LIVESTOCK AND POULTRY OUTLOOK
Ross Pruitt
Extension Economist - Livestock
OVERVIEW
Current meat situation
 Situation and Outlook

 Beef
 Pork
 Poultry
COLD STORAGE SUPPLIES

0.5
Source: LMIC, USDA NASS
Jun-09
Jul-09
Apr-09
May-09
Feb-09
Mar-09
Jan-09
0
Nov-08
Dec-08
Chicken -15%
Turkey +2%
Pork
Sep-08
Oct-08

Beef
1
Aug-08
Poultry -7%
Poultry
Jun-08
Jul-08

1.5
Apr-08
May-08

Beef -3%
Pork +3%
2
Feb-08
Mar-08

2.5
Jan-08

Total number is 4%
lower compared to
August ‘08
Red meat is unchanged
Million Lbs

BOXED BEEF CUTOUT VALUE
Choice 600-900 Lbs. Carcass, Weekly
$ Per Cwt.
180
175
Avg.
2003-07
170
165
160
155
2008
150
145
140
2009
135
130
JAN
APR
Livestock Marketing Information Center
JUL
OCT
C-P-62
09/14/09
CHOICE MINUS SELECT BEEF PRICES
Carcass Cutout Value 600-900 Lbs., Weekly
$ Per Cwt.
20
18
16
14
12
10
8
6
4
2
0
-2
JAN
Avg.
2003-07
2008
2009
APR
Livestock Marketing Information Center
JUL
OCT
C-P-68
09/14/09
HOG CUTOUT VALUE
Weekly
$ Per Cwt.
100
95
90
Avg.
2003-07
85
80
75
70
2008
65
60
55
2009
Livestock Marketing Information Center
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JA
N
50
H-P-10
09/14/09
BROILER PRICES
12-City Composite, Weekly
Cents Per Pound
90
Avg.
2003-07
85
80
2008
75
70
2009
Livestock Marketing Information Center
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JA
N
65
P-P-01
09/14/09
TOTAL RED MEAT & POULTRY PRODUCTION
Quarterly
Bil. Pounds
24.0
Avg.
2004/08
23.0
2009
22.0
2010
21.0
2011
20.0
JAN-MAR
APR-JUN
Livestock Marketing Information Center
JUL-SEP
OCT-DEC
M-S-31
08/25/09
U S RED MEAT & POULTRY CONSUMPTION
Per Capita, Retail Weight, Annual
Pounds
100
90
Beef
80
70
Pork
60
50
Total
Chicken
40
30
20
Turkey
10
0
1986
1989
1992
1995
Livestock Marketing Information Center
1998
2001
2004
2007
2010
M-C-10
08/13/09
MEAT SUMMARY
Contraction is likely going to occur into 2010 for
the meat complex
 Beef and poultry sectors’ ability to rebound will
be pressured by pork prices
 Economic recovery will help, but is not the sole
solution

BEEF SITUATION

Return to Normalcy?
 Or
is that complacency?
Current Trends
 Where’s the beef going to come from?
 A return to profitability

RETURN TO NORMAL?
Med. & Lrg. #1&2 Steer Calf Prices
400-500 Pounds & 700-800 Pounds, GA, Weekly
130.00
120.00
Average slide of
$10.83/cwt
110.00
Average slide of $20/cwt from
January to July 2008, $19/cwt
post October 2008
100.00
90.00
80.00
70.00
60.00
Source: LMIC & USDA AMS
700-800
400-500
Difference In Louisiana Steer Prices, 400 - 450 vs 550-600 Lbs
Price Per Hundredweight
$25.00
$20.00
$15.00
$10.00
$5.00
$0.00
Week Number
2003-07 Average
Source: USDA AMS
2008
2009
FERTILIZER PRICES
Estimated Fertilizer Prices, Southeast US
August 24, 2009
$1,193
$1,200
Dollars Per Ton
$1,000
$855
$730 $730
$800
$636
$585
$518
$600
$406$406
$353$353
$418$418
$290 $290
$400
$200
$38 $38 $38
$0
Ammonium
Nitrate
Liquid Nitrogen
(28% Spread)
13-13-13
This Week
USDA‐ AL Dept of Ag, Market News, Montgomery, AL
DAP
(Dammonium
Phoshate)
Last Week
Last Year
Potash
Lime (Spread)
FUEL PRICES HAVE FALLEN
Monthly Gulf Coast Diesel Prices
$5.00
$4.50
$4.00
Dollars per Gallon
$3.50
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
Source: Energy Information Administration
Diesel
WILL THE BASIS CONTINUE TO NARROW?
Louisiana Monthly Average Basis Levels
550-600 lb Medium and Large Frame Steers, Nos. 1 and 2
Dollars Per Hundredweight
15.00
10.00
5.00
0.00
-5.00
-10.00
-15.00
-20.00
2003-07 Average
Source: USDA AMS & LMIC
2008
2009
WINTER GRAZING COSTS STILL ABOVE
HISTORICAL LEVELS
Winter Ryegrass Grazing Costs
$1.20
$1.00
Dollars per Pound
$0.80
COG (Cash Expenses)
$0.60
COG (All Expenses)
$0.40
$0.20
$2005
2006
2007
2008
2009
CATTLE ON FEED
US Total, Monthly
Mil. Head
12.5
Avg.
20032007
12.0
11.5
2008
11.0
10.5
2009
10.0
9.5
JAN
FEB
MAR
APR
Livestock Marketing Information Center
Data Source: USDA/NASS
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
C-N-10
09/18/09
FEEDLOT PLACEMENTS
US Total, Monthly
Mil. Head
2.9
Avg.
200307
2.7
2.5
2.3
2008
2.1
1.9
2009
1.7
1.5
1.3
JAN
FEB
MAR
APR
Livestock Marketing Information Center
Data Source: USDA/NASS
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
C-N-08
09/18/09
CATTLE PLACED WEIGHING
LESS THAN 700 POUNDS
1,000 Plus Capacity Feedlots, U.S., Monthly
Mil. Head
1.8
Avg.
200307
1.6
1.4
2008
1.2
1.0
0.8
2009
0.6
0.4
JAN
FEB
MAR
APR
Livestock Marketing Information Center
Data Source: USDA/NASS
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
C-N-08A
09/18/09
STEER HIDE AND OFFAL VALUE
Live Animal Basis, Weekly
$ Per Cwt.
12.50
11.50
Avg.
2003-07
10.50
9.50
2008
8.50
7.50
6.50
2009
5.50
JAN
APR
Livestock Marketing Information Center
JUL
OCT
C-P-39
09/14/09
AVERAGE RETURNS TO CATTLE FEEDERS
Feeding 725 Lb. Steers, S. Plains, Monthly
$ Per Steer
250
Latest Data: August 2009
150
50
-50
-150
-250
2000
2001
2002
2003
2004
Livestock Marketing Information Center
2005
2006
2007
2008
2009
C-P-22
09/16/09
PROJECTIONS FOR REMAINDER OF
2008 AND EARLY 2009
Quarter
Q4-2009
Q1-2010
Q2-2010
Q3-2010
LA
400-500#
Steers
$95-$102
$100-$108
$102-$110
$102-$110
GA
500-600#
Steers
$86-$91
$85-$90
$90-$95
$95-$100
GA
700-800#
Steers
$80-$85
$78-$84
$85-$90
$95-$100
LA
Live Cattle Cull Cows
(5 Area) 85-90%
$84-$87 $34-$44
$85-$89 $36-$45
$89-$94 $38-$45
$85-$91 $36-$45
SUPPLY & OUTLOOK SUMMARY
Still waiting on the economy
 Feedlots are starting to return to profitability

 Corn

Supplies are not abundant
 Will

harvest
stocker operations overpay?
Will seasonality be dampened?
MARKETING CONSIDERATIONS
U.S. Corn Crop Development

Through 2nd Week In September
Economical forage
based gains still critical
100.00%
 Retained
100.00%
90.00%
80.00%
Causes
97.00%
ownership
89.00%93.00%
for concern:
61.00%66.00%
 Early
67.00%
freeze in the Corn Belt
50.00%
 Continued higher feedlot placements at lighter
40.00%
weights?
70.00%
Percent of Crop
60.00%
30.00%
20.00%
 July
17.00%
12.00%
placements marketed as late
as
March15.00%
2010
4.00%
10.00%
0.00%
% Dough
% Dent
Max Value - 1990 to 2008
% Mature
Growth Stage
Min Value - 1990 to 2008
% Harvested
2009
0.00%
BEEF COWS THAT HAVE CALVED
JANUARY 1, 2009
(1000 HEAD)
271
1494
885
535
451
238
350
200
720
484
5.5
Hawaii 84.4
US Total
31671
Livestock Marketing Information Center
Data Source: USDA/NASS
265
1616
1851
615
Alaska
713
VT
392
1508
2038
5170
925
9
85
92
150
213 304
408
204 633
1992
1114
385
951
188
891
491
668 536
520
942
11
NH 6
MA 8
RI 1.4
CT 6
NJ 10
DE 4
MD 39
930 to 5,170 (10)
520 to 930 (11)
300 to 520 (8)
80 to 300 (11)
0 to
80 (10)
C-N-15
03/05/09
CHANGE IN BEEF COW NUMBERS
JANUARY 1, 2008 TO JANUARY 1, 2009
(1000 HEAD)
-1
-9
-39
-60
-15
-4
5
US Total
-36
-0
2
-40
3
-15
Livestock Marketing Information Center
Data Source: USDA/NASS
-45
-78
-8
8
-19 -21
1 -59
1
MA -1
RI 0
CT 1
NJ 1
DE 0
MD -4
13
-128
-52
-8
20
-763
-19
-14
-10
-40
Hawaii
-5
-32
0
-1
-5
-28
-9
Alaska
-1
-4
1
-17
7
2
2 to 20 (7)
0 to 2 (9)
-9 to 0 (14)
-32 to -9 (10)
-128 to-32 (10)
C-N-28
03/05/09
HEIFERS HELD AS BEEF
COW REPLACEMENTS
Mil. Head
July 1, U.S.
7
6
-2.2 %
5
4
3
1979
1982
1985
1988
Livestock Marketing Information Center
Data Source: USDA/NASS
1991
1994
1997
2000
2003
2006
2009
C-N-37
07/24/09
JULY 1 FEEDER CATTLE SUPPLIES
Residual, Outside Feedlots, U.S.
Mil. Head
55
50
45
40
35
30
1979
1982
1985
1988
Livestock Marketing Information Center
Data Source: USDA/NASS
1991
1994
1997
2000
2003
2006
2009
C-N-32
07/24/09
BEEF COW SLAUGHTER
Federally Inspected, Weekly
Thou. Head
85
80
Avg.
2003-07
75
70
65
2008
60
55
50
2009
45
Livestock Marketing Information Center
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40
C-S-34
09/18/09
HIGHER DAIRY SLAUGHTER
2009 Beef and Dairy Cow Slaughter
75
70
CWT Buyouts
Thousand Head
65
60
Dairy
Beef
55
50
45
Source: LMIC & USDA AMS
SLAUGHTER COW PRICES
Southern Plains, 85-90% Lean, Weekly
$ Per Cwt.
63
CWT Buyouts
58
Avg.
2003-07
53
2008
48
43
2009
38
JAN
APR
Livestock Marketing Information Center
JUL
OCT
C-P-35
09/14/09
COOL’S IMPACT ON MEXICAN CATTLE
Source: USDA AMS & Oklahoma Farm Report
PORK SITUATION

Where’s the good news?
 Reduced
export access
 Slow to adjust due to nature of industry
 Reduced feed costs have helped
 H1N1 flu scare

Who is going to blink first?
 Bankers
or producers
ANNUAL PIG CROP
U.S.
Mil. Head
120
115
110
105
100
95
90
85
80
75
1984
1987
1990
Livestock Marketing Information Center
Data Source: USDA/NASS
1993
1996
1999
2002
2005
2008
H-N-52
06/26/09
PIG CROP
Quarterly
Mil. Head
32
30
28
26
24
22
20
18
1984
1987
1990
1993
Livestock Marketing Information Center
Data Source: USDA/NASS
1996
1999
2002
2005
2008
H-N-57
06/26/09
HOGS KEPT FOR BREEDING
Quarterly
Mil. Head
8
7
6
5
1984
1987
1990
1993
Livestock Marketing Information Center
Data Source: USDA/NASS
1996
1999
2002
2005
2008
H-N-55
06/26/09
HOG SLAUGHTER
Federally Inspected, Weekly
Thou. Head
2,500
Avg.
2003-07
2,300
2,100
2008
1,900
1,700
2009
Livestock Marketing Information Center
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1,500
H-S-05
09/18/09
SOW SLAUGHTER
Federally Inspected, Weekly
Thou. Head
85
80
Avg.
2003-07
75
70
65
60
55
2008
50
45
2009
40
Livestock Marketing Information Center
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JA
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35
H-S-15
09/18/09
PORK PRODUCTION
Federally Inspected, Weekly
Mil. Pounds
530
2Q 2009 down 1.9%,
Per capita consumption
up 3.3%
480
Avg.
2003-07
430
2008
380
330
13% higher YTD than
03-07 average
Livestock Marketing Information Center
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JA
N
280
2009
M-S-19
09/21/09
U S PORK EXPORTS
Carcass Weight, Monthly
Mil. Pounds
500
Avg.
2003-07
450
400
350
2008
300
250
2009
200
150
JAN
FEB
MAR
APR
MAY
Livestock Marketing Information Center
JUN
JUL
AUG
SEP
OCT
NOV
DEC
I-N-30
09/11/09
BARROW AND GILT PRICES
Iowa - So. Minnesota, Carcass Base Price, Weekly
$ Per Cwt.
90
85
80
Avg.
2003-07
75
70
65
60
2008
55
50
45
1st H1N1 Flu
scare
Weak demand
2009
Livestock Marketing Information Center
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40
H-P-09
09/14/09
IOWA MARKET HOG PROFIT
Farrow/Finish, Monthly
$/Head
50
Latest Data: August 2009
40
30
20
10
0
-10
-20
-30
-40
-50
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Livestock Marketing Information Center
Data Source: Iowa State University
09/16/09
COMMERCIAL PORK PRODUCTION
Quarterly
Bil. Pounds
6.5
6.0
Avg.
2004/08
5.5
2009
5.0
2010
4.5
2011
JAN-MAR
APR-JUN
Livestock Marketing Information Center
JUL-SEP
OCT-DEC
M-S-06
08/25/09
PORK SUMMARY

Cutbacks in production may be starting to
occur
 Supplies
will keep pressure on meat prices
Fall H1N1 outbreaks and impact on
prices/exports
 Lost over $4.1 billion in equity in last 2 years
(Zering)

 50%
of estimated equity since October 2007
(Meyer)
POULTRY ON THE UPSWING
Returned to profitability after loss filled 2008
 First year to year decrease in poultry production
since the 1970s
 Exports not as strong in 2009

 Production
cutbacks restored profitability
 Lowered feedstuff prices improved outlook
 Byproduct values are higher than 2008
BROILER-TYPE HATCHING LAYERS
Average Number On Hand During Month
Thousands
60
Avg.
2003-07
59
58
57
2008
56
55
54
2009
53
52
JAN
MAR
MAY
JUL
SEP
NOV
Livestock Marketing Information Center
Data Source: USDA/NASS
04/28/09
BROILER PRODUCTION
Federally Inspected, Ready-to-Cook Weight, Monthly
Bil. Pounds
3.4
3.3
Avg.
2003-07
3.2
3.1
3.0
2008
2.9
2.8
2.7
2.6
2009
2.5
2.4
JAN
MAR
MAY
Livestock Marketing Information Center
Data Source: USDA/NASS
JUL
SEP
NOV
P-S-12
08/25/09
REDUCED COSTS CARRYING THE LOAD
Northeast, Truckload, Weekly
WHOLESALE CHICKEN BREAST PRICES
Cents Per Pound
Skinless/Boneless,
80
Cents Per Pound
75
180
70
170
65
160
60
150
55
140
Northeast, Truckload, Weekly
Avg.
2003-07
Avg.
2003-07
2008
2008
50
130
45
120
2009
40
110
35
100
Livestock Marketing Information Center
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90
2009
AP
R
Leg prices are 24%
off last year
WHOLESALE CHICKEN LEG PRICES
JA
N

Breast prices are 1%
higher than last year
JA
N

U S BROILER EXPORTS
RTC Weight, Monthly
Mil. Pounds
700
Avg.
2003-07
650
600
550
2008
500
450
400
2009
350
JAN
FEB
MAR
APR
MAY
Livestock Marketing Information Center
JUN
JUL
AUG
SEP
OCT
NOV
DEC
I-N-50
09/11/09
ACTUAL AND PROJECTED BROILER PRODUCTION



Cumulative broiler placements down 5% through end of August
Projected increase of 2% for 2010
2009 was first year to year decline since 1975
2010 projected to see 2.3% increase in production
9600
9400
9200
Million Pounds

9000
8800
8600
8400
8200
8000
Quarterly Broiler Production
Forecasted
POULTRY SUMMARY

Broiler prices should stay in the low to mid
$80s
 Subject

to economy
Byproduct values are up 10% to 50% over
2008
 Underestimate
revenue streams from leg, wing, and
breast prices

Oversupply of pork will pressure poultry prices
LIVESTOCK OUTLOOK SUMMARY

Prices in 2010 are projected to be higher
Regardless of an economic recovery
 Pork supplies will pressure all prices
 Beef per capita consumption less than 60 lbs in 2010
 Export situation appears to be favorable

How soon and how much will input prices rise?
 Did the recession fundamentally change food
purchasing habits?
 What changes will policy induce?


More consolidation/mergers?
QUESTIONS