Livestock Outlook - Kate Brooks - 2014 Cornhusker Economics Outlook

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Dr. Kate Brooks looks at the livestock outlook for 2014 and beyond.

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Livestock Outlook - Kate Brooks - 2014 Cornhusker Economics Outlook

  1. 1. Livestock Outlook Kathleen R. Brooks, Ph.D. Extension Livestock Marketing Specialist Department of Agricultural Economics University of Nebraska-Lincoln kbrooks4@unl.edu
  2. 2. Outline   Beef Cattle Hog
  3. 3. Beef Cattle Outlook Photo taken by Troy Waltz
  4. 4. 2013 Recap     Drought conditions in U.S improving  Herd liquidation stabilizing toward end of 2013 Declining grain and forage prices Record high cattle prices  Increased cow-calf profitability potential  Poor feedlot and packer margins with some improvement towards end of year  Excess capacity within feedlot industry Record high wholesale and retail prices  Beef demand domestically & export markets
  5. 5. No Drought: 10.25% Abnormally Dry to Moderate: 63.25% Severe to Extreme Drought: 26.50%
  6. 6. Cattle Inventory Report, January 1, 2014      All cattle & calves -1.8%, 87.7 mil hd (smallest since 1951)  NE: -2.4% at 6.15 mil hd Beef cow inventory -0.9%, 29.0 mil hd  NE: -0.4% at 1.797 mil hd Beef replacement heifers +1.7%, 5.5 mil hd  NE: +10.6%, 387 thousand hd Calf crop -1.0%, 33.9 mil hd  NE: -2.3%, 1.68 mil hd Cattle & calves on feed for slaughter -5%, 12.7 mil hd  NE: -3.9% 2.5 mil hd
  7. 7. 2013 Slaughter -6.4% (vs. 2012) -10.7% (vs. 2007-11) Since September slaughter 17.6% below 2012 and 18.9% below 2007-11 average… C-S-34 Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS 12/27/13 …Period of herd stabilization (with little or no growth) that often occurs in first year of herd expansion???
  8. 8. ESTIMATED AVERAGE COW CALF RETURNS Returns Over Cash Cost (Includes Pasture Rent), Annual $ Per Cow 400 350 300 250 200 150 100 50 0 -50 -100 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC C-P-66 01/29/14
  9. 9. Cow-Calf Outlook  Improved margins  Improved pasture conditions, declining input prices, record calf prices  Is it enough to trigger expansion???  Market signals vs. mother nature
  10. 10. Longer-Term Projections (as of Feb. 2014) http://www.usda.gov/oce/commodity/projections/index.htm 15% Increase in herd for 2023 compared to 2013 Beef Cow Inventory (1,000 Head) 34,000 33,668  33,293  33,000 32,739  32,300  32,000 31,953  31,558  31,000 30,000 30,734  30,158  29,295  29,000 29,678  29,349  29,050  28,000 2012 2014 2016 2018 2020 2022
  11. 11. Livestock Marketing Information Center Data Source: USDA-NASS, Compiled by LMIC & Analysis by Kate Brooks
  12. 12. Livestock Marketing Information Center Data Source: USDA-NASS, Compiled by LMIC & Analysis by Kate Brooks
  13. 13. Feedlot Sector  Significant improvements in returns over last several months  Capacity issues still a concern
  14. 14. AVERAGE RETURNS TO CATTLE FEEDERS Feeding 725 Lb. Steers, S. Plains, Monthly $ Per Head 175 125 75 25 -25 -75 -125 -175 -225 -275 -325 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 C-P-22 02/20/14 Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC
  15. 15. SLAUGHTER STEER PRICES 5 Market Weighted Average, Weekly $ Per Cwt. 155 Avg. 2008-12 145 135 2013 125 115 105 2014 95 JAN APR Livestock Marketing Information Center Data Source: USDA-AMS JUL OCT
  16. 16. CHOICE STEER PRICE vs BREAKEVEN Cattle Feeding, S. Plains, Monthly $ Per Cwt 155 145 Steer Price 135 125 115 Breakeven 105 95 Projected Breakeven 85 75 2006 2007 2008 2009 2010 2011 Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC 2012 2013 2014 C-P-21 02/20/14
  17. 17. CATTLE ON FEED US Total, Monthly Mil. Head 12.0 Avg. 2008/12 11.5 11.0 2013 10.5 2014 10.0 9.5 JAN FEB MAR APR MAY Livestock Marketing Information Center Data Source: USDA-NASS JUN JUL AUG SEP OCT NOV DEC C-N-10 02/21/14
  18. 18. Thru June 2015 all cattle futures contracts are above $130 per cwt *Futures as of the close on Wed February 26, 2014
  19. 19. Thru Nov 2014 all feeder cattle futures contracts are above $171 per cwt *Futures as of the close on Wed February 26, 2014
  20. 20. Quarterly Forecasts (LMIC: 2/3/14) Year Quarter 2012 I II III IV Year 2013 I II III IV Year 2014 I II III IV Year 2015 I II III IV Year % Chg. Average Comm'l from Dressed Slaughter Year Ago Weight (1,000 Head) (Lbs.) % Chg. Comm'l from Beef Year Ago Production (Mil. Lbs.) % Chg. from Year Ago 8026 8309 8333 8283 32951 -3.5 -3.8 -4.6 -1.3 -3.3 783 779 790 794 786 1.5 2.6 2.5 2.6 2.3 6282 6473 6586 6572 25913 -2.0 -1.3 -2.2 1.3 -1.1 7779 8325 8322 8033 32459 -3.1 0.2 -0.1 -3.0 -1.5 793 783 794 799 792 1.4 0.5 0.5 0.7 0.8 6172 6517 6609 6420 25718 -1.7 0.7 0.4 -2.3 -0.8 7280 7711 7735 7529 30255 -6.4 -7.4 -7.1 -6.3 -6.8 796 786 799 802 796 0.4 0.4 0.6 0.4 0.4 5797 6061 6177 6041 24076 -6.1 -7.0 -6.5 -5.9 -6.4 6985 7366 7453 7362 29166 -4.1 -4.5 -3.6 -2.2 -3.6 801 792 806 806 801 0.6 0.8 0.9 0.5 0.7 5595 5836 6006 5937 23374 -3.5 -3.7 -2.8 -1.7 -2.9
  21. 21. Quarterly Forecasts (LMIC: 02/03/14) Live Sltr. Year Steer Price Quarter 5-Mkt Avg ($/Cwt.) 2012 I 125.30 II 120.91 III 119.69 IV 125.54 Year 122.86 2013 I 125.51 II 124.95 III 122.30 b 130.77 IV Year 125.88 2014 139-142 Ic II 138-141 III 133-137 IV 136-141 Year 137-140 2015 I 139-145 II 140-147 III 136-144 IV 138-146 Year 139-145 % Chg. from Year Ago Feeder Steer Price d Southern Plains 7-800# 5-600# ($/Cwt.) 13.8 7.2 4.9 2.9 7.1 154.25 152.65 141.82 146.50 148.81 182.41 178.65 150.57 161.42 168.26 0.2 3.3 2.2 4.2 2.5 142.41 137.34 155.95 167.04 150.69 170.13 159.71 171.19 187.56 172.15 11.9 11.6 10.4 5.9 10.0 169-172 170-175 171-177 168-175 169-175 200-205 205-212 199-207 195-204 199-208 1.1 2.9 3.7 2.5 2.5 170-178 171-180 173-184 170-182 172-180 199-210 205-217 198-211 192-207 199-211
  22. 22. RETAIL ALL FRESH BEEF DEMAND INDEX Annual, Using CPI 1990=100 Index Value 120 100 100 96 91 86 86 80 92 82 85 83 80 81 79 77 75 75 88 85 85 80 77 75 77 79 81 60 40 20 0 1990 1992 1994 1996 1998 2000 2002 2004 Livestock Marketing Information Center Data Source: Bureau of Labor Statistics, USDA-ERS, Compiled & Analysis by LMIC 2006 2008 2010 2012
  23. 23. U S BEEF EXPORTS TO MAJOR MARKETS Carcass Weight, Monthly Mil. Pounds 90 80 Japan 70 60 50 Canada 40 30 Mexico 20 10 0 2005 2006 2007 2008 2009 Livestock Marketing Information Center Data Source: USDA-ERS & USDA-FAS 2010 2011 2012 South Korea 2013 I-N-35 02/07/14
  24. 24. 2013 Beef Exports up 5.3% U S BEEF AND VEAL EXPORTS Carcass Weight, Monthly Mil. Pounds 290 Avg. 2007-11 270 250 230 2012 210 190 170 2013 150 130 JAN FEB MAR APR MAY JUN JUL AUG Livestock Marketing Information Center Data Source: USDA-ERS & USDA-FAS SEP OCT NOV DEC I-N-16 02/07/14
  25. 25. Hog Outlook
  26. 26. Diagnostic Case Submissions Testing Positive for PEDv
  27. 27. December 2013 Hog Inventory Report 2013 2013 as (1,000 head) % of 2012 All Hogs & Pigs 65,940 99.3 Kept for Breeding 5,757 98.9 Kept for Marketing 60,183 99.4 Under 50 lbs. 19,049 98.7 50-119 lbs. 16,669 99.5 120-179 lbs. 12,626 99.9 180 lbs. and over 11,838 99.7 (thousand litters) Mar-May Farrowings 2,816 95.4 June-Aug Farrowings 2,925 99.9 Sep-Nov Farrowings 2,882 99.8 Dec-Feb Farrowing Intentions 2,825 101.3 Mar-May Farrowing Intentions 2,855 101.4
  28. 28. Livestock Marketing Information Center Data Source: USDA-NASS, Compiled by LMIC & Analysis by Kate Brooks
  29. 29. PIGS PER LITTER Quarterly Head 10.7 10.2 9.7 9.2 8.7 8.2 7.7 7.2 1988 1991 1994 1997 Livestock Marketing Information Center Data Source: USDA-NASS 2000 2003 2006 2009 2012 H-N-58 12/27/13
  30. 30. BARROW AND GILT DRESSED WEIGHT Federally Inspected, Weekly Pounds 214 212 Avg. 200812 210 208 206 2013 204 202 200 198 2014 196 Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS T O C L JU R AP JA N 194 H-S-24 02/24/14
  31. 31. Est 2012 Profits = -$3.54 Est 2013 Profits = -$0.89 Forecasted 2014 Profits = +$41.80 Forecasted Jan-July 2015 Profits = +$26.06
  32. 32. EARLY WEANED PIG PRICES National, 10-12 Lbs, Delivered, Weekly $ Per Head 70 65 Avg. 2008-12 60 55 50 2013 45 40 35 30 2014 25 Livestock Marketing Information Center Data Source: USDA-AMS T O C L JU R AP JA N 20 H-P-21 02/24/14
  33. 33. FEEDER PIG PRICES 40 Pounds, Weekly $ Per Head 130 Avg. 2008-12 110 90 2013 70 50 2014 30 Livestock Marketing Information Center Data Source: USDA-AMS T O C L JU AP R JA N 10 H-P-01 02/24/14
  34. 34. BARROW AND GILT PRICES Iowa - So. Minnesota, Carcass Base Price, Weekly $ Per Cwt. 110 Avg. 2008-12 100 90 2013 80 70 60 2014 Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC T O C L JU R AP JA N 50 H-P-09 02/24/14
  35. 35. U S NET PORK EXPORTS Carcass Weight, Monthly Mil. Pounds 475 Avg. 2007-11 425 375 2012 325 275 2013 225 JAN FEB MAR APR MAY JUN JUL Livestock Marketing Information Center Data Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC AUG SEP OCT NOV DEC I-N-32 02/07/14
  36. 36. Source: USDA/ERS, Bureau of Labor Statistics
  37. 37. U.S. Pork Exports, Jan-Dec 2013 Change from a Year Ago Country Japan Mexico Canada South Korea China (Mainland) Russia Hong Kong China (Taiwan) Other Countries TOTAL Carcass Weight, 1,000 lbs -37,673 76,472 -9,358 -135,944 -141,601 -257,928 14,594 7,319 83,025 -388,285 Percent -2.7% 6.6% -1.6% -32.6% -22.2% -93.7% 10.5% 24.7% 12.1% -7.2% Source: USDA/ERS, Bureau of Labor Statistics
  38. 38. RETAIL PORK DEMAND INDEX Annual, Using CPI 1990=100 Index Value 120 100 100 97 95 90 89 91 92 91 90 91 90 90 83 83 84 80 85 84 80 83 79 80 79 80 79 60 40 20 0 1990 1992 1994 1996 1998 2000 2002 2004 Livestock Marketing Information Center Data Source: Bureau of Labor Statistics, USDA-ERS, Compiled & Analysis by LMIC 2006 2008 2010 2012
  39. 39. Quarterly Hog & Pork Forecasts (LMIC: 2/27/14) Year Quarter % Chg. Average % Chg. Comm'l % Chg. Comm'l from Carcass from Pork from Slaughter Year Ago Weight ear Ago Production Year Ago (1,000 Head) (Lbs.) (Mil. Lbs.) (Re 2012 I II III IV Year 2013 I II III IV Year 2014 I II III IV Year 2015 I II III IV Year 28105 26661 27965 30433 113163 2.3 2.1 2.1 1.8 2.1 209 207 201 206 206 0.2 0.6 0.3 -0.8 0.1 5858 5519 5631 6244 23253 2.4 2.8 2.7 0.9 2.2 27874 26778 27668 29808 112126 -0.8 0.4 -1.1 -2.1 -0.9 208 206 204 211 207 -0.5 -0.5 1.2 2.6 0.7 5777 5519 5624 6278 23197 -1.4 -0.0 -0.1 0.5 -0.2 27803 26569 27684 30257 112313 -0.3 -0.8 0.1 1.5 0.2 213 211 205 212 210 2.4 2.0 0.7 0.3 1.3 5912 5593 5678 6402 23585 2.3 1.3 1.0 2.0 1.7 28343 27184 28467 31287 115281 1.9 2.3 2.8 3.4 2.6 214 213 208 213 212 0.8 1.0 1.4 0.7 1.0 6074 5779 5921 6667 24441 2.7 3.3 4.3 4.1 3.6
  40. 40. Quarterly Hog & Pork Forecasts (LMIC: 2/27/14) % Chg. Prices % Chg. Year Per Capita from National Wtd from Quarter Consumption Year Ago Avg Base Year Ago (Retail Wt.) ($/Cwt.) 2012 I II III IV Year 2013 I II III IV Year 2014 I II III IV Year 2015 I II III IV Year 11.1 10.9 11.2 12.7 45.9 -2.6 -1.2 1.8 3.6 0.5 84.11 85.31 84.74 80.59 83.69 7.3 -4.7 -8.6 -5.2 -3.1 11.5 11.3 11.4 12.7 46.8 3.1 3.0 2.0 0.0 1.9 81.08 89.32 95.25 82.98 87.16 -3.6 4.7 12.4 3.0 3.6 11.7 11.3 11.4 12.6 47.0 2.0 0.5 -0.4 -0.9 0.3 84-86 93-96 95-99 83-88 89-92 4.8 5.8 1.8 3.0 4.0 11.8 11.3 11.4 12.9 47.5 0.9 -0.3 0.6 2.7 1.0 83-89 88-95 87-95 76-85 84-91 1.2 -3.2 -6.2 -5.8 -3.3
  41. 41. Thank You! kbrooks4@unl.edu Photo taken by Troy Waltz

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