1. 1 Livestock Outlook Gary Brester MSU Department of Agricultural Economics and Economics Agriculture Outlook 2008: Farm Bill, Wind Energy & Climate Change November 14, 2008 Bozeman, MT

2. 2 OUTLINE 1.Cattle Production/Prices 2. Trade Situation 3. Domestic Demand 4.Cattle Outlook

3. 3 OUTLINE 1.Cattle Production/Prices 2. Trade Situation 3. Domestic Demand 4.Cattle Outlook

4. 4 “US Beef Production” vs. Cattle Inventory (January 1) Source: Livestock Marketing Information Center & MSU Agricultural Marketing Policy Center

5. 5 Productivity of U.S. Beef Cow Breeding Herd Source: Livestock Marketing Information Center & MSU Agricultural Marketing Policy Center

6. 6 Nominal Fed And Feeder Cattle Prices Source: Livestock Marketing Information Center & MSU Agricultural Marketing Policy Center

7. 7 Real Fed And Feeder Cattle Prices Source: Livestock Marketing Information Center & Economic Report of the President (2000=100)

8. 8 Productivity of U.S. Beef Cow Breeding Herd Source: Livestock Marketing Information Center & MSU Agricultural Marketing Policy Center

9. 9 OUTLINE 1.Cattle Production/Prices 2. Trade Situation 3. Domestic Demand 4.Cattle Outlook

10. 10 U.S. Beef, Veal and Live Animal Imports Source: Livestock Marketing Information Center & MSU Agricultural Marketing Policy Center

11. 11 Beef and Beef From Live Cattle Imports as a Percentage of U.S. Supply Percent Source: Livestock Marketing Information Center & MSU Agricultural Marketing Policy Center *CUSTA **NAFTA

12. 12 U.S. Beef, Veal and Live Animal Exports Source: Livestock Marketing Information Center & MSU Agricultural Marketing Policy Center *CUSTA **NAFTA

13. 13 U.S. Beef/Live Animal Exports As A Percentage of U.S. Beef Supply Source: Livestock Marketing Information Center & MSU Agricultural Marketing Policy Center *CUSTA **NAFTA

14. 14 Value of U.S. Beef, Veal and Live Animal, By-Product Net Imports/Exports Source: Livestock Marketing Information Center & MSU Agricultural Marketing Policy Center *CUSTA **NAFTA

15. 15 OUTLINE 1.Cattle Production/Prices 2. Trade Situation 3. Domestic Demand 4.Cattle Outlook

16. 16 Demand for Fed Cattle U.S. Fed Steer Price vs. U.S. Beef Supply Price ($/cwt) Beef Supply (billion lbs) 24252728262931 60 70 75 80 65 90 91 92 93 94 95 96 97 98 99 01 00 0202 30 ? 0303 04 05 85 90 95 06 07 08 09

17. 17 Demand for Fed Cattle U.S. Fed Steer Price vs. U.S. Beef Supply Price ($/cwt) Beef Supply (billion lbs) 24252728262931 60 70 75 80 65 90 91 92 93 94 95 96 97 98 99 01 00 0202 30 ? 0303 04 05 85 90 95 06 07 08 09 ?

18. 18 U.S. Demand for Beef Source: James Mintert, Kansas State University Choice Retail Beef Demand Index (1980=100) Index Value

19. 19 U.S. Demand for Beef Source: James Mintert, Kansas State University Annual Percentage Change in Beef Demand Beef Demand Change (%)

20. 20 OUTLINE 1.Cattle Production/Prices 2. Trade Situation 3. Domestic Demand 4.Cattle Outlook

21. 21 Cattle And Corn Prices Sources: LMIC and NASS

22. 22 Impact Of Corn Prices On Cattle Prices 1. Price correlation between a.Corn and fed steers is 0.30 2. A 10% decrease in corn price a.Decrease fed cattle price by 0.6%  Increased fed cattle weights b.Increases feeder cattle prices by 2%

23. 23 Impact Of Fed Cattle Prices On Feeder Cattle Prices 1.The major factor in feeder cattle prices is fed cattle price a. Correlation of 0.83 b.Fed cattle price declines by 1%, feeder cattle decline by 1.5% c.A $10/cwt decline in fed cattle reduces feeder cattle by about $15/cwt

24. 24 2009 Cattle Prices 1.U.S. beef production is forecast to be level in 2008/2009 a. Cattle numbers remain low 2.Economic conditions important 3. Domestic demand likely to decline 4. International markets? 5. April 2010 fed cattle trading at $0.91/lb 6.September 09 futures $1.02/lb a.Suggests $1.06/lb for MT calves

25. 25 QUESTIONS? Picture Courtesy of Clint Peck