What’s The
Cattle Price Outlook
For 2006?
Dr. Walter Prevatt
Dr. Deacue Fields
Extension Economists
Auburn University
Cattle Situation and Outlook
Supply
Situation
U.S. Cattle and Calves Inventory, 1949-2006
Million Head
140
Cattle & Calves Inventory
120
100
80
60
40
20
0
1950
1955
1960
1965
1970
1975
Year
1980
1985
1990
1995
2000
2005
U.S. Cattle and Calves Inventory, 1949-2006
140
120
Million Head
Cattle & Calves Inventory
100
80
60
40
1949-58
1958-67
1967-79
1979-90
1990-04
20
0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Year
Length of U.S. Cattle Cycles
140
Million Head
130
1967-79
120
1958-67
110
2004-?
100
90
1949-58
1979-90
1990-04
80
70
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15
Number of Years
U.S. Cattle Inventory & Average Calf Price
1949-2006
U.S. Cattle Inventory
Million Head
U.S. Avg. Calf Price
140
$135
130
$125
120
$115
110
$105
100
$95
90
80
$85
70
$75
60
$65
50
$55
40
30
$45
$35
20
10
$25
0
$15
50
55
60
65
70
75
80
Year
85
90
95
'00
'05
U.S. Cattle and Calves Inventory,
97.1 Million Head, Jan. 1, 2006
45
37.8
Million Head
40
35
33.3
28.2
30
25
20
16.9
15
9.1
10
5
15.6
9.8
5.9
4.3
2.3
0
Beef
Cows
Milk
Cows
Beef
Cow
Repl.
Milk
Cow
Repl.
Other
Hfrs.
500+
Lbs.
Steers Bulls Calves
500+ 500 + < 500
lbs.
Lbs.
Lbs.
Calf
Crop
FCOF*
U.S. Cattle & Calves, Jan. 1, 2005 & 2006
Class
2005
2006
Change from 2005
Cattle & Calves
95.4
97.1
1.664
+1%
Cows & Heifers That Have Calved
41.9
42.3
0.391
+1%
Beef Cows
32.9
33.3
0.341
+1%
Milk Cows
9.0
9.1
0.053
+1%
19.6
20.0
0.405
+2%
For Beef Cow Replacement
5.7
5.9
0.214
+4%
For Milk Cow Replacement
4.1
4.3
0.160
+4%
Other Heifers
9.8
9.8
0.032
0%
16.5
16.9
0.447
+3%
2.2
2.3
0.044
+2%
Under 500 Pounds
15.3
15.6
0.376
+2%
Cattle on Feed
13.7
14.1
0.387
+3%
FC Outside Feedlots
27.7
28.2
0.468
+2%
Heifers 500 Pounds and over
Steers 500 Pounds and Over
Bulls 500 Pounds and Over
Percent Change from a year ago
Percent Change From A Year Ago
In U.S. Inventory, Jan. 1, 2006
6%
3.76%
4%
3.89%
2% 1.04% 0.59%
2.47%
1.98%
0.33% 0.27%
1.69%
0.41%
0%
-2%
-4%
-6%
Beef
Cows
Milk
Cows
Beef
Cow
Repl.
Milk
Cow
Repl.
Other Steers Bulls Calves
Hfrs. 500+ 500 + < 500
500+
lbs.
Lbs.
Lbs.
Lbs.
Calf
Crop
FCOF*
Million Head
Beef Replacement Heifers
Jan 1, 1985-2006
6.8
6.6
6.4
6.2
6.0
5.8
5.6
5.4
5.2
5.0
4.8
4.6
4.4
4.2
4.0
6.5
6.4
6.1
5.6
5.4
5.5
5.1
5.2 5.3 5.3
5.2
6.2
6.0
5.9
5.8
5.5 5.5
5.6
5.7
5.6
5.6
5.5
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06
Heifers As A Percent Of
Total Feedlot Placements, 1980-2005
41%
39%
38%
37%
Percent
37%
36%
31%
29%
35%
35% 35%
35%
33%
36%
32%
33%
31% 31%
29% 29%
32%
32%
32%
31%
31%
33%
31%
30%
35%
32%
32%
29%
27%
25%
80 81 82 83 84 85 86 87 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05?
Year
U. S. Beef Production, 1975-2006
28
27.1
26.8
26.4
26.1 26.2
25.7
25.4
25.4
25.1
Billion Pounds
27
26
25.7
25.0
25
24
23.7
24.0
23
22
24.3
24.2
23.4
23.6
23.4
23.4
22.8 22.9
23.1
23.0
23.0
22.6
22.4
22.2
25.9
24.7
24.5
21.5
21.3
21
20
75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00'01'02 '03'04'05 06
* Estimated
Year
U.S. Average Cattle Carcass Weights,
1975-2005
800
758
757
750
740
738 739
730
723
Pounds
750
698
677681
668
657
649 649
700
650
600
699 710705 700
695
688
635
629
631 636
624 623
607
602 597
579
550
75
77
79
81
83
85
87
89
91
93
95
97
99
'01
'03
Year
Factors affect carcass weights include genetics, marketing technology, corn
prices, grid pricing, fed cattle prices, breakeven prices, etc.
'05*
U.S. Cattle Operations,
Number by Year, 1975-2005
Cattler Operations (Millions)
2
1.9 1.8
1.8
1.7
1.5
1.61.61.61.6
1.6
1.5
1.5
1.41.4
1.4 1.3
1.3 1.2
1.21.2 1.2 1.21.21.2
1
1.1
1.11.1
1.0 1.01.0
1.0 1.0
0.5
0
75
77
79
81
83
85
87
89
91
Year
93
95
97
99
'01
'03
'05
U.S. Cattle Operations,
Number by Size Group, 2005
Number of Operations
700,000
600,000
612,100
500,000
400,000
300,000
163,780
200,000
177,510
100,000
29,120
0
1-49 Hd
50-99 Hd
982,510 U.S. cattle operations, 2005
100-499 Hd
500+ Hd
U.S. Cattle Operations & Inventory,
Percent by Size Group, 2005
Cattle Operations
Cattle Inventory
23%
21%
79%
1-99 Hd
100+ Hd
77%
1-99 Hd
100+ Hd
Cattle Situation and Outlook
Demand
Situation
U.S. Per Capita Meat Consumption,
Retail Weight Basis, 1976-2006
Beef
Pork
Chicken
Pounds Per Person
100
90
80
70
60
50
40
76
78
80
82
84
86
88
90
92
Year
94
96
98
'00 '02 '04 '06
U.S. Per Capita Meat Consumption,
Retail Weight Basis, 1976-2006
Total Pounds of Beef, Pork, & Chicken
Pounds Per Person
210
200
190
180
170
160
150
76
78
80
82
84
86
88
90
92
Year
94
96
98
'00 '02 '04 '06
U.S. Beef Imports and Exports,
Billion Pounds, 1970-06
Beef Imports
Beef Exports
Billion Pounds
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 '00 '02 '04 '06
Year
U.S. Beef Imports and Exports,
Billion Dollars, 1976-06
Beef Imports
Beef Exports
Billion Dollars
$3.5
$3.0
$2.5
$2.0
$1.5
$1.0
$0.5
$0.0
76 78
80
82 84
86
88 90
92
Year
94 96
98 '00 '02 '04 '06
Cattle Situation and Outlook
Cost of
Production
U.S. Cow-Calf Cash Expenses, 1972-99
Dollar Per Bred Cow
$600
$479 $488
$456
$446
$415
$402$388$383 $412$411
$500
$400
$300
$200
$277
$269
$286$287
$265
$265
$267
$266
$252
$254
$231
$173 $189
$162 $164
$137$148
$114
$100
$0
72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90* 91 92 93 94 95 96 97 98 99
Year
*1990-99 estimates were based on a revised methodology.
Southeast Ammonium Nitrate Prices, 1970-06
$350
Dollar Per Ton
$300
$280
$249
$236 $242
$222 $224 $222
$211
$210
$193
$182 $183 $192
$196$189
$187 $185
$180 $178
$172 $164
$171
$165
$158
$155
$143 $144
$138
$130
$250
$200
$150
$100
$294
$277
$269
$64 $74
$61 $65
$50
$0
70
72
74
76
78
80
82
84
86
88
Year
90
92
94
96
98
'00
'02
'04 '06*
Stocker Gross Margin, Alabama,
October-April, 400# -750#, 1979-2006
$300
Dollar Per Head
$261
$248
$250
$223 $221
$219
$210
$188 $197$194
$206
$199 $197
$194 $199 $196
$200
$159
$155
$150
$135
$133
$117
$100
$176
$174
$160
$101
$107
$91
$83
$50
7980
8182
8384
8586
8788
8990
9192
9394
9596
Year
Gross margin is feeder sale value minus stocker purchase value.
Based on steers, med. & lrg., No. 1, Oct. to Apr., 400 to 750 pounds.
9798
9900
0102*
'0304
'0506
Avg.
Monthly Feeding Cost of Gain
700 to 800 Lb. Steers in Kansas
Dollar Per Cwt.
$75
$70
$65
$60
$55
$50
$45
$40
05
nJa
4
-0
an
'J
3
-0
an
'J
2
-0
an
'J
1
-0
an
'J
Source: KSU Cattle Return Series
00
nJa
99
nJa
98
nJa
97
nJa
96
nJa
95
nJa
94
nJa
Year
Cattle Situation and Outlook
Market
Prices
Alabama Feeder Calf Prices,
Steers, Med. & Lg., #1, 1990-2006
325#
425#
525#
625#
725#
Dollar Per Cwt.
$180
$160
$140
$120
$100
$80
$60
$40
J90 J91 J92 J93 J94 J95 J96 J97 J98 J99 J00 J01 J02 J03 J04 J05 J06
Year
Annual U. S. Beef Production, 2000-06
30
Billion Pounds
29
28
27
26.8
26
27.1
26.1
26.2
25
25.9
24.5
24.7
'2004
'2005
24
23
22
21
20
'2000
'2001
'2002
'2003
Year
*Estimated
'2006*
Annual U.S. Beef Production &
Average Fed Beef Price, 2000-2006
Avg. Fed Beef Price
30
29
28
27
26
25
24
23
22
21
20
$90
$85
$80
$75
$70
$65
$60
2000
2001
2002
2003
Year
2004
2005
2006*
Dollars Per Cwt.
Billion Pounds
U.S. Beef Production
Quarterly U. S. Beef Production, 2004-06
7.0
6.7
Billion Pounds
6.8
6.6
6.6
6.4
6.3
6.2
6.0
5.8
6.8
6.4
6.2
6.1
5.8
6.3
6.2
6.1
5.7
5.6
5.4
5.2
5.0
'04-1 '04-2 '04-3 '04-4 '05-1 '05-2 '05-3 '05-4 '06-1* '06-2* '06-3* '06-4*
Year-Quarter
*Estimated (2004 -> 24.5B, 2005 -> 24.7B, 2006 -> 25.9B*)
Quarterly U. S. Beef Production &
Average Fed Beef Price, 2004-2006
Avg. Fed Beef Price
$92
7.0
6.8
6.6
6.4
6.2
6.0
5.8
5.6
5.4
5.2
5.0
$90
$88
$86
$84
$82
$80
$78
$76
'04-1
'04-2
'04-3
'04-4
'05-1
'05-2
'05-3
Year-Quarter
*Estimated
'05-4
'06-1*
'06-2*
'06-3*
'06-4*
Dollar Per Cwt.
Billion Pounds
U.S. Beef Production
2006 Cattle Price Projections, $/Cwt.
Item
First
Quarter
2006
Second
Quarter
2006
Third
Quarter
2006
Fourth
Quarter
2006
Kansas
Fed Cattle
Slaughter Wt.
$88-$91
$83-$87
$78-$82
$79-$84
Alabama
725# Fdr. Cattle,
Med. & Lg., #1
$100-$103
$94-$99
$92-$97
$90-$95
Alabama
525# Fdr. Calves,
Med. & Lg., #1
$124-$127
$118-$123 $115-$121
$114-$118
These projections will be revised as new economic information is received and processed.
Cattle Situation and Outlook
Profit
Potential
U.S. Cow - Calf Returns
Over Cash Expenses, 1972-99
Dollars Per Bred Cow
$150
121
$100
$50
38
56
26
55
57
12
$0
-$50
85
-17
-22
-43-39
-5 -12 -18 -11
-22
-$150
15
-14
-23
-51
-72
-160
72 74 76 78 80 82 84 86 88 90 92 94 96 98 '00
Year
Source: USDA
40 50 31
-79
-$100
-$200
73
Average Annual Cow-Calf Returns
Over Cash Expenses, 1980-2004
$200
145
Dollars Per Head
$150
83
$100
$50
31
51 44
$0
-24
-45 -42
-43
-63
-71
-$50
-$100
-$150
59 60
34
33
42
17
10
80
105
45
23
17
-12
-59
-88
80 82 84 86 88 90 92 94 96 98 '00 '02 '04Avg.
Year
Source: Cattle-Fax
Average Annual Stocker Cattle
Returns Over Cash Expenses, 1980-2006
$200
170165
Dollars Per Head
$150
95
$100
72
$50
43
38
34
8
8
29
49
49
28 26
9
74
44
-21-22
-$50
33
19
10
$0
-12 -3
47
-20
-30
-$100
-$150
80
82
84
86
88
90
92
94
Year
Source: Cattle-Fax
Includes winter and summer grazing programs.
96
98
'00
'02
'04
'06* Avg.
Monthly Returns for Finishing
700 to 800 Lb. Steers in Kansas
Dollars Per Head
500
400
300
200
100
0
-100
-200
-300
5
-0
an
'J
4
-0
an
'J
3
-0
an
'J
2
-0
an
'J
1
-0
an
'J
00
nJa
99
nJa
98
nJa
97
nJa
96
nJa
95
nJa
94
nJa
Source: KSU Cattle Return Sales
Average Annual Cattle
Feeding Returns, 1980-2004
200
Dollars Per Head
150
140
99
100
50
20
0
-50
-100
12
28
40
34
32 39
4
3
-28
17
82
Source: Cattle-Fax
-13
7
-23
-49
-75
80
25
10
5
-13
-42
-48
49
-84
84
86
88
90
92
94
96
98 '00 '02 04* Avg.
Cattle Situation and Outlook
Summary
Remarks
Cattle Situation and Outlook
Greed,
Fear, and
Weather
Alabama Feeder Calf Prices,
Steers, Med. & Lg., #1, 1990-2006
325#
425#
525#
625#
725#
Dollar Per Cwt.
$180
$160
$140
$120
$100
$80
$60
$40
J90
J91
J92
J93
J94
J95
J96
J97
J98
Year
J99
J00
J01
J02
J03
J04
J05
J06
Projected Profit/Loss By Cattle Industry Segments
During The Four Price Phases Of The Cattle Cycle*
Price Phase*
Cow- Calf
Stocker
Feedlot
Up Cycle
(2000 thru 2006?)
ModerateSignificant
Profits
Profits/losses
Profits/Losses
Downward Transition
(2007 thru 2008?)
Declining
Profitability,
Profits/Losses
MinorSignificant
Losses
MinorSignificant
Losses
Down Cycle
(2009 thru 2010?)
Significant
Losses
Marginal
Profits/Losses
Marginal
Profits/Losses
Upward Transition
(2011 thru 2012?)
Improving
Profitability,
Profits/Losses
Profits/Losses
Profits/Losses
The information in this chart is generalized based on the price phase of the cattle cycle. These
projections will be revised as new economic information is received and processed.
What’s The
Cattle Price Outlook
For 2006
Dr. Walter Prevatt
Dr. Deacue Fields
Extension Economists
Auburn University