Livestock Marketing

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ECON 337 Agricultural Marketing

Chad Hart Assistant Professor chart_at_iastate.edu 51
5-294-9911
Lee Schulz Assistant Professor lschulz_at_iastate.edu
515-294-3356
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Todays Topic
Livestock Marketing Introduction
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Livestock and Meat industry

• Per capita consumption
• Demand measures
• Trends
• Industry segments and structure
• Think of implication for supply and demand??????

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Livestock Poultry Markets 2012

• Billion Per Cap Price Exp Imp
• lbs1 lbs2 /cwt 3 3
• Broilers 37.038 80.4 86.98 19.7 0.3
• Beef 25.912 57.3 122.86 9.5 8.6
• Pork 23.250 45.7 83.69 23.2 3.4
• Turkeys 5.967 16.0 106.35 13.4 0.4
• Lamb 0.156 0.86 276.12 6.8 98.4

1/ Billion pounds of US production 2/ Pounds
consumed per person per year 3/ As a percent of
production
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Livestock Marketing Information Center Data
Source USDA-NASS, Compiled Analysis by LMIC
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Livestock Marketing Information Center Data
Source Bureau of Economic Analysis USDA-ERS,
Compiled Analysis by LMIC
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Measuring Consumption

• Balance sheet approach
• Beginning inventories
• Production
• Imports
• - Exports
• - Ending inventory
• Disappearance
• Per Capita consumption Disappearance
  Population
• A measure of supply rather than demand

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Livestock Marketing Information Center Data
Source Bureau of Economic Analysis USDA-ERS,
Compiled Analysis by LMIC
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Year-Over-Year increases in 9 of last 10 quarters
(since Q3 of 2010) Q42012 3.4 / 2012
3.5
Actual Quantity Price Changes 1990 67.8 lbs
(per capita consumption) 2.00 (real All fresh
price) 2012 57.3 lbs (per capita consumption)
2.04 (real All fresh price) 2012 Per Capita
Consumption -0.002 (Year-over-Year) Real
All Fresh Prices 3.5 IF Real All
Fresh Prices 0 0 Demand Change
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Year-Over-Year increases in 6 of last 9 quarters
(since Q4 of 2010) Q42012 2.59 / 2012
-0.58
Actual Quantity Price Changes 1990 49.7 lbs
(per capita consumption) 1.72 (real
price) 2012 45.7 lbs (per capita consumption)
1.51 (real price) 2012 Per Capita Consumption
0.42 (Year-over-Year) Real Prices
-1.08 IF Real Prices -0.50 0
Demand Change
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Livestock Marketing Information Center Data
Source USDA/NASS
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One time capacity
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United States
  Feedlots Less than 1,000 Head Capacity Feedlots Less than 1,000 Head Capacity Feedlots Less than 1,000 Head Capacity Feedlots Less than 1,000 Head Capacity Feedlots Over 1,000 Head Capacity Feedlots Over 1,000 Head Capacity Feedlots Over 1,000 Head Capacity Feedlots Over 1,000 Head Capacity
  Number of Operations Marketings (thousand head) Annual Change in Marketings of Total Marketings Number of Operations Marketings (thousand head) Annual Change in Marketings of Total Marketings
2006 86,000 3,640   13.94 2,165 22,480   86.06
2007 85,000 3,700 1.65 14.14 2,160 22,460 -0.09 85.86
2008 80,000 4,050 9.46 15.31 2,170 22,400 -0.27 84.69
2009 80,000 3,910 -3.46 15.27 2,170 21,690 -3.17 84.73
2010 75,000 4,030 3.07 15.43 2,140 22,080 1.80 84.57
2011 75,000 3,170 -21.34 12.31 2,120 22,577 2.25 87.69
2012 73,000 2,854 -9.97 11.44 2,100 22,095 -2.13 88.56
Iowa
  Feedlots Less than 1,000 Head Capacity Feedlots Less than 1,000 Head Capacity Feedlots Less than 1,000 Head Capacity Feedlots Over 1,000 Head Capacity Feedlots Over 1,000 Head Capacity Feedlots Over 1,000 Head Capacity
  Marketings (thousand head) Annual Change in Marketings of Total Marketings Marketings (thousand head) Annual Change in Marketings of Total Marketings
2006 915   52.50 828   47.50
2007 1,025 12.02 55.11 835 0.85 44.89
2008 1,050 2.44 54.83 865 3.59 45.17
2009 1,013 -3.52 53.40 884 2.20 46.60
2010 1,047 3.36 51.75 976 10.41 48.25
2011 1,050 0.29 50.90 1,013 3.79 49.10
2012 952 -9.33 49.58 968 -4.44 50.42
Source USDA-NASS, Cattle on Feed
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Estimated Beef Packer Capacity
Rank Company Head/Day Share
1 Cargill 29,000 21.2
2 Tyson Foods 28,700 21.0
3 JBS Swift 28,600 20.9
4 National Beef Packing 14,000 10.2
5 American Foods Group 7,000 4.7
6 Greater Omaha Packing 2,900 2.0
7 Nebraska Beef 2,600 1.9
8-13 10,100 7.4
Smaller 14,605 10.7
Total 136,855
Source CME DLR
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US Hog Operations and Inventory by Size Based on
Ownership of Hogs, 2007
Inventory Operations Inventory Hogs/Operation
lt500 48,760 2,727,080 56
500-999 2,840 2,181,664 768
1000-1999 1,860 3,272,496 1,759
2000-4999 1,600 6,135,930 3,835
5000-9999 670 5,454,160 8,141
10000-19999 340 5,454,160 16,042
20000-49999 150 6,135,930 40,906
50000 120 36,815,580 306,797
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Commercial Hog Slaughter Companies
Company 2002 2003 2004 2005 2006 2007 2008
Smithfield 19.9 22.5 26.1 25.1 26.5 28.4 28.3
Tyson 18.0 18.0 18.5 17.9 17.4 17.6 17.6
JBS USA 10.7 11.5 10.8 10.8 10.9 11.1 10.8
Cargill 8.5 9.2 8.9 9.0 8.7 8.5 8.5
Hormel 7.0 6.9 7.0 7.0 8.4 8.7 8.2
TOP 5 64.1 68.1 71.3 69.8 71.9 74.3 73.4
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Percent of U.S. Hogs Sold Through Various Pricing
Arrangements, 2002-2012
Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Swine or pork market formula 44.5 41.4 41.4 39.9 41.8 38.3 37.1 41.2 38.7 38.4 40.9
Other market formula 11.8 5.7 7.2 10.3 8.8 8.5 11.0 7.9 10.7 9.8 7.7
Other purchase arrangement 8.6 19.2 20.6 15.4 16.6 15.2 13.4 11.6 13.1 15.2 15.4
Packer-sold 2.1 2.2 2.1 2.4 2.6 6.7 6.1 5.6 5.6 4.7 4.3
Packer-owned 16.4 18.1 17.1 21.4 20 22.7 23.1 25.7 26.7 27.7 28.0
Negotiated - spot 16.7 13.5 11.6 10.6 10.2 8.6 9.2 8.1 5.2 4.2 3.6
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