Cattle Outlook

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Cattle Outlook

• James Mintert, Ph.D.
• Professor Extension State Leader
• Department of Agricultural Economics
• Kansas State University
• www.agmanager.info/livestock/marketing
• jmintert_at_ksu.edu

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A Shrinking IndustryResponding to a Lack of
Profitability
Current inventory is about 26 smaller than in
1975
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Rising Productivity Is Partially Responsible
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But Weaker Demand Was Key Beef Demand 1980-1998
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Measuring Changes In Beef Demand1998-2004
Demand in 04 Was Up About 25 from 1998 Level
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Measuring Changes In Beef Demand1998-2005
Beef Demand During All of 05 Decreased About
4 But Demand in 05 Was Still Up About 21 from
1998 Level
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1st Quarter Demand Index Fell About 5 Below A
Year Ago
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2nd Quarter Demand Index Fell About 10 Below A
Year Ago
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Where Are We Headed?

• Beef Demand
• Short run gains from low-carb diets behind us
• Near term, look for weaker domestic demand
• To stop the decline industry needs to innovate
• Opportunities abound for innovators

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International Trade Outlook
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U.S. Has Been A Net Exporter Since 1981
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Top 5 Importers Accounted for 91 of U.S. Exports
U.S. needs to recapture these markets to regain
s and volume
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Cattle Imports from Canada Are Increasing But
Remain Well Below 2002s Record Level
Jan-June 2006 imports 28 below 2002s and 15
below 2001s
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Beef Imports From Canada Decline
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Result U.S. Imports Falling Below 2005s
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Where Are We Headed?

• Trade
• U.S. strength is in high quality beef products
• Regaining export markets could take years
• Consumer incomes in importing countries are key
  to long-run growth in exports
• Other countries may have comparative advantage in
  cow-calf production

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Long, Slow Road to Export Recovery
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Export Recovery Means Net Beef Imports in 2007
Could Be 1/2 2004s
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Supply Side in the U.S.
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Mid-Year Inventory Was Above 2005s, And
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Strong Profitability Encouraging Expansion, But
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Poor Pasture Conditions Could Be Holding Back
Expansion
Livestock Marketing Information Center Data
Source USDA/NASS
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U.S. Beef Cow Slaughter Up 13 vs. 2005
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But Female Slaughter Still Low
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Through July, Still Looks Like Modest Expansion
Underway
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Slaughter Is Expected To Rise
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Large On Feed Inventory
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Drought Pushing Light Weight Placements Up
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Weights Will Remain Heavy
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And Beef Production Will Rise Cyclically
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Pork Production Expected To Rise Next Several
Years
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But Poultry Production Increases Could Moderate
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Summer Lows Are Behind Us
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Futures Are Pretty Optimistic For Fall
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Prices Could Wind Up Record High Again in 06
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Despite Feedlot Losses, Feeders Remain Optimistic
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Where Are Corn Prices Headed?Higher Corn Prices
Spell Trouble for Livestock Producers
Ethanol?
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Cattle Feeders Have Pushed Prices Back Up
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Feeders In 05 Averaged A Record High of
112/cwt.Prices in 06 Could Wind Up Near 05s
Average
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Counter-Seasonal Price Path in Spring 06
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Record High Calf Prices Again In 05Cycle Peak
in 05 06
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What About 2007?

• Slaughter cattle prices in high 80s during Q1
  Q2 07
• Feeder prices averaging about 110 - 112/cwt

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www.agmanager.info/livestock/marketing
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