WELCOME: BEEF ECONOMICS WEBINAR • Audio Announcement: all lines are currently muted and we will begin promptly at 1:30pm CST • Please select your audio now. • To dial the conference, select “Use Telephone” in your audio pane and enter your unique audio pin. • Select “Use Mic & Speakers” to use VoIP audio. • Submit questions and comments via the Chat panel • Note: Today’s presentation is being recorded and will be provided within 48 hours.
WELCOME: BEEF ECONOMICS WEBINAR. Audio Announcement: all lines are currently muted and we will begin promptly at 1:30pm CST Please select your audio now. To dial the conference, select “Use Telephone” in your audio pane and enter your unique audio pin. - PowerPoint PPT Presentation
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WELCOME: BEEF ECONOMICS WEBINAR• Audio Announcement: all lines are currently
muted and we will begin promptly at 1:30pm CST• Please select your audio now. • To dial the conference, select “Use Telephone” in
your audio pane and enter your unique audio pin. • Select “Use Mic & Speakers” to use VoIP audio.• Submit questions and comments via the Chat panel• Note: Today’s presentation is being recorded and
will be provided within 48 hours.
November 8, 2012
Sponsored by:
Presenter: Dr. Glynn Tonsor, Kansas State University
WEBINAR OVERVIEW• Broad Economic Outlook Overview for Industry
– Stocker Value of Gain Projection Resources – Feedlot Return Projection Resources
• Situation and Research Updates: – Beef demand assessment– Mandatory country of origin labeling – Animal welfare
Economic Outlook Overview: Cow-Calf• Strong calf price pullback during 2012
– National vs. regional drought magnified market impact compared to 2011 • Eventually: beneficiary of tight supplies and probable expanded heifer retention…
– majority of owners (not industry % of cows) are not necessarily seeking to maximize profits as core goal …
• Returns over cash costs – 2012 (2013) estimates have fell over $170/cow ($75) since March– Will 2015 now be “the peak return year” ?
• Further widening between top 1/3 and bottom 1/3 of producers?– Cost management drives majority of differences in KS cow-calf returns
and likely is even more critical in period of drought response ….
As of: 11/7/12 Nov. FC:11/7/12: $14510/8/12: $1468/7/12: $143
US RANGE AND PASTURE CONDITIONPercent Poor and Very Poor, Weekly
15
20
25
30
35
40
45
50
55
60
65
May Jul Sep
Percent
Avg.2006-102011
2012
G-NP-3010/31/12
Livestock Marketing Information CenterData Source: USDA-NASS, Compiled & Analysis by LMIC
Last year Cows % of Total10/23/11 14862 48.31%10/30/11 14185 46.11%
This Year10/21/12 21009 70.50%10/28/12 21009 70.50%
Beef Cows in stateswith 40% Poor to Very Poor
10/31/10’:19.9% of Cows
CORNBELT REGIONRANGE AND PASTURE CONDITION
Percent Poor and Very Poor, Weekly
0
10
20
30
40
50
60
70
80
May Jul Sep
Percent
Avg.2006-102011
2012
G-NP-3410/31/12
Livestock Marketing Information CenterData Source: USDA-NASS, Compiled & Analysis by LMIC
IL, IN, IA, MI, MN, MO, OH, & WI
14.5% of Cows (2012)
GREAT PLAINS REGIONRANGE AND PASTURE CONDITION
Percent Poor and Very Poor, Weekly
10
20
30
40
50
60
70
80
90
May Jul Sep
Percent
Avg.2006-102011
2012
G-NP-3210/31/12
Livestock Marketing Information CenterData Source: USDA-NASS, Compiled & Analysis by LMIC
CO, KS, MT, NE, ND, SD, & WY
29.2% of Cows (2012)
WESTERN REGIONRANGE AND PASTURE CONDITION
Percent Poor and Very Poor, Weekly
15
25
35
45
55
65
75
May Jul Sep
Percent
Avg.2006-102011
2012
G-NP-3110/31/12
Livestock Marketing Information CenterData Source: USDA-NASS, Compiled & Analysis by LMIC
AZ, CA, ID, NV, NM, OR, UT, & WA
10.2% of Cows (2012)
SOUTHERN PLAINS REGIONRANGE AND PASTURE CONDITION
Percent Poor and Very Poor, Weekly
10
20
30
40
50
60
70
80
90
100
May Jul Sep
Percent
Avg.2006-102011
2012
G-NP-3310/31/12
Livestock Marketing Information CenterData Source: USDA-NASS, Compiled & Analysis by LMIC
OK & TX20.4% of Cows (2012)
SOUTHEAST REGIONRANGE AND PASTURE CONDITION
Percent Poor and Very Poor, Weekly
5
10
15
20
25
30
35
40
45
May Jul Sep
Percent
Avg.2006-102011
2012
G-NP-3610/31/12
Livestock Marketing Information CenterData Source: USDA-NASS, Compiled & Analysis by LMIC
AL, AR, FL, GA, KY, LA, MS, NC, SC, TN, VA, & WV24.5% of Cows (2012)
200
250
300
350
400
450
500
550
600
650
700
$/br
ed co
w
Value of Production and Operating Cost by Region, 2008-2010
Will SE lead a national beef cow herd expansion?
Data source: USDA-ERS
Operating Cost
Value of Production
Herds > 20 cows
Operating Costs = 37% (MP) to 52% (NGP) of
Total Costs
Area with “good” 2012
pasture conditions…
Economic Outlook Overview : Stockers
• Historically high Values of Gain (VOG) – But also historically high Costs of Gain (COG)…
• Of course, not everyone has their typical feedstuffs/resources to engage this fall/winter– VOG = rewards for sound management – COG = pain of hiccups or poor management
• Many producers feeding something new… – Is there a widening gap between returns of stocker operations?
How Should VOG Be Projected?• Naïve (current cash market offering) vs. Forward Looking
(futures market & basis) – Important to recognize no crystal ball exist
– Salina, KS / 550 to 750 lb in 3 month case / Jan. 07’ to July 12’ period: • naïve is less accurate
– Forward-looking VOG projections are now updated daily on AgManager
Economic Outlook Overview : Feedlots• Excess capacity concerns remain & will be growing…
– Drought: mitigates this initially / magnifies it later … – Mexican supplies: mitigates this recently / magnifies it soon
• Losses persist… – July & August closeouts were at historically high losses…
• Elevated cost of gain + Feeders purchased before spring pullback
• Recent placements at break-even or + projections… – Important to watch response to shrinking available supplies
Historical and Projected Kansas Feedlot Net Returns (as of 11/8/12’) (http://www.agmanager.info/livestock/marketing/outlook/newsletters/FinishingReturns/default.asp)
Representative Barometer for Trends in Profitability
September 12’: -$197.58/steer Rolling 12 month average thru August:-$98.16/steer
Historical and Projected Kansas Feedlot Net Returns (as of 11/8/12’)
• Wrapping up USDA funded ex post assessment: – Majority of the public is unaware of MCOOL – Fail to reject: “Product of U.S.” = “Product of North America” – No observed change in exercised demand in retail, grocery store
based assessment since implementation in March 2009
• Bottom line view:– Aggregate economic loss from MCOOL is apparent – The quicker WTO resolution occurs the better for
aggregate economic welfare …• Important implications for excess capacity resolution also…
Situation and Research Update: Animal Welfare
• Beef cattle have not been main subject of focus – Naïve to assume immunity…
• Vote vs. Buy decision distinctions – Prevalent and important to recognize
• Is industry response to AW concerns/inquires a “cost of doing business?”
• Ongoing USDA funded beef and dairy cattle project
Sponsored by:
Questions typed by participants during the webinar presentation
which were not directly responded to are addressed in the remaining