2018 Beef Cattle Market Outlook.pptx [Read-Only] · $ Per Cwt. MED. & LRG. #1 STEER CALF PRICES 500‐600 Pounds, Southern Plains, Weekly Avg. 2011‐15 2016 2017 110 120 130 140

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2018 Beef CattleMarket Outlook

Chris PrevattBeef Cattle and Forage Economist

UF/IFAS Range Cattle Research and Education Center

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120

140

160

180

200

220

240

JAN APR JUL OCT

$ Per Cwt.

MED. & LRG. #1 STEER CALF PRICES400‐500 Pounds, Southern Plains, Weekly

 Avg. 2011‐15 2016 2017

120

130

140

150

160

170

180

190

200

210

220

JAN APR JUL OCT

$ Per Cwt.

MED. & LRG. #1 STEER CALF PRICES500‐600 Pounds, Southern Plains, Weekly

 Avg. 2011‐15 2016 2017

110

120

130

140

150

160

170

180

190

JAN APR JUL OCT

$ Per Cwt.

MED. & LRG. #1 FEEDER STEER PRICES700‐800 Pounds, Southern Plains, Weekly

 Avg. 2011‐15 2016 2017

50

60

70

80

90

100

JAN APR JUL OCT

$ Per Cwt.

SLAUGHTER COW PRICESSouthern Plains, 85‐90% Lean, Weekly

 Avg. 2011‐15 2016 2017

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3

90

100

110

120

130

140

150

JAN APR JUL OCT

$ Per Cwt.

SLAUGHTER STEER PRICES5 Market Weighted Average, Weekly

 Avg. 2011‐15 2016 2017

90

100

110

120

130

140

150

JAN APR JUL OCT

$ Per Cwt.

SLAUGHTER STEER PRICESSouthern Plains, Weekly

 Avg. 2011‐15 2016 2017

9.50

10.50

11.50

12.50

13.50

14.50

15.50

JAN APR JUL OCT

$ Per Cwt.

STEER HIDE AND OFFAL VALUELive Animal Basis, Weekly

 Avg. 2011‐15 2016 2017

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4

80

84

88

92

96

100

104

108

‐100

0

100

200

300

400

500

600

1988 1991 1994 1997 2000 2003 2006 2009 2012 2015

Mil. Head$ Per Cow

COW-CALF RETURNS AND CATTLE INVENTORYU.S., Annual

Estimated Cow‐Calf Returns Cattle Inventory Jan 1

Projected Cow-Calf Profits During the Four Phases of the Cattle Price Cycle

Phase of Cattle Price Cycle

Projected Cow-Calf Profits/Losses

This is simply a projection about cow-calf profit trends based on the past history using a 12-year cattle price cycle.

No one knows for certain the length of the four phases of the cattle price cycle.

We will update this projection as time progresses and new economic information becomes available.

Projected Cow-Calf Profits During the Four Phases of the Cattle Price Cycle

Phase of Cattle Price Cycle

Projected Cow-Calf Profits/Losses

Top of Price Cycle(2013-2015)

Downward Price Transition(2015-2019?)

Bottom of Price Cycle(2019-2021?)

Upward Price Transition(2021-2024?)

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Projected Cow-Calf Profits During the Four Phases of the Cattle Price Cycle

Phase of Cattle Price Cycle

Projected Cow-Calf Profits/Losses

Top of Price Cycle(2013-2015) Significant Profits

Downward Price Transition(2015-2019?)

Profits/Losses Declining Profitability

Bottom of Price Cycle(2019-2021?) Significant Losses

Upward Price Transition(2021-2024?)

Profits/Losses Improving Profitability

What Factors Will Influence the Direction of

2018 Cattle Market Prices?

Major Factors Affecting The2018 Beef Cattle Market Outlook

• U.S. and World Economies• Interest and Exchange Rates• Energy Prices• U.S. Domestic Beef Demand• U.S. Export Beef Demand• U.S. Domestic Beef Supply• U.S. Import Beef Supply• Total U.S. Meat Supply• Cow-Calf Cost of Production and Profitability• Feedlot Cost of Production• Weather• Outliers

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150

170

190

210

230

250

270

290

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Mil. Pounds

US BEEF AND VEAL EXPORTSCarcass Weight, Monthly

Avg. 2011‐15 2016 2017

150

175

200

225

250

275

300

325

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Mil. Pounds

US BEEF AND VEAL IMPORTSCarcass Weight, Monthly

Avg. 2011‐15 2016 2017

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7

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Beef Demand and

SupplyInteraction

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What should we expect when we expand U.S. Beef Production?

S2015

D

P2015

Q2015

S2015

D

P2015

Q2015

S2016

P2016

Q2016

What should we expect when we expand U.S. Beef Production?

S2015

D

P2015

Q2015

S2016 S2017

P2016

P2017

Q2016 Q2017

What should we expect when we expand U.S. Beef Production?

S2015

D

P2015

Q2015

S2016 S2018S2017

P2016

P2017

P2018

Q2018Q2016 Q2017

What should we expect when we expand U.S. Beef Production?

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80

90

100

110

120

130

140

1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017

Mil. Head

JANUARY 1 TOTAL CATTLE INVENTORYU.S., Annual

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425

475

525

575

625

675

JAN APR JUL OCT

Thou. Head

CATTLE SLAUGHTERFederally Inspected, Weekly

 Avg. 2011‐15 2016 2017

220

240

260

280

300

320

340

360

380

JAN APR JUL OCT

Thou. Head

STEER SLAUGHTERFederally Inspected, Weekly

 Avg. 2011‐15 2016 2017

820

840

860

880

900

920

940

JAN APR JUL OCT

Pounds

STEER DRESSED WEIGHTFederally Inspected, Weekly

 Avg. 2011‐15 2016 2017

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12

110

120

130

140

150

160

170

180

190

200

JAN APR JUL OCT

Thou. Head

HEIFER SLAUGHTERFederally Inspected, Weekly

 Avg. 2011‐15 2016 2017

750

770

790

810

830

850

870

JAN APR JUL OCT

Pounds

HEIFER DRESSED WEIGHTFederally Inspected, Weekly

 Avg. 2011‐15 2016 2017

80

90

100

110

120

130

140

JAN APR JUL OCT

Thou. Head

TOTAL COW SLAUGHTERFederally Inspected, Weekly

 Avg. 2011‐15 2016 2017

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Total U.S. Red Meat and Poultry

Production

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S2017

D2017

P2017

Q2017

What would cause a shift to the right in Demand?(which results in higher beef prices)

S2017

D2017

P2017

Q2017

D2018

P2018

• Increasing number of consumers• Increasing disposable incomes• Increases in competing meat prices• Increases in consumer preference

What would cause a shift to the right in Demand?(which results in higher beef prices)

170

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JAN APR JUL OCT

$ Per Cwt.

BOXED BEEF CUTOUT VALUEChoice 600‐900 Lbs., Carcass, Weekly

 Avg. 2011‐15 2016 2017

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15

500

600

700

800

900

1000

1100

JAN APR JUL OCT

Cents Per Pound

WHOLESALE BEEF RIBEYE PRICESBoneless, Light, Weekly

 Avg. 2011‐15 2016 2017

300

400

500

600

700

800

900

1000

JAN APR JUL OCT

Cents Per Pound

WHOLESALE BEEF LOIN STRIP PRICESBoneless 0x1, Weekly

 Avg. 2011‐15 2016 2017

200

220

240

260

280

300

320

340

JAN APR JUL OCT

Cents Per Pound

WHOLESALE BEEF CHUCK PRICESChuck Roll 1x1 Neck Off, Weekly

 Avg. 2011‐15 2016 2017

175

185

195

205

215

225

235

245

JAN APR JUL OCT

Cents Per Pound

WHOLESALE BONELESS BEEF PRICESFresh, 90% Lean, Weekly

 Avg. 2011‐15 2016 2017

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S2017

D2017

P2017

Q2017

What would cause a shift to the left in Demand?(which results in lower beef prices)

What would cause a shift to the left in Demand?(which results in lower beef prices)

S2017

D2017

P2017

Q2017

D2018

P2018

Economic Outliers(These usually can’t be anticipated or predicted.)

• Recession

• Food Safety

• Government Policies/Regulations • (taxes, health care, etc.)

• Terrorist Events

• Trade Barriers (NAFTA, TPP, South Korea, China)

• Political Confrontations

• Military Disturbances & Wars

• …………………, etc.?

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Major Factors Affecting The2018 Beef Cattle Market Outlook

• U.S. and World Economies• Interest and Exchange Rates• Energy Prices• U.S. Domestic Beef Demand• U.S. Export Beef Demand• U.S. Domestic Beef Supply• U.S. Import Beef Supply• Total U.S. Meat Supply• Cow-Calf Cost of Production and Profitability• Feedlot Cost of Production• Weather• Outliers

Summary• Herd expansion will likely continue as long as

beef producers feel they are profitable and have the land, labor, capital, feed, and forages resources to expand.

• As herd expansion continues the transition to cyclically lower cattle prices will likely continue until prices approach the cost of production.

SummaryDue to expected future declining beef prices, U.S. cattle producers will need to:

• 1) search for ways to lower their unit cost of production (such as more efficient use of inputs, reduce wastes, scrutinize capital purchases, debt, etc.)

• 2) identify opportunities to enhance cattle market prices (improve quality and quantity, identify economical weights, months to sell, when to use price protection, etc.) in order to achieve higher levels of profits during the bottom of the cattle price cycle (2017 – 2021?).

Thank You For Your AttentionHave a profitable 2017!

Chris [email protected]

(863) 735-1314

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2018 Beef CattleMarket Outlook