2013 Beef Cattle Market Outlook

Presented By: DeDe Jones

Extension Program Specialist III Risk Management

Overview
Drought Demand Supplies Changing Markets

Prices

U S ANNUAL CORN PRODUCTION

Bil. Bushels 16 14 12 10 8 6 4 2
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Crop Year

COMMERCIAL PORK PRODUCTION

Bil. Pounds 6.6 6.4 6.2 6.0 5.8 5.6 5.4 5.2 5.0
JAN-MAR APR-JUN JUL-SEP OCT-DEC

Quarterly
Avg. 2007/11 2012

2013

2014

RTC BROILER PRODUCTION

Bil. Pounds 9.6

Quarterly
Avg. 2007/11

9.2 2012 8.8 2013 8.4 2014 8.0

JAN-MAR APR-JUN JUL-SEP OCT-DEC

SOUTHERN PLAINS CORN PRICES

$ Per Bu. 9.00 8.00 7.00 6.00 5.00 4.00 3.00
AP R JA N JU O C T L

Weekly
Avg. 200610 2011

2012

MED. & LRG. #1 STEER CALF PRICES

$ Per Cwt. 200 190 180 170 160 150 140 130 120 110 100
JAN APR JUL OCT

500-600 Pounds, Southern Plains, Weekly

Avg. 200610 2011

2012

Drought and Feed

Adjustment
Adjust all users including ethanol High prices ration use

Next Year
More acres planted? Given lower corn futures prices, good question Yields?

Beef and Cattle Demand

RETAIL BEEF PRICE

Cents Per Pound 500 Avg. 200610 2011

All Fresh, Monthly

475

450

425 2012

400

375
JAN MAR MAY JUL SEP NOV

RETAIL ALL FRESH BEEF DEMAND INDEX

Index Value 120 100 80 60 40 20 0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 100 99 91 89 92 86 84 75 73 75 78 85 82 82 83 87 83 83 78 78 74 75 76

Third Quarter, Using CPI 1990=100

BOXED BEEF CUTOUT VALUE

$ Per Cwt. 205 195 185 175 165 155 2012 145 135
JAN APR JUL OCT

Choice 600-900 Lbs. Carcass, Weekly

Avg. 200610 2011

U S BEEF AND VEAL EXPORTS

Carcass Weight, Monthly
Mil. Pounds

280 260 240 220 200 180 160 140 120 100
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Avg. 2006-10

2011

2012

SLAUGHTER STEER PRICES

$ Per Cwt. 135 130 125 120 115 110 105 100 95 90 85 80
JAN APR JUL OCT

Southern Plains, Weekly

Avg. 200610 2011

2012

CHOICE MINUS SELECT BEEF PRICES

$ Per Cwt. 25 Avg. 200610 2011 10 2012

Carcass Cutout Value 600-900 Lbs., Weekly

20

15

0
JAN APR JUL OCT

Demand Factors
Beef Demand Has Been Growing
Record high retail prices

But, Near Term Beef Demand

High beef prices

Live Animal Demand

Cattle feeding losses Packing losses Drought

Cattle Supplies

JANUARY 1 TOTAL CATTLE INVENTORY

U.S., Annual
Mil. Head 140 130 120 110 100 90 80 70
1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012
2012 = 90.8 Million Head -2.1 Percent

U S CATTLE IMPORTS FROM MEXICO

Monthly
Thou. Head

205 185 165 145 125 105 85 65 45 25

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Avg. 200610 2011

2012

COMMERCIAL BEEF PRODUCTION

Quarterly
Bil. Pounds 7.0 6.8 6.6 6.4 6.2 6.0 5.8 5.6
JAN-MAR APR-JUN JUL-SEP OCT-DEC

Avg. 2007/11 2012

2013

2014

Supply Factors
Continued Tight Supplies
Calves, feeder cattle, cows COF below year ago

Continue for Several Years

Drought forces more liquidation Declining per capita supplies Beef prices relative to pork, chicken

Prices for 2011-2014

11-1300 2011 2012 I II III 114.74 125.29 120.91 119.69 7-800 131.98 154.03 152.23 136.70 5-600 140.00 176.70 178.85 154.26

IV
2013 I II III

125.54
128-131 128-132 126-131

141.81
140-143 143-148 145-151

158.76
151-155 153-159 155-163

IV
2014 I II III IV

128-134
132-138 133-141 131-140 133-142

146-153
151-159 154-164 155-166 153-165

153-160
165-174 168-180 164-177 161-176
Texas Combined Auction for 5-600 and 7-800

Cattle Insurance Programs

PRF Rainfall insurance, based on a coverage level and productivity factor (% of county base value). Have to insure a minimum of 2 two month intervals and a maximum of 6 two month intervals. Deadline Nov 15th NAP - Non-insured Crop Disaster Assistance Program (NAP) provides financial help to a farmer who has noninsurable crops when a low yield, loss of acreage or prevented planting occurs because of a natural disaster. Deadline Sept 31st. LRP Livestock Rick Protection allows you to choose a coverage price and ending period that is at least 13 weeks in the future. If market prices fall below coverage prices, producer receives an indemnity. Continuous sign-up.

2012 Farm Bill Extension

Authorized limited livestock disaster assistance for fiscal years 2012 and 2013:
$80 million for indeminity payments $400 million for the forage disaster program $50 million for emergency assistance Extends CRP (EQIP was extended in another bill). Continues DP and current crop ins programs.

NRCS Programs
EQIP Cost share program that helps pay for
Water wells Solar Pumps Troughs/Pipelines Crossfencing Brush management (spraying sand cedars and mesquite) Also have a prescribed grazing program that pays $ per acre to lay off land. Ex Prairie Chicken

Deadline is February 15th!!!

Cattle Marketing
Put buyer has the right (but not obligation) to sell a specified quantity of cattle at a specified price (strike price) on or before a certain time period. Puts increase in value when prices are going down. May want to consider in next 45 days or so. Call buyer has the right to buy cattle at a specified quantity on or before a specific date. Calls increase in value when prices go up.