1. Beef Cattle Market Update
Kenny Burdine
UK Agricultural Economics
Economics

2. Outline for Discussion
Overall market factors
Calf expectations
Heavy feeder expectations
Fed cattle expectations
A bit on post-weaning programs

3. Where we’ve been…
Weather challenges, competition for pasture acres, cow herd gets younger
Cooperative weather, record cattle prices, expansion across all meats
Expanding cattle numbers, volatile export levels, growing pork and poultry supplies, rising slaughter weights
Economics

4. Nearby CME© Feeder Futures (Jan 2008 - August 2017)

5. Data Source: USDA-NASS
Economics
Data Source: USDA-NASS
Livestock Marketing Information Center
Economics

6. Jan 2017 Cattle Inventory
Economics

7. July 2017 Cattle Inventory
Economics

8. Beef Heifers as % of Cow Inventory (January: 1973 to 2017)

9. Beef Heifers as % of Cow Inventory (July: 1973 to 2017)

10. BEEF COWS THAT CALVED JANUARY 1, 2017 (1000 Head)DC 1 3 5 7 8 11 14 43 74
110
120
170
184
185
207
210
220
225
288
290
338
370
387
448
465
476
497
500
546
643
655
693
714
805
908
909
914
954
965
1023
1486
1570
1664
1920
2052
2095
4460
0 to 170
170 to 448
448 to 914
914 to 4461
TX still down 465K cows from 2011
Economics
Livestock Marketing Information Center
Data Source: USDA-NASS

11. Beef Cows in Key States (2006 vs. 2017, 1,000 cows)
% Change
Texas
5,350
4,460
-17%
Oklahoma
2,045
2,095
+2%
Florida
916
908
-1%
Georgia
592
497
-16%
Tennessee
1,080
909
Kentucky
1,118
1,023
-9% US
32,702
31,210
-6%
Economics
Data Source: USDA-NASS
Livestock Marketing Information Center

13. Economics Data Source: USDA-AMS & USDA-NASS
Livestock Marketing Information Center
Economics

14. Economics
Data Source: USDA-AMS
Livestock Marketing Information Center

15. Key Market Expectations
1% larger cow herd January 1, 2018
3% increase in beef production
3% increase in pork production
2% increase in poultry production
Per caps are going up!

16. KY Auction Prices 550# Steers ($ per cwt)

17. Calf Market Expectations
Spring board does not support current calf prices
Runs likely late in some areas due to weather
$15 per cwt off calf market by late October / early November – KY = $1.35 to $1.40
Back to or slightly above current levels by spring- KY = $1.50 to $1.60
2018 calf market will average between 2016 and 2017 levels

18. Estimated Fall Cow-calf Revenues
550# steer calves - $140 per cwt
550# heifer calves - $125 per cwt
Average calf: 550# x $133 per cwt = $729
Weaning rate effect
90% - $656 per cow
80% - $583 per cow
70% - $510 per cow
Economics

19. Cow-calf Thoughts on 17 / 18
2014 / 2015 calf prices supported some bad habits
Access current profitability
What are your costs?
Avoid low market mentality
Be aggressive culling
Stocking rate and culling criteria should move with market
Consider post-weaning programs
Economics

20. KY Auction Prices 850# Steers ($ per cwt)

21. Heavy Feeder Expectations
Decline seasonally through winter
$5 to $10 per cwt
Fall 2018 live board does not support anything above low $130’s
KY = upper $130’s for 850# steer
Price slides to widen by time calf runs hit, expect normal - $4-6 on heavies, $6-8 on calves

22. Economics
Data Source: USDA-AMS
Livestock Marketing Information Center

23. Data Source: USDA
Livestock Marketing Information Center

24. Data Source: USDA
Livestock Marketing Information Center

25. Data Source: USDA
Livestock Marketing Information Center

26. Fed Market Expectations
Is this the bottom?
Some “glut” of cattle to work through late / fall early winter
Continued issues with board vs. cash
Feedlots are bidding on feeders like they don’t believe the spring board

27. Post-weaning Programs for 2017

28. Thoughts for 2017 Fed cattle market has bottomed late last two years
2017 looks very similar to 2016
Feeder cattle market tends to follow
Market still shows separation for green vs. weaned calves
Feed prices have moderated
Much pasture availability
Value of gain fairly attractive

29. What is the current value of gain?
Source: KY Livestock and Grain Market Report for

30. What are additional lbs worth?
$ = $794
$ = $903
$109 for 100 lbs, or $1.09
$ = $1002
$99 for $100 lbs, $0.99 per lb

31. Value-added in Current Market State Market Summary (last week)

32. 60 Day Backgrounding (Drylot)
Value 550# steers in $1.50
1.25% BW 50 / $160 per ton
1.25% $60 per ton
2.25 lbs gain per day
0.25 lb mineral per $20 per bag
$1.40 price for 685# steer

33. 60 Day Drylot Budget (No price premium, owned calves)

34. 60 Day Drylot Budget ($5 per cwt price premium, owned calves)

35. 120 Day Backgrounding (Drylot)
Value 550# steers $1.50
1.25% BW 50 / $160 per ton
1.25% BW $60 per ton
2.25 lbs gain per day
0.25 mineral per $20 per bag
$1.30 price for 820# steer

36. 120 Day Drylot Budget (No price premium, owned calves)

37. Summary Over next couple years, calf market still has some downside
Producers should focus on efficiency and adding value
Heavy feeders and fed prices probably comparable to 2017 levels

38. Contact Information
Kenny Burdine UK Agricultural Economics (859)
Economics