Beef Cattle Outlook
Dr. Curt Lacy Extension Economist-Livestock
UGA Winter School Beef Update January 20, 2012
Overview
• Recent Trends
• Outlook for 2012 and beyond
• Marketing Alternatives
MED. & LRG. #1 & 2 STEER CALF PRICES500-600 Pounds, Georgia, Weekly
90
100
110
120
130
140
150
JAN
APR
JUL
OCT
$ Per Cwt.
Avg.2005-09
2010
2011
12/19/11Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
MED. & LRG. #1 & 2 FEEDER STEER PRICES700-800 Pounds, Georgia, Weekly
70
80
90
100
110
120
130
JAN
APR
JUL
OCT
$ Per Cwt.
Avg.2005-09
2010
2011
12/19/11Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
SLAUGHTER STEER PRICES5 Market Weighted Average, Weekly
80
85
90
95
100
105
110
115
120
125
130
JAN APR JUL OCT
$ Per Cwt.
Avg.2005-09
2010
2011
Livestock Marketing Information Center
Data Source: USDA-AMS
BOXED BEEF CUTOUT VALUEChoice 600-900 Lbs. Carcass, Weekly
135
145
155
165
175
185
195
205
JAN APR JUL OCT
$ Per Cwt.
Avg.2005-09
2010
2011
C-P-62
01/03/12Livestock Marketing Information Center
Data Source: USDA-AMS
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.2005-09
2010
2011
C-P-68
01/03/12Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
5 THINGS SHAPING MARKETS TODAY AND FOR 2012
BEEF COW SLAUGHTERFederally Inspected, Weekly
45
50
55
60
65
70
75
80
85
90
95
JAN
APR
JUL
OCT
Thou. Head
Avg.2005-09
2010
2011
C-S-34
12/30/11Livestock Marketing Information Center
Data Source: USDA-AMS & USDA-NASS
Source: DTN/Telvent
TOTAL U.S. EXPORTS
OF BEEF MUSCLE CUTSWeekly
4
6
8
10
12
14
16
18
20
22
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11
1000 MT
12/29/11Livestock Marketing Information Center
Data Source: USDA-FAS
OUTLOOK FOR 2012 AND BEYOND What can we expect this year and next?
Outlook
• Positives
– Low interest rates
– Little inflation pressure
– Generally strong corporate balance sheets
– Recently improving hiring prospects
• Negatives
– Uncertainty over European situation
– Federal debt/deficit
– Political uncertainty
CALF CROPJuly 1 Estimates, U.S., Annual
35
37
39
41
43
45
1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011
Mil. Head
C-N-18B
07/22/11
-0.5 Percent
2011 = 35.5 Million Head
Livestock Marketing Information Center
Data Source: USDA-NASS
CHANGE IN BEEF COW NUMBERS
JANUARY 1, 2010 TO JANUARY 1, 2011 (1000 Head)
2 to 44 (13)
0 to 2 (7)
-10 to 0 (17)
-115 to -10 (13)
Alaska
Hawaii
US Total
C-N-28
01/28/11
-10
-0
-28 -9
-10
13
CT -2
DE -1
-32
-20
-2
6
-37 -8
-45
44 -47
-38
2
MD 1
MA -2
3
-20
-8
-103
11
-90
-1
NJ -1
-14
0
-16
11
2
3
-3
RI 0
1
-8
-7
-115
-3
0
10
6
10
5
0
-506
Livestock Marketing Information Center
Data Source: USDA/NASS
-37
C-N-02
01/29/10
Declining cow numbers reflect lack of profitability in the
sector
25
30
35
40
45
50
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
Mil. Head
JANUARY 1 “BEEF COW FACTORY’
U.S., Annual
ReplacementHeifers
Beef Cows
Beef cows down 2 percent @ 30.9 million Beef replacement heifers down 5 percent @ 5.20 million Total beef cow factory down 2.1percent
Meat supplies will be slightly larger in 2011 but lower in 2012
Source: USDA-WASDE, December 2011 Report
2010
2011
Projected
2012
Forecast 11 vs 10 12 vs 11
Beef 26.30 26.39 25.07 0.34% -5.27%
Pork 22.44 22.67 23.07 1.01% 1.73%
Total Red Meat* 49.04 49.36 48.44 0.65% -1.90%
Broilers 36.91 36.92 36.31 0.03% -1.68%
Total Poultry** 43.06 43.18 42.59 0.28% -1.39%
Total RedMeat & Poultry 92.10 92.54 91.02 0.48% -1.67%
BILLION POUNDS PERCENT CHANGECommodity
Tight Stocks Since 1995 in Feed Crops Despite Large Crops
19.8% 17.5%
11.6% 12.8% 13.9% 13.1%
5.4% 6.7%
0%
10%
20%
30%
40%
50%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12
Ending Stocks Production Domestic Use and Exports Stocks:Use
US Corn Supply and Demand
Projected Prices 2011 and Beyond
$40
$50
$60
$70
$80
$90
$100
$110
$120
$130
$140
2010 2011 2012 2013
GA 500# steer GA 750# steer Choice fed steer GA Slaughter cow
Source: USDA, LMIC and UGA
INPUTS, PROFITS AND RISK MANAGEMENT FOR 2012
90
95
100
105
110
115
-100
-50
0
50
100
150
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Mil. Head $ Per Cow
COW-CALF RETURNS AND CATTLE INVENTORY
U.S., Annual
Cow-CalfReturns
CattleInventoryJan 1
C-P-67
11/17/11
Livestock Marketing Information Center
Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC
Don’t look for fertilizer prices to go down
$-
$200.00
$400.00
$600.00
$800.00
$1,000.00
$1,200.00
$1,400.00
Dat
e
4/7
/20
08
5/1
9/2
00
9
6/3
0/2
00
8
8/1
1/2
00
8
9/2
9/2
00
8
11
/10
/20
08
12
/22
/20
08
2/9
/20
09
3/2
3/2
00
9
5/1
1/2
00
9
6/2
9/2
00
9
8/1
0/2
00
9
9/2
8/2
00
9
11
/9/2
00
9
12
/21
/20
09
2/1
/20
10
3/1
5/2
01
0
4/2
6/2
01
0
6/2
1/2
01
0
8/9
/20
10
9/2
0/2
01
0
11
/1/2
01
0
12
/13
/20
10
1/2
4/2
01
1
3/7
/20
11
4/1
8/2
01
1
5/3
0/2
01
1
7/1
1/2
01
1
8/2
2/2
01
1
10
/3/2
01
1
11
/14
/20
11
12
/26
/20
11
$/t
on
Fertilizer Prices 2002-2011
Ammonium Nitrate
DAP (Diammonnm Phospate)
Potash
Feedstuffs will be higher also
$-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$10.00
$-
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
3/3/2008 3/3/2009 3/3/2010 3/3/2011
Do
llars
Pe
r To
n
Weekly Average Feed Prices
Whole Cottonseed
Corn Gluten Pellets
Soybean Hull Pellets
2 Yellow Corn
Cost of production will be higher but should be manageable for most
$75.00
$85.00
$95.00
$105.00
$115.00
$125.00
$135.00
$145.00
$155.00
$165.00
2012
Co
st o
f P
rod
uct
ion
($
/Cw
t.)
Expected Production Costs in 2012
Variable Costs Fixed Costs
Range of Expected Prices
There are opportunities to manage risk
$80.00
$90.00
$100.00
$110.00
$120.00
$130.00
$140.00
$150.00
$160.00
$170.00
Feb
-12
Mar
-12
Ap
r-1
2
May
-12
Jun
-12
Jul-
12
Au
g-1
2
Sep
-12
Oct
-12
No
v-1
2
Dec
-12
$/C
wt.
CME Feeder Cattle Futures Month
CME Live and Feeder Cattle Futures Close for January 6, 2012
Feeder Cattle Futures
Live Cattle Futures
Beef Cattle Outlook
R. Curt Lacy, Ph.D.
Extension Economist-Livestock
www.secattleadvisor.com