Red Meat and
Poultry Outlook
Curt Lacy
Extension Economist-Livestock
Overview




Current meat S&O
Beef S&O
Pork
Poultry
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Livestock producers’ situation
Red Meat and Poultry in Cold Storage


Total number 9%
higher compared to
07.
Red meat
unchanged




2.50
2.00
1.50
Beef -9%
Pork +8%
1.00
0.50
Poultry +16%

Millions
Chicken +12%
Turkey +23%
0.00
JAN
MAR MAY
JUL
BEEF
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
SEP
PORK
NOV
JAN
POULTRY
MAR MAY
JUL
Pork and Beef prices are higher
compared to last year.
100
95
90
Avg.
2002-06
85
80
2007
75
70
2008
65
60
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
C
T
55
O

Major strength
from hams and
loins.
Ribs and bellies
are off from 2007.
Weekly
$ Per Cwt.
JU
L

HOG CUTOUT VALUE
AP
R
Pork cutout has
been record high
lately
JA
N

Pork and Beef prices are higher
compared to last year.


Beef below last
year for most of
2008.
High likely
occurred in early
July.
BOXED BEEF CUTOUT VALUE
Choice 600-900 Lbs. Carcass, Weekly
$ Per Cwt.
185
175
165
Avg.
2002-06
155
2007
145
2008
135
125
JAN
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
APR
JUL
OCT
Broiler wholesale prices have also
been strong.
BROILER PRICES
12-City Composite, Weekly
Cents Per Pound
90
85
Avg.
2002-06
80
75
2007
70
2008
65
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
T
C
O
JU
L
60
AP
R

SOME cost
increases have
been passed on .
However, pressure
from pork and beef
has prohibited
passing all of those
costs along.
JA
N

Total Meat Supplies are Higher




Total + 4.7% YTD
compared to 2007.
Beef = +2.0%
Poultry +4.4%
Pork +9.5%
TOTAL RED MEAT & POULTRY PRODUCTION
Quarterly
Bil. Pounds
100.0
80.0
OCT-DEC
60.0
JUL-SEP
40.0
APR-JUN
20.0
JAN-MAR
0.0
Avg. 2002/06
2007
2008
M-S-31
07/14/08
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Short Story



More meat.
Higher prices earlier in the year.
However, a weak economy and
burdensome supplies in Q2 and Q3 have
conspired to depress wholesale prices.
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Beef Cattle
Situation & Outlook
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Feeder Cattle Situation –
A Tale of 2 Weights
MED. & LRG. #1 & 2 STEER CALF PRICES
400-500 Pounds & 700-800 Pounds, Georgia, Weekly
125
Prices for calves and feeders
have almost converged
120
115
105
100
95
90
85
80
700-800
400-500
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
T
O
C
JU
L
AP
R
75
JA
N
$ Per Cwt.
110
CATTLE ON FEED
US Total, Monthly
Mil. Head
12.5
Avg.
20022006
12.0
11.5
2007
11.0
10.5
2008
10.0
9.5
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
Livestock Marketing Information Center
Data Source: USDA/NASS
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
SEP
OCT
NOV
DEC
C-N-10
09/19/08
Lower Cattle Supplies in the Fall

NET FEEDLOT PLACEMENTS
US Total, Monthly
Mil. Head
2.8
2.6
2.4
Avg.
200206
2.2
2007

2.0
2008
1.8

1.6
1.4
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
Net Placements
lower.
Feeders weighing
more than 800#
up.
Feeders weighing
less than 600#
down.
C-N-08
07/25/08
Livestock Marketing Information Center
Data Source: USDA/NASS
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Projections for Remainder of 2008 and
Early 2009
Quarter
400-500#
Steers*
700800#
Steers*
Live
Cattle
(5 Area)
Cull
Cows*
8590%
Q3-2008 $99-$105
$92-$98
$90-$95
$52-$58
Q4-2008 $90-$98
$85-$93
$85-$93
$42-$48
Q1-2009 $100-$110
$85-$95
$93-99
$46-$54
Q2-2009 $105-$120
$95-$103 $100-$107 $52-$60
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
2008/2009 Summary



An improved economy would help beef
demand.
Larger total meat supplies in Q3 and Q4
could be troublesome.
Corn crop (prices) vs. Live Cattle prices will
continue to drive the train for feeder cattle
prices.
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Marketing Alternatives This Summer
and Fall



Current pricing scenario favors adding as
much weight as possible.
Stockering or backgrounding may be
economical.
Retained ownership may be profitable this
year.
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
BEEF COWS THAT HAVE CALVED
JANUARY 1, 2008
(1000 Head)
272
1523
922
605
460
218
365
165
730
460
5.9
Hawaii 82.7
US Total 32553
Livestock Marketing Information Center
Data Source: USDA/NASS
270
1644
1883
655
Alaska
733
VT
397
1511
2053
5240
1015
10
104
106
158
234 292
427
202 692
2080
1159
372
1079
197
943
519
677 553
513
936
12
NH 5
MA 9
RI 1.4
CT 6
NJ
DE
MD
9
4
44
1,020 to 5,240 (9)
520 to 1,020 (11)
290 to 520 (9)
80 to 290 (11)
0 to
80 (10)
C-N-15
02/01/08
CHANGE IN BEEF COW NUMBERS
JANUARY 1, 2007 TO JANUARY 1, 2008
(1000 Head)
7
141
-17
30
-13
5
20
-1
-3
US Total -339
Livestock Marketing Information Center
Data Source: USDA/NASS
-8
-2
-30
-45
Hawaii
5
-25
21
-10
0
-8
-55
-57
-15
Alaska
1
0
11
53
-10 -18
MA 2
RI -0
CT -1
NJ 1
DE 0
MD -6
-20
-74
22
1
-63
-4
0
-48
-66
8
1
-6
-40
-32
23
-14
2 to 141
1 to 2
-6 to 1
-25 to -6
-74 to -25
C-N-28
02/01/08
(13)
(3)
(13)
(11)
(10)
JULY 1 BEEF COW INVENTORY
U.S., Annual
50
Points to a January 1,2009
number lower than
January 1, 2008
Mil. Head
45
40
35
30
25
1975
1978
1981
1984
1987
1990
1993
Livestock Marketing Information Center
Data Source: USDA/NASS
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
1996
1999
2002
2005
2008
C-N-46
01/30/06
Drought and high inputs continue to
cause herd reductions
BEEF COW SLAUGHTER
Federally Inspected, Weekly
Thou. Head
80
75
Avg.
2002-06
70
65
2007
60
55
50
2008
45
T
O
C
L
JU
AP
R
JA
N
40
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
C-S-34
07/18/08
Fewer Cows = Smaller Calf Crop
 Fewer Supplies
CALF CROP
U.S., Annual
Mil. Head
55
Smallest calf crop since 1952
50
45
40
35
30
1946
1951
1956
Livestock Marketing Information Center
1961
1966
1971
1976
1981
1986
Red Meat and Poultry Outlook
Data Source: USDA/NASS
Southern Region Outlook Conference
September 24, 2008
1991
1996
2001
2006
Fertilizer Prices
1997-2008 (and 2009)
$1,500
$1,300
$900
$700
$500
$300
$100
19
9
7
19
9
8
19
9
9
20
0
0
20
0
1
20
0
2
20
0
3
20
0
4
20
0
5
20
0
6
20
0
7
A
pr
-0
8
M
ay
-0
Se 8
p0
Ja 8
n0
9
$/ton
$1,100
Nitrogen (AN)
Phosphorous (DAP)
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Potash (Muriate)
$4.50
$4.00
$3.50
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
Ju 8
l0
8
$/Gallon
Fuel Prices
1997-2008
Diesel (bulk)
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Impact of Fuel & Fertilizer Prices on
Cost of Production
$140
$120
$100
$80
$60
$40
$20
2002
500# Calf ($/Cwt.)
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
2008
Hay ($/ton)
Incentives to Expand Beef Herd
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Incentives to Expand Beef Herd
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Projected Prices 2009 and Beyond
$130
$120
$110
$100
$90
$80
$70
$60
$50
$40
2009
GA 500# steer
Source: USDA, LMIC and UGA
2010
GA 750# steer
Choice fed steer
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
2011
GA Slaughter cow
Other Issues

Southeast




Increasing demand for beef from alternative production
systems






More reliant on fertilizer
Wider basis
Increasing land values
Natural
Organic
Grass-fed
Increasing demand for locally produced foods
Animal welfare
MCOOL/NAIS
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Pork Situation &
Outlook
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Pork Situation
Pork Situation



Record supplies in 2008.
UNBELIEVABLE export demand has
supported prices.
Historically high input prices have certainly
taken a toll on profits.
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Returns to farrow-finish hog producers have
been negative for most of the past year!
20
04
M
ay
Se
p
20
05
M
ay
Se
p
20
06
M
ay
Se
p
20
07
M
ay
Se
p
20
08
M
ay
50
40
30
20
10
0
-10
-20
-30
-40
Source: IA State University
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
HOG SLAUGHTER
Federally Inspected, Weekly
Thou. Head
2,500
Avg.
2002-06
2,300
2,100
2007
1,900
1,700
2008
T
O
C
L
JU
AP
R
JA
N
1,500
H-S-05
09/12/08
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
PORK PRODUCTION
Federally Inspected, Weekly
Mil. Pounds
530
Avg.
2002-06
480
430
2007
380
330
2008
T
O
C
L
JU
AP
R
JA
N
280
M-S-19
09/15/08
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
BARROW AND GILT PRICES
Iowa - So. Minnesota, Carcass Base Price, Weekly
$ Per Cwt.
90
85
Avg.
2002-06
80
75
70
2007
65
60
55
2008
50
Livestock Marketing Information Center
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
T
O
C
JU
L
AP
R
JA
N
45
H-P-09
08/14/08
U S NET PORK EXPORTS
Carcass Weight, Monthly
Mil. Pounds
480
430
Avg.
2002-06
380
330
280
2007
230
180
130
2008
80
30
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
Livestock Marketing Information Center
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
SEP
OCT
NOV
DEC
I-N-32
09/12/08
Pork Summary






Record supplies of pork in 2008.
Supplies will be reduced some in 2009.
Packing capacity may be a concern this
fall.
Prices will be pressured this fall.
Prices should be stable to higher next year.
High input prices will continue to plague
producers.
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Poultry Situation
and Outlook
BROILER PRICES
12-City Composite, Weekly
Cents Per Pound
90
Avg.
2002-06
85
80
75
2007
70
65
2008
Livestock Marketing Information Center
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
T
O
C
JU
L
AP
R
JA
N
60
P-P-01
09/16/08
These prices do not tell the whole
story!
Cents Per Pound
Skinless/Boneless,
Northeast,
Truckload,
Weekly
Northeast,
Truckload,
Weekly
Cents Per Pound
80
180
75
170
70
160
Avg.Avg.
2002-06
2002-06
65
150
60
2007
2007
55
140
50
2008
130
2008
45
120
40
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
T
T
C
C
O
O
JU
L
JU
L
110
35
R

WHOLESALE
CHICKEN
BREAST
PRICES
WHOLESALE
CHICKEN
LEG PRICES
AP
APR

Breast prices are
running 10.5%
lower than last
year.
Leg and wing
prices are
carrying the
water for broilers
this year.
Exports have
played a major
role in moving
the dark meats.
JJA
ANN

US Broiler Exports, Annual
Other
Romania
8
Korea
Billion Pounds RTC
7
July 2008 forward EMI Analytics
forecast
Ukraine
6
Cuba
5
Lithuania
Angola
4
Taiwan
3
Turkey
2
Canada
1
Mexico
0
China
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
© EMI Analytics, All Rights Reserved
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Russia
What’s the impact of higher feed-grain
prices on broilers?
Since 2006



US Broiler Production Cost (WOG basis)
EMI Analytics model, weighted average, with OH & interest
Corn prices up 67%
Soybean meal
prices up 206%
Broiler costs up
137%.
85
80
2006 avg.
2007 avg.
2008 avg.
2009 avg.
75
cents/lb

60 cents
68 cents
81 cents
82 cents
70
Sept 2008 forward forecast
65
60
55
50
45
2000
2001
2002
© EMI Analytics, All Rights Reserved
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
2003
2004
2005
2006
2007
2008
2009
US Broiler Average Profitability Index
spot market prices, EMI Analytics model
25
index (1998-2000 base)
20
15
10
5
0
-5
-10
Sept 2008 forward forecast
-15
1998
1999
2000
2001
2002
2003
2004
2005
© EMI Analytics, All Rights Reserved
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
2006
2007
2008
2009
Production will be lower the rest of the
year.




Broiler egg sets down.
Broiler chick placements down.
Total production for 2008 will be up “only” 2.3%.
Will actually see a decrease in production in 2009.
9600
9400
9200
9000
8800
8600
8400
8200
2006
2007
2008
2009
Quarterly Broiler Production
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
2010
Projected
Poultry Price Forecast




Broiler prices should remain in the lower
$80s.
Breast prices will continue to struggle.
Legs and wing prices should stabilize.
HOWEVER, disruptions in the export
market could be very problematic.
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
TOTAL RED MEAT & POULTRY PRODUCTION
Quarterly
Bil. Pounds
24.0
Avg.
2002/06
23.0
2007
22.0
21.0
2008
20.0
2009
19.0
JAN-MAR
APR-JUN
JUL-SEP
OCT-DEC
M-S-31
07/14/08
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Red Meat and Poultry Summary






Record meat supplies this year.
Q3-Q4 could be a big problem for pork supplies.
Smaller beef, pork and poultry supplies in 2009.
Exports for all meats continue to be favorable.
All meat prices should remain steady to
improving for the remainder of this year and
next year.
HOWEVER, if the economy continues to
weaken all bets are off.
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
QUESTIONS?
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008