Agricultural Economics Beef, Dairy, Equine, Poultry, Hogs, Sheep, and Goats Kenny Burdine and Lee...

Agricultural Economics

Beef, Dairy, Equine, Poultry, Hogs, Sheep, and Goats

Kenny Burdine and Lee Meyer

UK Ag Economics


Overview of Equine Industry

Fell behind poultry in 2009 cash receipts Will stay there in 2010

T-bred sales make up nearly ¾ of equine receipts, balance is stud fees

Majority of horses used recreationally, fewer dollars, more producers Still challenges with recreation demand and lack of

slaughter market


Racing: Receipts and Sales

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

($1,

000)

KY Cash Receipts Equine Receipts


Poultry


BROILER PRODUCTIONFederally Inspected, Ready-to-Cook Weight, Monthly

2.6

2.7

2.8

2.9

3.0

3.1

3.2

3.3

JAN MAR MAY JUL SEP NOV

Bil. Pounds

Avg.2004-08

2009

2010

P-S-1209/27/10

Livestock Marketing Information Center

Data Source: USDA/NASS


BROILER PRICES12-City Composite, Weekly

68

73

78

83

88

93Cents Per Pound

Avg.2004-08

2009

2010

P-P-0109/20/10Data Source: USDA-AMS, Compiled by LMIC


Broiler Market Summary

Largest gross farm income source in Ky. Ag. Production up 3%, per person consumption

continues to increase Exports are very important (about 20% of

production) Prices are up, and are expected to be higher

again in 2011, averaging in the $.83 - .88 range Profits will be hurt by higher feed costs


Hogs


BARROW AND GILT PRICESIowa - So. Minnesota, Carcass Base Price, Weekly

40

45

50

55

60

65

70

75

80

85

90$ Per Cwt.

Avg.2004-08

2009

2010

H-P-0909/20/10Data Source: USDA-AMS, Compiled & Analysis by LMIC


SEPTEMBER 1 ALL HOGS AND PIGSU.S. Inventory (Prior to 1988 Estimated)

45

48

51

54

57

60

63

66

69

72

1984 1987 1990 1993 1996 1999 2002 2005 2008

Mil. Head

H-N-1406/25/10

Livestock Marketing Information CenterData Source: USDA/NASS


IOWA MARKET HOG PROFIT Farrow/Finish, Monthly

-50

-40

-30

-20

-10

0

10

20

30

40

50

2006 2007 2008 2009 2010

$/Head

09/17/10Livestock Marketing Information CenterData Source: Iowa State University

Latest Data: August 2010


Hog Market Summary

Remarkable recovery in prices – up 60% from year ago (Oct.), and 2010 will average 35% higher than 2009;

Price gains are from lower production, and stronger demand – at home and exports;

Sow numbers down about 2%, but even production for 2011 with better efficiency;

Futures markets for 2011 in the $80 to $85 range, about same as 2010

Profits hurt by increasing feeding costs.


Sheep and Goats


SLAUGHTER LAMB PRICESWooled, 110-130 lbs, Sioux Falls, Weekly

85

95

105

115

125

135

145

JAN APR JUL OCT

$ Per Cwt.

Avg.2004-08

2009

2010

S-P-0509/22/10Data Source: USDA-AMS, Compiled by LMIC



Lamb and Goat Summary

• Ky sheep numbers down 7% to 37,000• Lamb prices up about 20% from last year,

selling for $1.40 – 1.50/lb.

• Ky goat numbers are unchanged at 79,000• Goat prices up 20%, with Selection #2 40-60 lb. kids selling for $1.35/lb.

• Both goat and lamb prices likely to continue at these high levels (stronger economy, weak $ compared to NZ)


Dairy


US Milk Production (billion lbs)

40

42

44

46

48

50

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

200820092010


BUTTER PRICESUS, Weekly

1.00

1.20

1.40

1.60

1.80

2.00

2.20

2.40

JAN

APRJU

LOCT

$ Per Pound

Avg.2004-08

2009

2010


US All Milk Price

$0

$5

$10

$15

$20

$25

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

$ p

er c

wt

2004-2008 2009 2010


2010 Dairy Outlook

Milk production likely to increase again Primarily milk per cow

World production was down in 2009, good chance for increase in 2010

USDA projecting $17-20 I’m seeing $15-18


KY Dairy Cow Inventory

0

50

100

150

200

250

300

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010


Beef Cattle


Cattle Market Summary Cattle numbers low, and likely dropping Weather Large corn crop, but a lot of difficulty

getting a feel for size Feedlots saw some black ink this spring

Fed market has improved Questionable wheat grazing conditions

and expensive wheat




JANUARY 1 TOTAL CATTLE INVENTORYU.S., Annual

70

80

90

100

110

120

130

140

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Mil. Head





SLAUGHTER STEER PRICES5 Market Weighted Average, Weekly

77

82

87

92

97

102

JAN APR JUL OCT

$ Per Cwt.

Avg.2004-08

2009

2010


December Corn Futures


Market Expectations Calves likely have more downside

I look for 5wt steers in $90’s by November / December

I expect rally into spring, to put calves above $110 again

Heavy feeders Price slides will tighten with higher corn prices Spring futures hovering around $110 5wt steers average $105 in KY

Spring board upper $110’s, calf prices in mid-upper $90’s


Med / Large Frame #1 Steers500 to 600 lbs.

40

60

80

100

120

Jan

Feb

Mar

Apr

May

June

July

Aug

Sep

t

Oct

Nov

Dec

$ /

cwt.

2008 1995-2007 2009


Med / Large Frame #1 Steers700 to 800 lbs.

60

70

80

90

100

110

Jan

Feb

Mar

Apr

May

June

July

Aug

Sep

t

Oct

Nov

Dec

$ /

cwt.

1995-2007 2008 2009


KY Hay Production

0100020003000400050006000

1994

1996

1998

2000

2002

2004

2006

2008

1,00

0 to

ns


Wholesale Commodity Feeds(last 36 months)

0

20

40

60

80

100

120

140

160

180

Jan

Feb Mar Apr

May Ju

n Jul

Aug Sep Oct NovDec

SB Hulls

DDG


KY Cull Cow PricesBoning 80-85%

30

35

40

45

50

55

60

Jan

Feb Mar

AprM

ay

June Ju

lyAug Sep

tO

ctNov Dec

2005-2009 2009 2010


Medium / Large Frame #1 Steers 500 to 600 lbs

70

80

90

100

110

120

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

2005-2009 1995-2004


Timing of Post-weaning Sales (2004 to 2009)

Wean 530# in October, sell 650# in Dec $61.72 gross margin to put on 120 lbs must put gain on for $0.51 per lb

From 650# in December to 770# in Feb $87.87 gross margin to put on 120 lbs Must put gain on for $0.73

(NOTE: This assumes no price premium)


October 2005-2009

96.00

98.00100.00

102.00

104.00106.00

108.00

110.00112.00

114.00

12/03

/04

12/31

/04

01/28

/05

02/25

/05

03/25

/05

04/22

/05

05/20

/05

06/17

/05

07/15

/05

08/12

/05

09/09

/05

10/07

/05


November CME Group Futures 2005 - 2009

96.0098.00

100.00102.00104.00106.00108.00110.00112.00114.00

12/3

/200

4

1/3/

2005

2/3/

2005

3/3/

2005

4/3/

2005

5/3/

2005

6/3/

2005

7/3/

2005

8/3/

2005

9/3/

2005

10/3

/200

5

11/3

/200

5


January 2006 - 2010

92.0094.0096.0098.00

100.00102.00104.00106.00108.00110.00112.00

03/04

/05

04/01

/05

04/29

/05

05/27

/05

06/24

/05

07/22

/05

08/19

/05

09/16

/05

10/14

/05

11/11

/05

12/09

/05

01/06

/06


Basic Backgrounding Budget(October to March)

550# steers @ $1.07 $588.50Hay (12 lbs @ $75 / ton) $67.50Hulls / Gluten (7 lbs @ $160) $84.00Mineral (.25 lbs at $20 / bag) $15.00Vet / Med $20.00Interest (6%) $19.11Death Loss (2%) $17.00

$811.11

BE Price = $95 on 850 steersMarch / April Futures at $110-112

Date post:	13-Jan-2016
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