2013 Cattle Market Situation and Outlook

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2013 Cattle Market
Situation and
Outlook
Derrell S. Peel
Breedlove Professor of Agribusiness
and Livestock Marketing Specialist
2012 Recap
• Widespread drought in U.S.
– Continued herd liquidation
– Not as severe in Oklahoma this summer
• Limited water and forage for winter
• Record high grain and forage prices
• Record high cattle prices
– Reduced cow-calf profitability
– Poor feedlot and packer margins
• Higher wholesale and retail beef prices
– Limited beef demand
– Weaker beef exports
BOXED BEEF CUTOUT VALUE
Choice 600-900 Lbs. Carcass, Weekly
$ Per Cwt.
205
195
Avg.
2006-10
185
175
2011
165
155
2012
145
135
JAN
APR
Livestock Marketing Information Center
Data Source: USDA-AMS
JUL
OCT
C-P-62
11/05/12
SLAUGHTER STEER PRICES
Southern Plains, Weekly
$ Per Cwt.
135
130
125
120
115
110
105
100
95
90
85
80
JAN
Avg.
2006-10
2011
2012
APR
Livestock Marketing Information Center
Data Source: USDA-AMS
JUL
OCT
C-P-52
11/05/12
MED. & LRG. #1 FEEDER STEER PRICES
700-800 Pounds, Southern Plains, Weekly
$ Per Cwt.
170
160
Avg.
2006-10
150
140
130
2011
120
110
2012
100
90
JAN
APR
Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
JUL
OCT
C-P-49
11/05/12
MED. & LRG. #1 STEER CALF PRICES
400-500 Pounds, Southern Plains, Weekly
$ Per Cwt.
235
Avg.
2006-10
215
195
175
2011
155
135
2012
115
JAN
APR
Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
JUL
OCT
C-P-49A
11/05/12
SLAUGHTER COW PRICES
Southern Plains, 85-90% Lean, Weekly
$ Per Cwt.
90
Avg.
2006-10
80
70
2011
60
50
2012
40
JAN
APR
Livestock Marketing Information Center
Data Source: USDA-AMS
JUL
OCT
C-P-35
11/05/12
2013 Cattle Market Environment
• Continued drought?
– More liquidation
• …Or normal weather
– More heifer retention
• Tighter cattle supplies…into 2014
• Beef demand is the key unknown
– tied to general economy
JANUARY 1 FEEDER CATTLE SUPPLIES
Residual, Outside Feedlots, U.S.
Mil. Head
50
48
46
44
42
40
38
36
34
32
30
28
26
24
1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
Data Source: USDA-NASS, Calculations by Derrell Peel
2013 Cattle Market Expectations
• Cattle and beef prices pushed higher by
limited supplies
– Beef production down by 4-4.5%
•
•
•
•
Beef demand will limit price increases
Question is “How much higher?”
Moderation in feed prices
Higher cow and heifer prices (if no drought)
– Breeding cow and heifer demand
BEEF PRODUCTION
vs. CATTLE INVENTORY
Inventory on January 1, U.S.
Mil. Head
120
Bil. Pounds
28
Commercial Beef Production
27
115
110
26
105
25
100
24
95
23
Total Cattle Inventory
90
22
1987
1990
1993
1996
Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
1999
2002
2005
2008
2011
2014
M-S-23
08/10/12
Cattle Sector Implications
• Cow-calf
– Good profit potential; cost management key
– Rebuilding strategy and costs
– Producer transition
• Stocker
– Good value of gain
• Feedlots and packers will continue to struggle
– Loss of capacity likely
• Production challenges bigger than marketing
challenges
Price-Weight Relationship
Medium/Large No. 1 Steers, 7 Oklahoma Auctions
$210.00
$190.00
$180.00
November 9, 2012
$170.00
$160.00
$150.00
$140.00
weight (pounds)
925
875
825
775
725
675
625
575
525
475
425
$130.00
375
Price ($/cwt)
$200.00
Steer Price, Total Value and Value of Gain
November 9, 2012, 7 Auction, Oklahoma
Weight Average Total
(lbs)
Price
Value
($/cwt.) ($/hd)
400
450
500
550
600
650
700
750
800
850
900
$189.13
$174.39
$163.67
$154.76
$149.41
$147.55
$145.52
$144.47
$143.66
$142.76
$139.73
$757
$785
$818
$851
$896
$959
$1,019
$1,084
$1,149
$1,213
$1,258
VOG
400 lb.
Beg.
Weight
($/lb.)
$0.56
$0.62
$0.63
$0.70
$0.81
$0.87
$0.93
$0.98
$1.02
$1.00
VOG
450 lb.
Beg.
Weight
($/lb
$0.67
$0.66
$0.74
$0.87
$0.94
$1.00
$1.04
$1.07
$1.05
VOG
500 lb.
Beg.
Weight
($/lb.)
$0.66
$0.78
$0.94
$1.00
$1.06
$1.10
$1.13
$1.10
VOG
550 lb.
Beg.
Weight
($/lb.)
$0.91
$1.08
$1.12
$1.16
$1.19
$1.21
$1.16
VOG
600 lb.
Beg.
Weight
($/lb.)
$1.25
$1.22
$1.25
$1.26
$1.27
$1.20
VOG
650 lb.
Beg.
Weight
($/lb.)
$1.19
$1.25
$1.27
$1.27
$1.19
ANNUAL AVERAGE CATTLE PRICES
Southern Plains
$ Per Cwt
500-600lb
Steer
Calves
175
155
135
700-800lb
Feeder
Steers
115
95
Fed
Steers
75
55
1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
C-P-06
09/23/12
Agricultural Economics
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