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Cattle Outlook 2011 and Beyond

Cattle Outlook 2011 and Beyond. Shane Ellis Extension Livestock Economist Iowa State University August 16, 2011. Beef Situation. Extremely volatile cattle prices Demand and the economy Exports up Industry still in retraction, cow herd declining

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Cattle Outlook 2011 and Beyond

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  1. Cattle Outlook 2011 and Beyond Shane Ellis Extension Livestock Economist Iowa State University August 16, 2011

  2. Beef Situation • Extremely volatile cattle prices • Demand and the economy • Exports up • Industry still in retraction, cow herd declining • Beef production to decline slightly in 2011 • More COF, fewer placements in 4th quarter • Profit outlook had been mixed, but remains tight

  3. Beef Supply Summary 2010 • Total Beef Production: +1.3% • Total Slght+2.7%, wts -1.4% 2011 • Total Beef Production: -0.6% • Total Slght -1.4%, wts +0.9% 2012 • Total Beef Production -3.8%

  4. January 2011 Cattle Report

  5. July 2011 Cattle Report

  6. Livestock Marketing Information Center Data Source: USDA-NASS

  7. BEEF COWS THAT HAVE CALVEDJANUARY 1, 2011(1000 Head) Alaska Hawaii US Total Livestock Marketing Information Center Data Source: USDA/NASS

  8. CHANGE IN BEEF COW NUMBERSJANUARY 1, 2002 TO JANUARY 1, 2011(1000 Head) Alaska Hawaii US Total Livestock Marketing Information Center Data Source: USDA/NASS

  9. Building the Cow Herd • Location • Resources • Capital • Producer Interest (i.e. enthusiasm, youth) • Profitable Outlook

  10. Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC

  11. Yr/yr % Prd & Con 1.3 & -2.5 -0.6 & -2.8 -3.8 & -2.4 Data Source: USDA-NASS, Compiled and Forecasts by LMIC

  12. July Cattle on feed up 4% 10.5 million Aug Cattle on feed up 6-8% Record placements?

  13. Cattle Price & Beef Demand • Fed cattle prices up 10+% • Feeder cattle prices up 20+% • Domestic & foreign demand strong • Consumer preferences, steak vs. ground • Tight choice-select spread

  14. Livestock Marketing Information Center Data Source: USDA-AMS

  15. Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC

  16. Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC

  17. Livestock Marketing Information Center Data Source: USDA-AMS

  18. up 11% in 2010 Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS

  19. Livestock Marketing Information Center Data Source: USDA-AMS

  20. Livestock Marketing Information Center Data Source: USDA-AMS

  21. Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC

  22. Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC

  23. +17% in 2010 Livestock Marketing Information Center Data Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC

  24. Livestock Marketing Information Center Data Source: USDA-ERS & USDA-FAS

  25. Livestock Marketing Information Center Data Source: USDA-FAS

  26. Livestock Marketing Information Center Data Source: USDA-ERS & USDA-FAS

  27. Livestock Marketing Information Center Data Source: USDA-ERS & USDA-FAS

  28. Profitability • Profitability in 2011, substantial but brief • Feed and feeder cattle prices keep pressure on margins • Profitability in cattle feeding = margin risk management

  29. Livestock Marketing Information Center Data Source: USDA-AMS

  30. Cattle Crush Margin Farms differ, but approximately a $150 margin is needed to breakeven www.econ.iastate.edu/margins

  31. Cattle Summary • Demand connected with the economy • Demand added support to prices in 2010 • Beef production declining until 2015+ • Profitability in first quarter of year • Losses in second half of year • Fed cattle price forecast $112-120/cwt

  32. Thank you Questions? Shane Ellis shanee@iastate.edu www.econ.iastate.edu/ifo www.econ.iastate.edu/margins 515-294-8030

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