Beef Cattle Situation and Outlook. 1.39 million tons.

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Presentation transcript:

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.