Swine & Beef Outlook & Management Considerations · 2015. 11. 20. · 11/17/2015 1 Lee Schulz,...

11/17/2015

1

Lee Schulz, Department of Economics, Iowa State University

(515) 294-3356; [email protected]

Swine & Beef Outlook

& Management

Considerations

Crops/feedstuffs – ADVANTAGEOUS for the industry.

Size of industry driven by last year’s profitability –

Some calculated restraint?

BIG changes in some state inventories – Rebuild

and/or growth?

Productivity to guide 2016 hog supply prospects –

AND weights something to watch.

U.S. consumer demand has been GOOD – Will it

continue?

International trade a bit of a drag but improving –

U.S. dollar impacts but lower prices on the way?

Key factors impacting hog-pork market

mailto:[email protected]

11/17/2015

2

2013 = +$6.21 [-$25.60 to +$24.57]

2014 = +$61.85 [+$13.15 to +$107.25]

2015* = +$7.40 [-$20.22 to +$26.25]

2016* = -$1.76 [-$18.10 to +$19.48]

Farrow Closeout Total Cost Lean Hog Price Net Return

Mo-Yr Mo-Yr $/carcass cwt $/carcass cwt $/carcass cwt

Mar-15 Oct-15 62.41 69.31 6.90

Apr-15 Nov-15 60.57 50.58 -9.99

May-15 Dec-15 59.98 50.61 -9.37

Jun-15 Jan-16 61.55 52.61 -8.94

Jul-15 Feb-16 62.08 54.69 -7.39

Aug-15 Mar-16 62.47 57.95 -4.51

Sep-15 Apr-16 62.69 58.64 -4.05

Oct-15 May-16 63.31 65.34 2.03

Nov-15 Jun-16 63.74 71.21 7.47

Dec-15 Jul-16 63.96 72.39 8.43

Jan-16 Aug-16 63.92 73.54 9.62

Feb-16 Sep-16 64.20 63.29 -0.91

Mar-16 Oct-16 63.59 63.29 -0.29

Apr-16 Nov-16 63.17 57.21 -5.96

May-16 Dec-16 63.16 57.23 -5.93

2013 87.34 90.41 3.07

2014 75.34 105.89 30.54

Jan-Oct 2015 65.59 71.91 6.32

Nov-Dec 2015 60.27 50.59 -9.68

2016 63.15 62.28 -0.87

Jan-Apr 2017 64.21 62.46 -1.75

Historical and Projected Iowa Farrow to Finish Returns (as of 11/13/15) (http://www2.econ.iastate.edu/estimated-returns/)

http://www2.econ.iastate.edu/estimated-returns/





11/17/2015

3

Data Source: USDA/NASS. Urner Barry pre-report estimates

USDA Quarterly Hogs and Pigs Report – United States September 25, 2015

2015 as % Pre-Report Pre-Report Actual -

2014 2015 of 2014 Range Estimate Estimate

Inventories on Sep 1 *

All hogs and pigs 65,979 68,395 103.7 103.0 - 104.7 103.6 0.1

Kept for breeding 5,920 5,986 101.1 99.0 - 101.0 100.3 0.8

Market 60,059 62,410 103.9 103.0 - 105.1 103.9 0.0

Under 50 pounds 20,390 20,291 99.5 98.8 - 101.0 100.2 -0.7

50-119 pounds 17,458 17,986 103.0 102.0 - 104.5 103.2 -0.2

120-179 pounds 12,112 13,080 108.0 104.9 - 108.4 106.6 1.4

180 pounds and over 10,098 11,053 109.5 107.9 - 111.2 109.7 -0.2

Farrowing **

Jun – Aug sows farrowed 2,991 2,944 98.4 97.0 - 100.5 98.1 0.3

Sep – Nov intentions 2,994 2,920 97.5 95.7 - 99.5 97.2 0.3

Dec – Feb intentions 2,895 2,875 99.3 95.7 - 101.2 99.1 0.2

Jun – Aug Pig Crop * 30,402 30,585 100.6 99.0 - 103.0 100.4 0.2

Jun – Aug Pigs per Litter 10.16 10.39 102.3 101.9 - 103.0 102.4 -0.1

* 1,000 head ** 1,000 litters

Data Source: USDA/NASS

% of U.S. Inventory 2014 2015

IA 17.4% 16.7%

NC 14.7% 14.7%

MN 9.3% 9.4%

IL 8.6% 8.4%

OK 7.3% 7.9%

11/17/2015

4


% of U.S. Inventory

2014 2015

IA 32.9% 32.4%

NC 12.5% 12.5%

MN 12.0% 11.8%

IL 6.9% 6.8%

IN 5.5% 5.6%


60,000 breeding

herd additions

since June 1, 2015

11/17/2015

5


Avg 2008-12 2013 2014 2015

Dec-Feb 48.8% 47.9% 48.0% 48.7%

Mar-May 49.9% 48.1% 48.0% 47.6%

Jun-Aug 50.2% 49.1% 51.1% 49.7%

Sep-Nov 49.9% 47.8% 50.6%

H-S-15

11/13/15

30

35

40

45

50

55

60

65

70

JAN APR JUL OCT

Thou. Head

SOW SLAUGHTER Federally Inspected, Weekly

Avg. 2009-13 2014 2015Data Source: USDA-AMS & USDA-NASS

Livestock Marketing Information Center

2015-YTD

+4.6% (vs. 2014)

-5.3% (vs. 2009-13)

11/17/2015

6



11/17/2015

7

Data Source: USDA/AMS & APHIS

Incorrect data from APHIS

2015-YTD Feeder Pigs

8.7% (vs. 2014)

1.9% (vs. 2013)

-10.7% (vs. 2012)

Data Source: USDA/AMS

2015-YTD

15% (vs. 2014)

-20% (vs. 2009-13)

2015-YTD

1% (vs. 2014)

-9% (vs. 2009-13)

Cash Sales as % of Total Sales

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Avg 2009-13 50% 47% 45% 42% 44% 43% 43% 46% 48% 48% 45% 49%

2014 44% 32% 37% 30% 33% 41% 47% 41% 38% 38% 37% 43%

2015 39% 46% 37% 51% 41% 39% 47% 43% 39% 33% 40%

11/17/2015

8


2015-YTD

-53% (vs. 2014)

2% (vs. 2009-13)

2015-YTD

-18% (vs. 2014)

1% (vs. 2009-13)

Cash Price – Formula Price, $/head

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Avg 2009-13 11.38 9.31 0.56 -1.87 -8.14 -10.78 -13.35 -14.11 -11.01 -3.41 5.63 13.50

2014 33.67 31.45 37.11 36.22 31.05 28.07 27.72 15.07 15.19 20.39 20.93 24.22

2015 20.00 2.69 -1.34 -3.92 -0.46 -10.17 -14.67 -15.31 -8.12 -4.09 -3.40

2013 = +$4.77 [-$14.80 to +$22.07]

2014 = +$39.48 [+$1.62 to +$84.64]

2015* = -$14.85 [-$35.96 to +$4.70]

2016* = -$8.89 [-$19.69 to +$9.95]

11/17/2015

9

Lean Breakeven Breakeven

Place Closeout Net Hog SEW Breakeven Lean Hog SEW

Mo-Yr Mo-Yr Return* FCOG** Price Price* FCOG** Price Price*

Apr-15 Oct-15 0.95 39.93 69.31 36.40 40.29 68.85 37.34

May-15 Nov-15 -35.96 38.36 50.58 39.42 24.42 68.34 3.47

Jun-15 Dec-15 -27.99 38.14 50.61 32.07 27.29 64.43 4.08

Jul-15 Jan-16 -19.69 38.11 52.61 27.90 30.48 62.34 8.21

Aug-15 Feb-16 -18.10 38.41 54.69 29.74 31.40 63.62 11.64

Sep-15 Mar-16 -16.07 38.64 57.95 33.74 32.41 65.89 17.67

Oct-15 Apr-16 -19.91 38.91 58.64 38.28 31.19 68.47 18.37

Nov-15 May-16 -0.72 39.50 65.34 31.11 39.22 65.70 30.39

Dec-15 Jun-16 9.95 39.98 71.21 31.11 43.83 66.30 41.06

Jan-16 Jul-16 8.35 40.23 72.39 34.46 43.46 68.27 42.81

Feb-16 Aug-16 8.50 40.25 73.54 36.58 43.55 69.34 45.08

Mar-16 Sep-16 -12.39 40.20 63.29 36.83 35.40 69.41 24.44

Apr-16 Oct-16 -11.45 39.85 63.29 36.81 35.41 68.95 25.36

May-16 Nov-16 -17.67 39.27 57.21 32.19 32.42 65.93 14.51

Jun-16 Dec-16 -17.54 39.24 57.23 32.19 32.45 65.89 14.65

2013 4.77 54.86 90.41 36.78 56.71 88.06 41.55

2014 39.48 46.53 105.89 54.90 61.83 86.39 94.38

Jan-Oct 2015 -11.42 40.92 71.91 51.45 36.50 77.55 40.03

Nov-Dec 2015 -31.97 38.25 50.59 35.75 25.86 66.38 3.77

2016 -8.89 39.38 62.28 33.41 35.94 66.68 24.52

Jan-Apr 2017 -8.61 40.14 62.46 31.53 36.81 66.71 22.91

Historical and Projected Iowa Wean to Finish Returns (as of 11/13/15) (http://www2.econ.iastate.edu/estimated-returns/)

* Net return and SEW price is $/head and all other values are $/carcass cwt. ** FCOG = Feeding cost of gain.

2015-YTD

8.8% (vs. 2014)

3.4% (vs. 2009-13)

9.4% (since Aug)

Data Source: USDA/AMS. * Steve Meyer, Vice President, Pork Analysis,

Express Markets Inc. Analytics.






11/17/2015

10


2015-YTD

-0.84% (vs. 2014)

2.50% (vs. 2009-13)

Year Comm’l % Chg. Avg Carcass % Chg. Comm’l Pork % Chg.

Quarter Slaughter Year Ago Weight Year Ago Production Year Ago

2014

I 27,131 -2.6 213 2.7 5,784 0.2

II 25,575 -4.4 215 4.4 5,504 -0.2

III 25,558 -7.6 212 4.3 5,424 -3.5

IV 28,612 -4.0 215 1.7 6,131 -2.3

Year 106,876 -4.6 214 3.3 22,843 -1.5

2015

I 28,723 5.9 215 0.8 6,161 6.5

II 27,848 8.9 213 -1.1 5,925 7.6

III 28,474 11.4 209 -1.5 5,957 9.8

IV 30,359 6.1 214 -0.2 6,503 6.1

Year 115,404 8.0 213 -0.5 24,546 7.5

2016

I 29,161 1.5 215 -0.2 6,257 1.6

II 27,536 -1.1 213 0.2 5,877 -0.8

III 28,319 -0.5 209 0.1 5,929 -0.5

IV 30,498 0.5 215 0.2 6,549 0.7

Year 115,514 0.1 213 0.1 24,612 0.3

2017

I 29,909 2.6 215 0.2 6,431 2.8

II 28,163 2.3 214 0.2 6,023 2.5

III 28,495 0.6 210 0.2 5,976 0.8

IV 31,395 2.9 215 0.2 6,754 3.1

Year 117,962 2.1 213 0.2 25,184 2.3

LMIC Pork Production and Price Quarterly Forecasts (11/05/15) Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC

11/17/2015

11

Overarching Beef Industry

Economic Outlook

• Supplies – Historically tight; but expansion well underway

– Supply of heavy cattle burdensome

• Demand – Confusing yet largely positive

Recent concerns have driven market

• Combined – Nervousness or excitement depending on…

Perspective

Sector of the industry

Change Average Change Commercial Change

Commercial from Dressed from Beef from

Year Slaughter Year Ago Weight Year Ago Production Year Ago

Quarter (1,000 hd) (%) (lbs) (%) (mil lbs) (%)

2014

I 7,374 -5.2 796 0.3 5,868 -5.0

II 7,837 -5.9 789 0.9 6,184 -5.1

III 7,632 -8.3 810 1.9 6,179 -6.5

IV 7,326 -8.8 822 2.8 6,021 -6.3

Year 30,170 -7.1 804 1.5 24,252 -5.7

2015

I 6,967 -5.5 813 2.2 5,664 -3.5

II 7,227 -7.8 810 2.7 5,855 -5.3

III 7,288 -4.5 832 2.8 6,066 -1.8

IV 7,350 0.3 840 2.3 6,177 2.6

Year 28,832 -4.4 824 2.5 23,762 -2.0

2016

I 7,166 2.9 822 1.1 5,890 4.0

II 7,417 2.6 813 0.4 6,030 3.0

III 7,623 4.6 836 0.4 6,370 5.0

IV 7,550 2.7 838 -0.3 6,327 2.4

Year 29,756 3.2 827 0.4 24,617 3.6

2017

I 7,447 3.9 827 0.7 6,161 4.6

II 7,720 4.1 816 0.4 6,299 4.5

III 7,815 2.5 839 0.4 6,559 3.0

IV 7,891 4.5 841 0.4 6,639 4.9

Year 30,873 3.8 831 0.5 25,658 4.2

Quarterly Cattle & Beef Forecasts (LMIC: 11/05/2015)

11/17/2015

12

Live Sltr. Change

Steer Price from Feeder Steer Price

Year 5-Mkt Avg Year Ago Southern Plains

Quarter ($/cwt) (%) 7-800# 5-600#

2015

I 162.43 11.0 215.87 276.14

II 158.11 7.0 225.29 279.32

III 144.22 -9.0 214.38 246.04

IV 136-138 -17.3 186-189 220-224

Year 150-151 -2.6 210-211 254-258

2016

I 142-145 -11.7 184-189 226-232

II 145-149 -7.0 187-192 229-237

III 139-144 -1.9 183-189 225-234

IV 140-146 4.4 179-186 217-226

Year 142-146 -4.3 184-188 225-231

2017

I 139-146 -0.7 176-184 220-230

II 139-147 -2.7 177-186 223-234

III 134-145 -1.4 174-184 217-230

IV 136-146 -1.4 170-182 211-225

Year 139-144 -1.7 176-182 220-228


-11.6% -10.9%

-3.8% -1.8%

+1.4% +3.9%

2014: +23% from 2013

2014: +38%

from 2013

2014: +43%

from 2013

Live Sltr. Change

Steer Price from Feeder Steer Price

Year 5-Mkt Avg Year Ago Southern Plains

Quarter ($/cwt) (%) 7-800# 5-600#

2015

I 162.43 11.0 215.87 276.14

II 158.11 7.0 225.29 279.32

III 144.22 -9.0 214.38 246.04

IV 136-138 -17.3 186-189 220-224

Year 150-151 -2.6 210-211 254-258

2016

I 142-145 -11.7 184-189 226-232

II 145-149 -7.0 187-192 229-237

III 139-144 -1.9 183-189 225-234

IV 140-146 4.4 179-186 217-226

Year 142-146 -4.3 184-188 225-231

2017

I 139-146 -0.7 176-184 220-230

II 139-147 -2.7 177-186 223-234

III 134-145 -1.4 174-184 217-230

IV 136-146 -1.4 170-182 211-225

Year 139-144 -1.7 176-182 220-228


-11.6% -10.9%

-3.8% -1.8%

+1.4% +3.9%

11/17/2015

13

C-P-66

11/06/15

-100

0

100

200

300

400

500

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

$ Per Cow

ESTIMATED AVERAGE COW CALF RETURNS Returns Over Cash Cost (Includes Pasture Rent), Annual

Data Source: USDA & LMIC, Compiled by LMIC


11/6 Projections (vs 9/4) 2015: $357 (vs $467)

2016: $300 (vs $394)


Feeder Cattle

Futures (as of 11/13):

Nov 15: $175.075

Jan 16: $164.550

Mar 16: $160.925

2015-YTD Prices

+4% (vs. 2014)

+78% (vs. 2009-13)

-22% (since Aug)

11/17/2015

14

0

100

200

300

400

500

600

700

800

900

1000

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

$ Per Cow

ESTIMATED AVERAGE COW CALF COSTS Total Cash Cost Plus Pasture Rent, Annual

Data Source: USDA & LMIC, Compiled by LMIC

Livestock Marketing Information Center 11/06/15

11/6 Projections (vs 9/4) 2014: $884 (vs $884)

2015: $892 (vs $894)

G-P-12

10/30/15

140

150

160

170

180

190

200

210

220

230

240

$ Per Ton

ALFALFA HAY – MONTHLY AVERAGE PRICE

Received by Farmers, U.S., Crop Year

Avg. 09/10-13/14 2014/15 2015/16

Data Source: USDA-NASS


100

105

110

115

120

125

130

135

140

145

$ Per Ton

OTHER HAY – MONTHLY AVERAGE PRICE

Received by Farmers, U.S., Crop Year

Avg. 09/10-13/14 2014/15 2015/16

2015 (OCT est)

Prod: 63,214,000 tons (+2.9%)

Acres: 18,337,000 tons (-0.6%)

Yield: 3.45 tons (+3.6%)

2015 (OCT est)

Prod: 79,187,000 tons (+1.1%)

Acres: 38,202,000 tons (-1.2%)

Yield: 2.07 tons (+2.0%)

11/17/2015

15

Data Source: USDA-NASS, Compiled & Analysis by LMIC


Beef Cows in states

with 40% Poor to Very Poor

Last year Cows % of Total

10/12/14 1,351 4.57%

10/19/14 1,351 4.57%

10/26/14 835 2.83%

This Year

10/12/15 7,480 25.78%

10/19/15 7,305 25.18%

10/26/15 8,811 30.37%

% Poor & Very Poor:

CA = 65%

TX = 44%

MT = 40%

MO = 27%

OK = 22%

KS = 19%

WI = 17%

MN = 16%

IA = 15%

U.S.: 27%

5

10

15

20

25

30

35

40

May Jul Sep

Percent

US RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly

Avg. 2009-13 2014 2015

G-NP-30

10/26/15

Added Investment Cost per Cow

Expanding

is still

expensive

48%


Increase in

investment cost

16%

11/17/2015

16


2015-YTD Prices

-1% (vs. 2014)

+57% (vs. 2009-13)

-29% (since Jul)

C-S-34

11/13/15

30

40

50

60

70

80

90

JAN APR JUL OCT

Thou. Head

BEEF COW SLAUGHTER Federally Inspected, Weekly

Avg. 2009-13 2014 2015

Data Source: USDA-AMS & USDA-NASS


2015-YTD Slaughter

-14.3% (vs. 2014)

-23.9% (vs. 2009-13)

Beef Cow Culling Rates

2005 = 7.9%

2006 - 2007 = 9.4%

2008 - 2012 = 11.3%

2013 = 10.5%

2014 = 8.8%

2014-YTD = 7.5%

2015-YTD = 6.3%

11/17/2015

17

Net Present Value of Beef Replacement Females

Base Scenario for Calf/Cull Prices; 525 lb steer WW

485 lb heifer WW

Annual cow costs, $/head

Calves

Calves + Cull Cow

Expected calving opportunities, years 6

Marketable calves (1 - death loss), % 100%

Discount factor (risk rate), % 5.0%

$800

Annual heifer development

costs, $/head …in 2015

Purchase and Financing

Purchase price of replacement female, $/head $2,381

Year of purchase 2015

First year for calf sales 2016

$200

Nominal (undiscounted):

$518.21

5.0%

7

2021

Average annual pre-tax cash flows …………………………..

Internal rate of return (IRR) ……………………………………

Payback period, years …………………………………………

Payback year ……………………………………………………

Preferred (discounted):

$0

$2,381

Net present value (NPV) ……...……………………………………

Max bid price for replacement female to yield risk rate ………..

Using base values; NPV = $0, Max bid price = $2,381 ($2,381 purchase price, 6 calves, 100% marketable, 5% discount rate, $800 cow costs)

1) Marketable calves o Every 1% ∆ in marketable calves worth ~$64 in NPV (or in max bid price)

2) Calving years o Every 1 year ∆ in calving year worth ~$124 in NPV

3) Annual cow costs o Every $1 ∆ in annual cow cost worth ~$5.79 in NPV

4) Targeted rate of return (discount rate) o Every 1% ∆ in targeted rate of return worth ~$80.24 in NPV

5) Calf and cull cow prices o Every 1% ∆ in calf/cull prices worth ~$70.88 in NPV

6) Weaning weights o Every 1% ∆ in weaning weights worth ~$63.26 in NPV

Net Present Value of Beef Replacement Females

11/17/2015

18

• Discouraging VOG vs COG – Reflecting lower deferred feeder cattle prices

• Dunlap, IA 11/16/15 situation: – Buy 600 lb steer on 11/20/15

– Sell 900 lb steer on 4/18/16 {2.00 ADG} • VOG: $42.60/cwt

IF COG = $60/cwt, Expected profit = (+/-) -$35/hd

• BeefBasis.com – Value of gain projections http://www.beefbasis.com/ForecastingTools/ValueofGain/tabid/1132/Default.aspx

Economic Outlook Overview: Backgrounding/Retained Ownership

Beginning

Date

Ending

Date

Beginning

Weight, lbs

Ending

Weight, lbs

Weight Gain,

lbs/head ADG, lbs

Value of Gain,

$/cwt

11/20/15 01/03/16 600 700 100 2.27 $41.06

11/20/15 01/16/16 600 700 100 1.75 $40.57

11/20/15 02/16/16 600 800 200 2.27 $35.45

11/20/15 03/13/16 600 800 200 1.75 $36.09

11/20/15 03/19/16 600 900 300 2.50 $40.73

11/20/15 04/18/16 600 900 300 2.00 $42.60

Note: Projections derived for the Dunlap, IA market using BeefBasis.com

Related information available at BeefBasis.com

11/16/15

Increased Value ($/hd)

Projected VOG 80% of Projected VOG

COG ($/cwt) $42.60 $34.08

$60.00 ($34.80) ($51.84)

$70.00 ($54.80) ($71.84)

$80.00 ($74.80) ($91.84)

$90.00 ($94.80) ($111.84)

$100.00 ($114.80) ($131.84)

Trucking, interest, etc. must be subtracted

to identify returns

http://www.beefbasis.com/ForecastingTools/ValueofGain/tabid/1132/Default.aspx



11/17/2015

19



11/17/2015

20

Economic Outlook Overview:

Feedlots

• 2015 has been rough

• Structural concerns persist:

– Excess capacity

Heifer retention, feeder cattle supplies, plant closures, …

• Supply of heavy cattle burdensome

C-N-32

07/28/15

30

35

40

45

50

55

1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

Mil. Head

JULY 1 FEEDER CATTLE SUPPLIES Residual, Outside Feedlots, U.S.

Data Source: USDA-NASS


38.49

million head

-8.4%

35.25

million head

11/17/2015

21

Q4.2015: 32.8%

Smallest Q4 of data (‘96)

2015-YTD Heifer Slaughter

-12.7% (vs. 2014)

-23.8% (vs. 2009-13)


Cattle on Feed―10/23 report (1,000+ head capacity feedlots)

• Oct .1 On Feed: +2.3%

– Vs. +1.8% pre-report est. (+0.1%, +2.6%) IA: +7.1% vs last year [Lots 1,000+ Head]

IA: +8.5% vs last year [Lots <1,000 Head]

• Sept. Placements: -4.1%

– Vs. -6.1% pre-report est. (-8.8%, -2.1%) IA: -14.1% vs last year; largest (+) of main states [Lots 1,000+ Head]

IA: +36.6% vs last year [Lots <1,000 Head]

• Sept. Marketings: -2.4%

– Vs. -2.3% pre-report est. (-3.0%, -1.0%) IA: -11.4% vs last year (NE +8%, TX -11%, SD/MN 0%) [Lots 1,000+ Head]

IA: -31.1% vs last year [Lots <1,000 Head]

11/17/2015

22

C-S-17

11/13/15

190

210

230

250

270

290

310

330

350

370

JAN APR JUL OCT

Thou. Head

STEER SLAUGHTER Federally Inspected, Weekly



2015-YTD

-1.0% (vs. 2014)

-6.3% (vs. 2009-13)

+5.1% (since Aug)

C-S-18

11/13/15

810

830

850

870

890

910

930

950

JAN APR JUL OCT

Pounds

STEER DRESSED WEIGHT Federally Inspected, Weekly



2015-YTD

+2.4% (vs. 2014)

+4.8% (vs. 2009-13)

Feedlot Closeouts

+ Days on feed

- ADG

+ Feed:Gain

11/17/2015

23

C-P-62

11/09/15

140

160

180

200

220

240

260

280

JAN APR JUL OCT

$ Per Cwt.

BOXED BEEF CUTOUT VALUE Choice 600-900 Lbs., Carcass, Weekly

Avg. 2009-13 2014 2015

Data Source: USDA-AMS


0

2

4

6

8

10

12

14

16

JAN APR JUL OCT

$ Per Cwt.

CHOICE MINUS SELECT BEEF PRICES Carcass Cutout Value 600-900 Lbs., Weekly

Avg. 2009-13 2014 2015

Source: USDA/AMS

11/17/2015

24

Source: USDA/AMS

July 2015

Source: USDA/AMS

11/17/2015

25

Cattle on Feed More than 120 Days, 1000+

head Capacity Feedlots, October 1 Change in Number of Head Percent Difference

2015 vs

Avg 2009-13

2015 vs

2014

2015 vs

Avg 2009-13

2015 vs

2014

U.S. 678,200 381,000 21.3% 10.9%

IA (1,000+) 44,400 14,000 16.3% 4.6%

IA (<1,000) 2,600 64,000 0.8% 25.3%

MN 17,000 18,000 29.3% 31.6%

SD 5,400 44,000 6.1% 88.0%

NE 51,000 60,000 8.7% 10.4%

KS 111,000 25,000 24.4% 4.6%

CO 69,000 40,000 24.6% 12.9%

TX 256,000 105,000 34.6% 11.8%

OK -7,200 6,000 -8.2% 8.0%



11/17/2015

26

Place Closeout Net Fed Feeder Breakeven Breakeven Breakeven

Mo-Yr Mo-Yr Return* FCOG** Price Price FCOG** Fed Price Feeder Price

May-15 Oct-15 -470.52 79.22 128.58 227.51 -6.33 164.77 164.78

Jun-15 Nov-15 -443.65 77.91 130.28 227.84 -2.76 164.41 168.69

Jul-15 Dec-15 -464.25 76.83 130.12 231.10 -7.58 165.83 169.20

Aug-15 Jan-16 -337.12 76.07 131.68 217.41 14.77 157.61 172.46

Sep-15 Feb-16 -287.98 75.73 130.99 209.92 23.37 153.15 171.52

Oct-15 Mar-16 -153.69 75.91 132.81 195.03 47.97 144.63 174.53

Nov-15 Apr-16 4.23 76.14 134.49 176.72 76.90 134.17 177.29

Dec-15 May-16 6.81 76.95 128.62 165.61 78.19 128.10 166.51

Jan-16 Jun-16 -13.00 77.97 126.93 164.57 75.61 127.93 162.84

Feb-16 Jul-16 -49.86 78.34 121.89 160.47 69.28 125.72 153.82

Mar-16 Aug-16 -60.63 78.56 121.35 160.81 67.54 126.01 152.73

Apr-16 Sep-16 -85.72 79.43 121.55 163.86 63.85 128.14 152.43

May-16 Oct-16 -90.90 79.16 121.99 165.52 62.63 128.98 153.40

Jun-16 Nov-16 -48.76 78.41 123.53 163.12 69.54 127.28 156.62

Jul-16 Dec-16 -65.22 77.57 123.37 165.65 65.71 128.38 156.95

2014 197.24 85.05 154.15 178.52 120.91 138.97 204.82

Jan-Oct 2015 -167.45 79.40 152.31 228.11 48.96 165.19 205.78

Nov-Dec 2015 -453.95 77.37 130.20 229.47 -5.17 165.12 168.94

2016 -98.49 77.52 126.60 175.72 59.61 134.18 162.59

Jan-Mar 2017 -82.41 78.26 123.06 166.90 63.28 129.40 155.91

Historical and Projected Iowa Finishing Yearling Steer Returns (as of 11/13/15) (http://www2.econ.iastate.edu/estimated-returns/)

* Net return is $/head and all other values are $/carcass cwt. ** FCOG = Feeding cost of gain.






11/17/2015

27

Rolling 12-month average Net Return:

Dec 2014: $197

Jan 2015: $186

Aug 2015: -$3

Mar 2016 (projected): -$265

Previous worst (-$148) was Jun 2013

Cattle-beef wrap-Up

• Broad 2015/16 Profitability Situation & Outlook

Industry at tipping point on role of tight supplies

– Cow-calf: Very good (but not 2014)

– Backgrounding: Discouraging, with lots of $ tied up

– Feedlot: Struggle, with lots of $ tied up

11/17/2015

28

Choice

All

Fresh Pork Broiler Turkey

Sep-15/Aug-15 -1.3% -0.1% 2.2% -0.5% -0.5%

Sep-15/Sep-14 -0.4% 2.9% -7.0% -1.1% -2.9%

Data Source: USDA/ERS, BLS

Data Source: USDA/ERS, BLS

11/17/2015

29

Data Source: USDA/ERS & USDL/BLS, Compiled & Analysis by Lee Schulz

Q3:2015 = +3.7% Yr/Yr increases in last 12 quarters (since Q4.2012)

Q3:2015 Per Capita Consumption = +9.6% (yr/yr)

Real Pork Prices = -8.2%

IF Real Pork Prices -11.5% = 0.0% Demand Change

Data Source: USDA/ERS & USDL/BLS, Compiled & Analysis by Lee Schulz

Q3:2015 = +8.0% Yr/Yr increases in last 21 quarters (since Q3.2010)

2015: Per Capita Consumption = +2.6% (yr/yr)

Real All Fresh Prices = +6.0%

IF Real All Fresh Prices -1.9% = 0.0% Demand Change

11/17/2015

30

Global demand growth critical for

U.S. producers

Data Source: USMEF

o 2014: Exported 1.197 bil lbs

of beef & beef variety meat,

$7.135 bil

o 2014: Equated to $300.36/hd

of each animal processed

o 2014: 14.0% of U.S. beef &

beef variety meat production

exported

o 2014: Exported 4.73 bil lbs of

pork & pork variety meat,

$6.674 bil

o 2014: Equated to $62.45/hd

of each animal processed

o 2014: 26.5% of U.S. pork and

variety meat production

exported

Data Source: Policy Analysis Computing & Information Facility In Commerce

Real is the big mover among competitors

Peso much weaker than year ago

Won and Yen have improved some but still

weaker than year ago

Strong Renmimbi but not as strong as year ago

P

O

R

K

11/17/2015

31

Data Source: InterPig

Sep-15/Aug-15 Sep-15/Sep-14 Year-to-Date

Country Percent Percent 1,000 lbs Percent

Japan 15.1% 25.3% -35,994 -3.8%

Mexico -3.5% 8.6% 122,376 12.0%

Canada 17.8% -1.0% -15,225 -3.7%

South Korea 21.7% 0.1% 106,841 39.2%

China (Mainland) 5.5% 178.8% -94,049 -33.0%

Hong Kong 51.1% -33.3% -18,063 -21.0%

Australia 3.0% 127.1% 7,968 6.2%

China (Taiwan) -41.6% 226.4% 7,651 35.2%

Philippines 34.6% 28.9% -29,890 -36.6%

Honduras 0.2% 48.4% 9,395 25.5%

Colombia -18.2% -19.3% -18,246 -17.8%

Dominican Republic 31.2% 59.8% 12,648 34.3%

Other Countries 25.2% 25.4% -100,429 -35.6%

Total 7.9% 17.8% -45,020 -1.2%

U.S. Pork Exports, Jan-Sep 2015

Source: USDA/ERS

WASDE U.S.: 2014: 4,857 mil lbs 2015: 4,996 (+2.9% vs 2014) 2016: 5,225 (+4.6% vs 2015)

11/17/2015

32

Real is the big mover among competitors

Peso much weaker than year ago

Won and Yen have improved some but still weaker

than year ago

CAN weaker; different customer/competitor impact

B

E

E

F

U.S. Beef Exports, Jan-Sep 2015

Source: USDA/ERS

WASDE U.S.: 2014: 2,573 mil lbs 2015: 2,223 (-13.6%) 2016: 2,425 (+9.1%)



Mexico 11.4% -24.9% -76,674 -22.9% Japan -4.6% -36.0% -77,504 -15.2% Canada -17.1% -16.1% -36,879 -13.1% South Korea -23.5% -10.0% 16,543 7.6% Hong Kong 53.1% -37.9% -88,304 -30.6% China (Taiwan) -43.7% -16.3% 4,391 5.6% Vietnam -12.4% 48.6% 2,448 43.5% Netherlands -14.0% -19.9% 2,501 9.1% Philippines -33.5% -30.5% 2,994 13.9% United Arab Emirates -33.3% 1.4% 1,322 13.1% Dominican Republic -11.8% -12.4% 2,430 17.9% Chile -5.9% -1.0% -2,814 -13.2% Italy -38.9% -35.1% -41 -0.3%

Other Countries -0.4% 17.1% -6,587 -6.3%

Total -6.1% -24.9% -256,173 -13.3%

11/17/2015

33

U.S. Beef Imports, Jan-Sep 2015

Source: USDA/ERS

WASDE U.S.: 2014: 2,947 mil lbs 2015: 3,432 (+16.5%) 2016: 3,045 (-11.3%)



Australia -2.5% 15.3% 335,892 47.0% Canada -6.9% 12.9% 31,168 7.0% New Zealand -27.9% 36.8% 89,262 18.0% Brazil 0.5% 83.1% 65,111 108.7% Uruguay -28.7% 16.1% 39,433 57.0% Mexico -9.1% 3.9% 71,190 30.8% Nicaragua 54.5% -61.3% -6,953 -8.1% Argentina 4.7% -73.9% -85 -6.7% Costa Rica 25.8% -13.0% 2,460 12.9% Other Countries 43.1% 1.9% 859 11.2% Total -8.0% 12.4% 628,337 29.5%

Thank You!

More information available at:

Iowa Farm Outlook & News www.econ.iastate.edu/ifo/

Ag Decision Maker www.extension.iastate.edu/agdm/

ISU Estimated Livestock Returns www.econ.iastate.edu/estimated-returns/

ISU Livestock Crush Margins www.econ.iastate.edu/margins/

http://www.iowabeefcenter.org/ http://www.ipic.iastate.edu/

http://www.econ.iastate.edu/ifo/

http://www.extension.iastate.edu/agdm/

http://www.extension.iastate.edu/agdm/

http://www.econ.iastate.edu/estimated-returns/



http://www.econ.iastate.edu/margins/

http://www.iowabeefcenter.org/

http://www.iowabeefcenter.org/

http://www.ipic.iastate.edu/

http://www.ipic.iastate.edu/

Swine & Beef Outlook & Management Considerations · 2015. 11. 20. · 11/17/2015 1 Lee Schulz,...

Documents

Transcript of Swine & Beef Outlook & Management Considerations · 2015. 11. 20. · 11/17/2015 1 Lee Schulz,...