feed outlook jim dunn ag economist pennsylvania state university
TRANSCRIPT
Feed Outlook
Jim Dunn
Ag Economist
Pennsylvania State University
Sources of InformationUSDA
• http://usda.mannlib.cornell.edu/MannUsda/homepage.do
• http://usda.mannlib.cornell.edu/MannUsda/viewTaxonomy.do?taxonomyID=3
• http://usda.mannlib.cornell.edu/MannUsda/viewTaxonomy.do?taxonomyID=25
• http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1273
What these are called
• USDA Economics, Statistics and Market Information System (ESMIS)
• Field Crops
• Outlooks, Yearbooks, and Estimates
• Feed Outlook
Other useful links
• Oil Crops Outlook
• Livestock, Dairy, and Poultry Outlook
• Milk Production
• Feed grains database
• Livestock, Dairy, and Poultry Outlook: Tables
Issues for Feed Economy
• Bio-Fuel
• Expensive inputs
• More debt
• Cheap dollar
• China and India
• Banking crisis
• Weather
Bio-Fuel
• Ethanol• Bio-diesel• Both ethanol & bio-diesel subsidies and
tariff on ethanol expired this year• Does it make sense to use food for fuel?
Source: CME
Jul-06 Nov-06 Apr-07 Aug-07 Jan-08 Jun-08 Oct-08 Mar-09 Jul-09 Dec-090
5
10
15
20
25
30
35
40
Verasun EnergyAventine Renewable EnergyPacific Ethanol
Ethanol Company Stock PricesJuly 06- Jan10
Prices todayVerasun 0Pacific 1.13Aventine 3.10 old shares 0
Ethanol
• 36 of 211 plants are not operating
• Others are on partial slowdown
• All of these plants cannot survive
• Clearfield operating again – present owner has very little capital costs
• Margins may still be negative
Source: Renewable Fuels Association
Corn Supply Year Beg stocks Production Supply
Bil. Bu.
2007/08 1.30 13.07 14.36
2008/09 1.62 12.09 13.73
2009/10 1.67 13.10 14.77
2010/11 1.71 12.45 14.18
2011/12 1.13 12.36 13.51
2012/13 est 0.99 10.73 11.81
Source: USDA
Corn Usagebil. bu
Source: USDA
Year Feed Food Fuel Exports Total
2007/08 5.86 1.32 3.05 2.44 12.74
2008/09 5.18 1.32 3.71 1.85 12.06
2009/10 5.13 1.35 4.59 1.98 13.07
2010/11 4.79 1.41 5.02 1.84 13.05
2011/12 4.55 1.43 5.01 1.54 12.53
2012/13 est 4.15 1.37 4.50 0.90 11.17
Food and Industrial Corn Usemil. bu.
Crop
Year
HFCS Other sweeteners
Starch Fuel Liquor Cereal
2007 490 236 262 3,049 135 192
2008 489 245 234 3,709 134 192
2009 513 257 250 4,568 134 194
2010 521 272 258 5,021 135 197
2011 514 294 254 5,011 135 203
2012 485 280 240 4,500 135 202
Source: USDA
Corn Usage
Crop 2004 2007 2010 2012
Feed 57.8% 46.0% 36.7% 37.1%
Food 12.6% 10.4% 10.8% 12.2%
Exports 17.1% 19.0% 14.1% 10.3%
Ethanol 12.4% 24.7% 38.5% 40.2%
15 25 35 45 55 65 75
Days Carryout
$0
$1
$2
$3
$4
$5
$6
$7
$8
Avg
Far
m P
rice
'00'01'02'03
'04'05
'06
'07 '08'09
'10
'11
'12
US Corn Farm Price vs Days Carryout
2000-2012 crop years
est. 2012 crop carryout
Corn futures prices2/7/13
Month Price (cts/bu.)
March 13 718
(62 cents more than last year
May 13 719
July 13 710
Sept 13 597
Dec 13 573
Corn Price History
US65%
Argentina22%
Brazil9%
Other4%
World Corn Exports2009 Crop Year
Source: USDA
Soybean Supplymil.bu.
Year Carry-in Production Total
2007 574 2677 3261
2008 205 2967 3185
2009 138 3359 3512
2010 151 3329 3495
2011 215 3056 3286
2012 175 3205 3395
Soybean Usage
Year Crush Exports Seed Total
2007 1803 1159 94 3056
2008 1662 1279 106 3047
2009 1752 1501 108 3361
2010 1648 1501 130 3280
2011 1660 1335 116 3111
2012 1645 1485 125 3255
Soybean Carryout & PriceYear Carryout
mil. bu.
Price Days Use of carryout
2006 574 $6.43 67
2007 140 $10.10 24
2008 138 $9.97 16
2009 151 $9.59 16
2010 215 $11.30 19
2011 175 $12.50 23
2012 140 $14.55 15
0 10 20 30 40 50 60 70
Days Carryout
$0
$2
$4
$6
$8
$10
$12
$14
Avg
Far
m P
rice
'00'01
'02
'03
'04 '05'06
'07'08'09
'10
'11
'12
US Soybeans Farm Price vs Days Carryout
2000-12 crop years
Soybean Price History
Soybean futures prices2/7/13
Month Price (cts/bu.)
March 13 1490
May 13 1479
July 13 1468
Sept 13 1380
Nov 13 1329
2003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011 201220120
0.25
0.5
0.75
1
1.25
1.5
1.75
2
broilerbeefhogsmilk
Price/feed Ratio Jan 2003-presentJan 2003 = 1.00
Low values mean animal producers lose money
2000 2002 2004 2006 2008 2010 20120.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
cattlecorn
Cattle Price vs Corn Price 2000=1.0
2000 2002 2004 2006 2008 2010 20120.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
hogscorn
Hog Price vs Corn Price 2000=1.0
2000 2002 2004 2006 2008 2010 20120.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
broilercorn
Broiler Price vs Corn Price 2000=1.0
Beef notes
• Feeder cattle numbers were hit hard by drought in Texas
• Animals put in feed lots early
• High feeder cattle prices
• Feed lots returns low
• Packers can’t pass costs on in this economy – high-valued cuts are not high enough
1977 1982 1987 1992 1997 2002 2007 20120
5
10
15
20
25
30
35
40
45
50
55
calvescattle
Beef Cattle Herd and Calf Crop
Hog notes
• Integrators suffering from feed prices
• Demand is okay but prices too low to cover costs
Poultry Notes
• Eggs and Broilers cheapest form of protein
• Margins bad
• Exports important and weakness in world economy affects price
• Demand is okay but feed is too high priced
1980 1985 1990 1995 2000 2005 20100
10
20
30
40
50
60
70
80
90
lbs
beefporkchicken
Per Capita Meat Consumption1980-2012
Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-130
5
10
15
20
25
$/c
wt.
PA all milk priceaverage
PA All Milk PriceJan 2003-present
Source: NASS
2003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011 20122012$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
milk marginaverage
PA Dairy Milk Margin2003-present
Jan Mar May July Sept Nov0
2
4
6
8
10
12
14
16
$/c
wt
200920102011201220135 yr avg
PA Milk Margin2009-13
Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-130
2
4
6
8
10
12
$/cw
t.
Feed Costavg
PA Feed Cost/cwt. MilkJan 2003 - present
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130
5
10
15
20
25$/
cwt.
Class IIIaveragefutures
Class III Milk Price
Source: USDA
Concluding Questions
• How will meat producers deal with feed prices?
• How will dairy producers deal with feed situation
• How will consumers adjust consumption in weak economy?
• Will we really keep cutting per capita meat consumption?