1. 1 K-State Research & Extension Cattle Outlook James Mintert, Ph.D. Professor & Extension State Leader Department of Agricultural Economics Kansas State University www.agmanager.info/livestock/marketing jmintert@ksu.edu

2. 2 K-State Research & Extension A Shrinking Industry Responding to a Lack of Profitability Current inventory is about 26% smaller than in 1975

3. 3 K-State Research & Extension Rising Productivity Is Partially Responsible

4. 4 K-State Research & Extension But Weaker Demand Was Key Beef Demand 1980-1998

5. 5 K-State Research & Extension Measuring Changes In Beef Demand 1998-2004 Demand in ’04 Was Up About 25% from 1998 Level

6. 6 K-State Research & Extension Measuring Changes In Beef Demand 1998-2005 Beef Demand During All of ’05 Decreased About 4% But Demand in ’05 Was Still Up About 21% from 1998 Level

7. 7 K-State Research & Extension 1 st Quarter Demand Index Fell About 5% Below A Year Ago

8. 8 K-State Research & Extension 2 nd Quarter Demand Index Fell About 10% Below A Year Ago

9. 9 K-State Research & Extension Where Are We Headed? Beef Demand Short run gains from low-carb diets behind usShort run gains from low-carb diets behind us Near term, look for weaker domestic demandNear term, look for weaker domestic demand To stop the decline industry needs to innovateTo stop the decline industry needs to innovate Opportunities abound for innovatorsOpportunities abound for innovators

10. 10 K-State Research & Extension International Trade Outlook

11. 11 K-State Research & Extension U.S. Has Been A Net Exporter Since 1981

12. 12 K-State Research & Extension Top 5 Importers Accounted for 91% of U.S. Exports U.S. needs to recapture these markets to regain $’s and volume

13. 13 K-State Research & Extension Cattle Imports from Canada Are Increasing But Remain Well Below 2002’s Record Level Jan-June 2006 imports 28% below 2002’s and 15% below 2001’s

14. 14 K-State Research & Extension Beef Imports From Canada Decline

15. 15 K-State Research & Extension Result: U.S. Imports Falling Below 2005’s

16. 16 K-State Research & Extension Where Are We Headed? Trade U.S. strength is in high quality beef productsU.S. strength is in high quality beef products Regaining export markets could take yearsRegaining export markets could take years Consumer incomes in importing countries are key to long-run growth in exportsConsumer incomes in importing countries are key to long-run growth in exports Other countries may have comparative advantage in cow-calf productionOther countries may have comparative advantage in cow-calf production

17. 17 K-State Research & Extension Long, Slow Road to Export Recovery

18. 18 K-State Research & Extension Export Recovery Means Net Beef Imports in 2007 Could Be 1/2 2004’s

19. 19 K-State Research & Extension Supply Side in the U.S.

20. 20 K-State Research & Extension Mid-Year Inventory Was Above 2005’s, And…

21. 21 K-State Research & Extension Strong Profitability Encouraging Expansion, But…

22. 22 K-State Research & Extension Livestock Marketing Information Center Data Source: USDA/NASS Poor Pasture Conditions Could Be Holding Back Expansion

23. 23 K-State Research & Extension U.S. Beef Cow Slaughter Up 13% vs. 2005

24. 24 K-State Research & Extension But Female Slaughter Still Low

25. 25 K-State Research & Extension Through July, Still Looks Like Modest Expansion Underway

26. 26 K-State Research & Extension Slaughter Is Expected To Rise

27. 27 K-State Research & Extension Large On Feed Inventory

28. 28 K-State Research & Extension Drought Pushing Light Weight Placements Up

29. 29 K-State Research & Extension Weights Will Remain Heavy

30. 30 K-State Research & Extension And Beef Production Will Rise Cyclically

31. 31 K-State Research & Extension Pork Production Expected To Rise Next Several Years

32. 32 K-State Research & Extension But Poultry Production Increases Could Moderate

33. 33 K-State Research & Extension Summer Lows Are Behind Us

34. 34 K-State Research & Extension Futures Are Pretty Optimistic For Fall

35. 35 K-State Research & Extension Prices Could Wind Up Record High Again in ‘06 Prices Could Wind Up Record High Again in ‘06

36. 36 K-State Research & Extension Despite Feedlot Losses, Feeders Remain Optimistic

37. 37 K-State Research & Extension Where Are Corn Prices Headed? Higher Corn Prices Spell Trouble for Livestock Producers Ethanol?

38. 38 K-State Research & Extension Cattle Feeders Have Pushed Prices Back Up

39. 39 K-State Research & Extension Feeders In ‘05 Averaged A Record High of $112/cwt. Prices in ’06 Could Wind Up Near ’05’s Average

40. 40 K-State Research & Extension Counter-Seasonal Price Path in Spring ‘06

41. 41 K-State Research & Extension Record High Calf Prices Again In ‘05 Cycle Peak in ’05 & ‘06

42. 42 K-State Research & Extension What About 2007? Slaughter cattle prices in high $80’s during Q1 & Q2 ‘07 Feeder prices averaging about $110 - $112/cwt

43. www.agmanager.info/livestock/marketing