Beef Cattle Situation and Outlook
1.39 million tons
Major Items to Watch this Year Price of corn Total meat production Economy Crude oil prices U.S. currency value
Livestock Marketing Information Center
2008 Outlook
Recent and Projected Beef Supply
Total Meat Supplies
What is the Market Offering Today- Futures Based Price Projections
What You Can Sell for Today-Futures Based Price Projections
Inputs
Fertilizer Prices Nitrogen prices have increased 91% since 2002
Fuel Prices Diesel prices are up 300% since 2002
Impact of Fuel & Fertilizer Prices on Cost of Production
Projected Profits for 2008 ItemSouth Georgia North Georgia Expected Returns Over Variable Costs ($/cow) ($3.13)($30.58) Chance for positive returns48%30% Returns to Land, Labor, Capital and Management ($/cow) $56.87($2.80) Breakeven Price ($/cwt.)$100.32$101.73
BEEF COWS THAT HAVE CALVED JANUARY 1, 2008 (1000 Head) Alaska Hawaii US Total Livestock Marketing Information Center Data Source: USDA/NASS
CHANGE IN BEEF COW NUMBERS JANUARY 1, 2007 TO JANUARY 1, 2008 (1000 Head) Alaska Hawaii US Total Livestock Marketing Information Center Data Source: USDA/NASS
Livestock Marketing Information Center Data Source: USDA/NASS
Livestock Marketing Information Center Data Source: USDA/NASS -1.0%
DEMAND FOR FEEDERS
Price Differences between classes
Energy Bill 36 billion gallons of ethanol used by blenders by 15 billion gallons required to come from corn by 15 billion gallons ethanol ≈5.4 billion bushels of corn. 2007 U.S. corn crop = billion bushels. At 2007 yield of 151 bushels, need million acres just for ethanol.
Longer Term Trends Continued pressure from input prices. Continued consolidation in the beef industry. Continuing favorable beef demand. Expanding growth in grass-fed and natural beef segments. Animal traceability/mandatory animal ID.
Summary & Implications Supply The herd has expanded some but the drought has halted growth for this year. Feeder cattle supplies are tight, … and will be for a while. Demand Demand for beef remains good but,…economy is a big question!! Higher corn prices will reduce demand for feeders Exports will help. Profits Most cow-calf producers will be hard pressed to cover out of pocket expenses for next 2-4 years. Higher feed, fuel and fertilizer costs will continue to squeeze profits. We are probably going to have to change our way of doing business. High-quality, source-verified, preconditioned cattle will always top the market.