006

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

50 55 60 65 70 75 80 85 90 95 '00 '05

$15

$25

$35

$45

$55

$65

$75

$85

$95

$105

$115

$125

$135

U.S. Cattle Inventory U.S. Avg. Calf Price

Year

Million Head

U.S. Cattle and Calves Inventory,U.S. Cattle and Calves Inventory,97.1 Million Head, Jan. 1, 200697.1 Million Head, Jan. 1, 2006

33.3

9.15.9 4.3

9.8

16.9

2.3

15.6

37.8

28.2

0

5

10

15

20

25

30

35

40

45

BeefCows

MilkCows

BeefCowRepl.

MilkCowRepl.

OtherHfrs.500+Lbs.

Steers500+lbs.

Bulls500 +Lbs.

Calves< 500Lbs.

CalfCrop

FCOF*

Mill

ion H

ead

U.S. Cattle & Calves, Jan. 1, 2005 & U.S. Cattle & Calves, Jan. 1, 2005 & 20062006

ClassClass 20052005 20062006 Change from 2005Change from 2005

Cattle & CalvesCattle & Calves 95.495.4 97.197.1 1.664 +1%1.664 +1%

Cows & Heifers That Have Cows & Heifers That Have CalvedCalved

41.941.9 42.342.3 0.391 +1%0.391 +1%

Beef CowsBeef Cows 32.932.9 33.333.3 0.341 +1%0.341 +1%

Milk CowsMilk Cows 9.09.0 9.19.1 0.053 +1%0.053 +1%

Heifers 500 Pounds and overHeifers 500 Pounds and over 19.619.6 20.020.0 0.405 +2%0.405 +2%

For Beef Cow ReplacementFor Beef Cow Replacement 5.75.7 5.95.9 0.214 +4%0.214 +4%

For Milk Cow ReplacementFor Milk Cow Replacement 4.14.1 4.34.3 0.160 +4%0.160 +4%

Other HeifersOther Heifers 9.89.8 9.89.8 0.032 0%0.032 0%

Steers 500 Pounds and Over Steers 500 Pounds and Over 16.516.5 16.916.9 0.447 +3%0.447 +3%

Bulls 500 Pounds and OverBulls 500 Pounds and Over 2.22.2 2.32.3 0.044 +2%0.044 +2%

Under 500 Pounds Under 500 Pounds 15.315.3 15.615.6 0.376 +2%0.376 +2%

Cattle on FeedCattle on Feed 13.713.7 14.114.1 0.387 +3%0.387 +3%

FC Outside FeedlotsFC Outside Feedlots 27.727.7 28.228.2 0.468 +2%0.468 +2%

Percent Change From A Year Ago Percent Change From A Year Ago In U.S. Inventory, Jan. 1, 2006In U.S. Inventory, Jan. 1, 2006

1.04%

1.69%

0.41%

2.47%1.98%

0.27%0.33%

3.89%3.76%

0.59%

-6%

-4%

-2%

0%

2%

4%

6%

BeefCows

MilkCows

BeefCowRepl.

MilkCowRepl.

OtherHfrs.500+Lbs.

Steers500+lbs.

Bulls500 +Lbs.

Calves< 500Lbs.

CalfCrop

FCOF*

Per

cent

Chan

ge

from

a y

ear

ago

Beef Replacement Beef Replacement Heifers Jan 1, 1985-Heifers Jan 1, 1985-

20062006

6.46.2

6.0

5.8

5.5 5.6 5.5

5.75.9

5.65.65.5

6.5

6.1

5.6

5.45.35.35.2

5.25.1

5.5

4.04.24.44.64.85.05.25.45.65.86.06.26.46.66.8

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06

Million H

ead

Heifers As A Percent Of Heifers As A Percent Of Total Feedlot Placements, 1980-Total Feedlot Placements, 1980-

20052005

36%35%

32%32%

38%

35%35%

35%

36%

33%

37%

31%

30%

29%

31%

32%32%

32%

31%

33%

31%31%29%

32%

29%

25%

27%

29%

31%

33%

35%

37%

39%

41%

80 81 82 83 84 85 86 87 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04'05?

Year

Per

cent

U. S. Beef Production, 1975-2006U. S. Beef Production, 1975-2006

25.7

24.0

21.3

22.2

23.123.4

24.2

23.423.0

22.623.0

24.3

25.125.4

26.426.8

26.1

27.1

26.2

24.524.7

25.925.725.4

22.922.8

23.423.6

22.4

21.5

23.7

25.0

20

21

22

23

24

25

26

27

28

75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00'01'02'03'04'0506

Year

Bill

ion

Poun

ds

* Estimated

U.S. Average Cattle Carcass U.S. Average Cattle Carcass Weights, 1975-2005Weights, 1975-2005

602

631624 623

649657

668677681

698688

710705695700

723730738

758

739750

757

579

597607

635636 629

649

699

740

550

600

650

700

750

800

75 77 79 81 83 85 87 89 91 93 95 97 99 '01 '03 '05*

Year

Pounds

Factors affect carcass weights include genetics, marketing technology, corn prices, grid pricing, fed cattle prices, breakeven prices, etc.

U.S. Cattle Operations, U.S. Cattle Operations, Number by Year, 1975-Number by Year, 1975-

200520051.91.8

1.81.7

1.61.61.61.61.61.51.51.41.41.41.31.31.21.21.21.21.21.21.21.11.11.11.01.01.01.01.0

0

0.5

1

1.5

2

75 77 79 81 83 85 87 89 91 93 95 97 99 '01 '03 '05

Year

Cat

tler

Oper

atio

ns

(Millions)

U.S. Cattle Operations, U.S. Cattle Operations, Number by Size Group, Number by Size Group,

20052005

163,780 177,510

29,120

612,100

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

1-49 Hd 50-99 Hd 100-499 Hd 500+ Hd

Num

ber

of O

pera

tions

982,510 U.S. cattle operations, 2005

U.S. Cattle Operations & U.S. Cattle Operations & Inventory, Percent by Size Inventory, Percent by Size

Group, 2005Group, 2005

79%

21%

1-99 Hd 100+ Hd

23%

77%

1-99 Hd 100+ Hd

Cattle Operations Cattle Inventory

Cattle Situation and Cattle Situation and OutlookOutlook

Demand

Situation

U.S. Per Capita Meat U.S. Per Capita Meat Consumption,Consumption,

Retail Weight Basis, 1976-200Retail Weight Basis, 1976-20066

40

50

60

70

80

90

100

76 78 80 82 84 86 88 90 92 94 96 98 '00 '02 '04 '06

Year

Pounds

Per

Pers

on

Beef Pork Chicken

U.S. Per Capita Meat U.S. Per Capita Meat Consumption,Consumption,

Retail Weight Basis, 1976-200Retail Weight Basis, 1976-20066

150

160

170

180

190

200

210

76 78 80 82 84 86 88 90 92 94 96 98 '00 '02 '04 '06

Year

Pounds

Per

Pers

on

Total Pounds of Beef, Pork, & Chicken

U.S. Beef Imports and U.S. Beef Imports and Exports, Exports,

Billion Pounds, 1970-0Billion Pounds, 1970-066

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 '00 '02 '04 '06

Year

Billion P

ounds

Beef Imports Beef Exports

U.S. Beef Imports and U.S. Beef Imports and Exports, Exports,

Billion Dollars, 1976-0Billion Dollars, 1976-066

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

76 78 80 82 84 86 88 90 92 94 96 98 '00 '02 '04 '06

Year

Billion D

ollars

Beef Imports Beef Exports

Cattle Situation and Cattle Situation and OutlookOutlook

Cost of Productio

n

U.S. Cow-Calf Cash Expenses, U.S. Cow-Calf Cash Expenses, 1972-991972-99

$114

$162 $164$189

$231$252

$411

$488

$446

$254$265 $269 $265

$277

$267

$173

$137$148

$266$286$287

$456$479

$388$402 $383$412

$415

$0

$100

$200

$300

$400

$500

$600

72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 8990* 91 92 93 94 95 96 97 98 99

Year

Dollar

Per

Bre

d C

ow

*1990-99 estimates were based on a revised methodology.

Southeast Ammonium Nitrate Prices, Southeast Ammonium Nitrate Prices, 1970-01970-066

$65$74

$155$171

$130

$165

$187 $185$196

$172$158

$192

$236 $242

$222$210

$224

$280

$222

$277$294

$61$64

$269

$189$193

$144$138

$143

$249

$211

$182

$164 $180$178

$183

$0

$50

$100

$150

$200

$250

$300

$350

70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 '00 '02 '04 '06*

Year

Dolla

r Per

Ton

Stocker Gross Margin, Alabama, Stocker Gross Margin, Alabama, October-April, 400# -750#, 1979-October-April, 400# -750#, 1979-

20020066

$83

$155

$194

$219

$199

$101

$206

$135

$197

$223

$133

$221

$159

$117

$91

$261

$160$174

$210

$107

$197

$248

$176

$194$188$199$196

$50

$100

$150

$200

$250

$300

79-80

81-82

83-84

85-86

87-88

89-90

91-92

93-94

95-96

97-98

99-00

01-02*

'03-04

'05-06

Avg.

Year

Dollar

Per

Head

Gross margin is feeder sale value minus stocker purchase value.Based on steers, med. & lrg., No. 1, Oct. to Apr., 400 to 750 pounds.

$40

$45

$50

$55

$60

$65

$70

$75

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

'Jan-01

'Jan-02

'Jan-03

'Jan-04

Jan-05

Year

Dollar

Per

Cw

t.

Source: KSU Cattle Return Series

Monthly Feeding Cost of GainMonthly Feeding Cost of Gain700 to 800 Lb. Steers in 700 to 800 Lb. Steers in

KansasKansas

Cattle Situation and Cattle Situation and OutlookOutlook

Market Prices

Alabama Feeder Calf Prices,Alabama Feeder Calf Prices,Steers, Med. & Lg., #1, 1990-Steers, Med. & Lg., #1, 1990-

20020066

$40

$60

$80

$100

$120

$140

$160

$180

J90 J91 J92 J93 J94 J95 J96 J97 J98 J99 J00 J01 J02 J03 J04 J05 J06

Year

Dollar

Per

Cw

t.

325# 425# 525# 625# 725#

Annual U. S. Beef Production, 2000-Annual U. S. Beef Production, 2000-0606

26.826.1

27.126.2

24.5 24.7

25.9

20

21

22

23

24

25

26

27

28

29

30

'2000 '2001 '2002 '2003 '2004 '2005 '2006*

Year

Billion P

ounds

*Estimated

Annual U.S. Beef Production &Annual U.S. Beef Production &Average Fed Beef Price, 2000-Average Fed Beef Price, 2000-

20062006

20

21

22

23

24

25

26

27

28

29

30

2000 2001 2002 2003 2004 2005 2006*

Year

Bill

ion

Po

un

ds

$60

$65

$70

$75

$80

$85

$90

Do

llars

Pe

r C

wt.

U.S. Beef Production Avg. Fed Beef Price

Quarterly U. S. Beef Production, Quarterly U. S. Beef Production, 2004-062004-06

5.8

6.36.4

6.1

5.7

6.2

6.6

6.2

6.1

6.76.8

6.3

5.0

5.2

5.4

5.6

5.8

6.0

6.2

6.4

6.6

6.8

7.0

'04-1 '04-2 '04-3 '04-4 '05-1 '05-2 '05-3 '05-4 '06-1* '06-2* '06-3* '06-4*

Year-Quarter

Bill

ion

Pou

nds

*Estimated (2004 -> 24.5B, 2005 -> 24.7B, 2006 -> 25.9B*)

Quarterly U. S. Beef Production Quarterly U. S. Beef Production & Average Fed Beef Price, & Average Fed Beef Price,

2004-20062004-2006

5.0

5.2

5.4

5.6

5.8

6.0

6.2

6.4

6.6

6.8

7.0

'04-1 '04-2 '04-3 '04-4 '05-1 '05-2 '05-3 '05-4 '06-1* '06-2* '06-3* '06-4*

Year-Quarter

Bill

ion

Po

un

ds

$76

$78

$80

$82

$84

$86

$88

$90

$92

Do

llar

Pe

r C

wt.

U.S. Beef Production Avg. Fed Beef Price

*Estimated

2006 Cattle Price Projections, 2006 Cattle Price Projections, $/Cwt.$/Cwt.

ItemItem First First Quarter Quarter

20062006

Second Second Quarter Quarter

20062006

Third Third Quarter Quarter

20062006

Fourth Fourth Quarter Quarter

20062006

KansasKansas

Fed CattleFed Cattle

Slaughter Wt.Slaughter Wt.$88-$91$88-$91 $83-$87$83-$87 $78-$82$78-$82 $79-$84$79-$84

AlabamaAlabama

725# Fdr. Cattle,725# Fdr. Cattle,

Med. & Lg., #1Med. & Lg., #1$100-$100-$103$103

$94-$99$94-$99 $92-$97$92-$97 $90-$95$90-$95

AlabamaAlabama

525# Fdr. Calves,525# Fdr. Calves,

Med. & Lg., #1Med. & Lg., #1$124-$124-$127$127

$118-$118-$123$123

$115-$121$115-$121 $114-$118$114-$118

These projections will be revised as new economic information is received and processed.

Cattle Situation and Cattle Situation and OutlookOutlook

Profit Potential

U.S. Cow - Calf Returns U.S. Cow - Calf Returns Over Cash Expenses, 1972-Over Cash Expenses, 1972-

9999

26

38

-22-43-39

-17

56

121

55

-5 -12-22

-18-11

12

5773

85

40 5031

15

-23

-79

-160

-72-51

-14

-$200

-$150

-$100

-$50

$0

$50

$100

$150

Dollars

Per

Bre

d C

ow

72 74 76 78 80 82 84 86 88 90 92 94 96 98 '00

Year

Source: USDA

Average Annual Cow-Calf Average Annual Cow-Calf ReturnsReturns

Over Cash Expenses, 1980-Over Cash Expenses, 1980-20042004

31

-45-42-71

-63-43

-24

51 4434

59 60

3342

-12

-59

-88

1710

45

8380

23

105

145

17

-$150

-$100

-$50

$0

$50

$100

$150

$200

Dollars

Per

Head

80 82 84 86 88 90 92 94 96 98 '00 '02 '04Avg.

Year

Source: Cattle-Fax

Average Annual Stocker CattleAverage Annual Stocker CattleReturns Over Cash Expenses, 1980-Returns Over Cash Expenses, 1980-

20020066

-12 -3

34

8

38

8 9

7243

2949

2826

49

-21-22

10

74

-30

4744

19

-20

170165

95

33

-$150

-$100

-$50

$0

$50

$100

$150

$200

Dolla

rs P

er H

ead

80 82 84 86 88 90 92 94 96 98 '00 '02 '04 '06* Avg.

YearSource: Cattle-FaxIncludes winter and summer grazing programs.

Monthly Returns for FinishingMonthly Returns for Finishing 700 to 800 Lb. Steers in Kansas 700 to 800 Lb. Steers in Kansas

Source: KSU Cattle Return Sales

-300

-200

-100

0

100

200

300

400

500

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

'Jan-01

'Jan-02

'Jan-03

'Jan-04

'Jan-05

Dollars

Per

Head

Average Annual Cattle Average Annual Cattle Feeding Returns, 1980-2004Feeding Returns, 1980-2004

Source: Cattle-Fax

-28

-75

2012 4

-48

28

99

34

3

40

-42

32 39

-49

17

-13

5

-84

49

10

-13-23

140

257

-100

-50

0

50

100

150

200

Dollars

Per

Head

80 82 84 86 88 90 92 94 96 98 '00 '02 04* Avg.

Cattle Situation and Cattle Situation and OutlookOutlook

Summary

Remarks

Cattle Situation and Cattle Situation and OutlookOutlook

Greed,Greed,

Fear, andFear, and

WeatherWeather

Alabama Feeder Calf Prices,Alabama Feeder Calf Prices,Steers, Med. & Lg., #1, 1990-Steers, Med. & Lg., #1, 1990-

20062006

$40

$60

$80

$100

$120

$140

$160

$180

J90 J91 J92 J93 J94 J95 J96 J97 J98 J99 J00 J01 J02 J03 J04 J05 J06

Year

Dollar

Per

Cw

t.

325# 425# 525# 625# 725#

Projected Profit/Loss By Cattle Industry SegmentsProjected Profit/Loss By Cattle Industry SegmentsDuring The Four Price Phases Of The Cattle Cycle*During The Four Price Phases Of The Cattle Cycle*

Price Phase*Price Phase* Cow- CalfCow- Calf StockerStocker FeedlotFeedlotUp CycleUp Cycle

(2000 thru 2006?)(2000 thru 2006?)Moderate-Moderate-

SignificantSignificant

ProfitsProfitsProfits/lossesProfits/losses Profits/LossesProfits/Losses

Downward TransitionDownward Transition

(2007 thru 2008?)(2007 thru 2008?)DecliningDeclining

Profitability,Profitability,

Profits/LossesProfits/Losses

Minor-Minor-SignificantSignificant

LossesLosses

Minor-Minor-

Significant Significant LossesLosses

Down CycleDown Cycle

(2009 thru 2010?)(2009 thru 2010?)SignificantSignificant

LossesLossesMarginal Marginal Profits/LossesProfits/Losses

Marginal Marginal Profits/LossesProfits/Losses

Upward TransitionUpward Transition

(2011 thru 2012?)(2011 thru 2012?)ImprovingImproving

Profitability,Profitability,

Profits/LossesProfits/LossesProfits/LossesProfits/Losses Profits/LossesProfits/Losses

The information in this chart is generalized based on the price phase of the cattle cycle. These projections will be revised as new economic information is received and processed.

What’s The What’s The Cattle Price Cattle Price

OutlookOutlookFor 2006For 2006

Dr. Walter Prevatt Dr. Walter Prevatt

Dr. Deacue FieldsDr. Deacue Fields

Extension EconomistsExtension Economists

Auburn University Auburn University