copyright 1991-2014. barron’s, aug. 5, 2013 copyright 1991-2014 beta agonists fed to cattle item...
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Copyright 1991-2014
“Size Matters"The Economics of Cattle Weights
USDA Outlook Forum 2014Arlington, VAFebruary 21, 2014
John S. NalivkaSterling Marketing, Inc.
Copyright 1991-2014 Barron’s, Aug. 5, 2013
Copyright 1991-2014
Beta Agonists Fed to Cattle
Item Optaflex TM Zilmax TM
Elanco Merck
Optimal feeding duration 28 – 35 days 20 days
Withdrawal time None 3 days
Average daily gain ↑ 9 – 21% ↑ 14 – 40%
Feed efficiency ↑ 9 – 21% ↑ 14 – 40%
Dressing percent Minimal impact ↑ 1 – 2% points
Hot carcass weight ↑ 10 – 20 lbs. ↑ 13 – 28 lbs.
Source: University of Wisconsin Cooperative Extension
Copyright 1991-2014
Will weights decline?Key Factors to Consider
• Industry Structure• Cattle Cycle• Industry Capacity
• Genetics• Nutrition• Consumer Demand• Price / Value Equation
• Consistent, high quality beef brings the greatest value back to all parties in the supply chain.
• Feedlot and packer economics
Copyright 1991-2014
Steer & Heifer Carcass Weights – thru week ending February 1st
Pounds per head
19931996
19992002
20052008
20112014
650
675
700
725
750
775
800
825
850
875
900Steers Heifers
Copyright 1991-2014
Cattle Slaughter & Carcass WeightsPounds per head Pounds per head
Jan-1950Apr-1955
Jul-1960Oct-1965
Jan-1971Apr-1976
Jul-1981Oct-1986
Jan-1992Apr-1997
Jul-2002Oct-2007
Jan-2013
700
800
900
1,000
1,100
1,200
1,300
1,400
500
600
700
800
900Live weight (Y1) Carcass weight (Y2)
Copyright 1991-2014
Week Ending1/6/90
3/14/925/21/94
7/27/9610/3/98
12/9/002/15/03
4/23/056/30/07
9/5/0911/12/11
1/18/14
0
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
0
0.20
0.40
0.60
0.80
1.00
1.20
1.40Corn Price (Y1) Cost of Gain (Y2)
Corn PriceDollars per bushel Dollars per lb. of gain
Copyright 1991-2014
Week Ending9-Jun-90
24-Oct-9211-Mar-95
26-Jul-9711-Dec-99
27-Apr-0211-Sep-04
27-Jan-0713-Jun-09
29-Oct-1115-Mar-14
0.10
0.30
0.50
0.70
0.90
1.10
1.30
1.50 Cost of Gain Choice Steer Price
Cost of Gain, Steer Price, & Carcass WeightsDollars per bushel Pounds per head
Copyright 1991-2014
Week Ending9-Jun-90
24-Oct-9211-Mar-95
26-Jul-9711-Dec-99
27-Apr-0211-Sep-04
27-Jan-0713-Jun-09
29-Oct-1115-Mar-14
0.10
0.30
0.50
0.70
0.90
1.10
1.30
1.50
650
700
750
800
850
900Cost of Gain (Y1)
Choice Steer Price (Y1)
Carcass Weight (Y2)
Cost of Gain, Steer Price, & Carcass WeightsDollars per bushel Pounds per head
Copyright 1991-2014
Week Ending9-Jun-90
24-Oct-9211-Mar-95
26-Jul-9711-Dec-99
27-Apr-0211-Sep-04
27-Jan-0713-Jun-09
29-Oct-1115-Mar-14
0.10
0.30
0.50
0.70
0.90
1.10
1.30
1.50
650
700
750
800
850
900Cost of Gain (Y1)
Choice Steer Price (Y1)
Carcass Weight (Y2)
Cost of Gain, Steer Price, & Carcass WeightsDollars per bushel Pounds per head
Copyright 1991-2014
Week Ending9-Jun-07
19-Jul-0829-Aug-09
9-Oct-1019-Nov-11
29-Dec-128-Feb-14
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
700
750
800
850
900Cost of Gain (Y1)
Choice Steer Price (Y1)
Carcass Weight (Y2)
Cost of Gain, Steer Price, & Carcass WeightsDollars per bushel Pounds per head
Copyright 1991-2014
Combined Steer & Heifer Carcass WeightsPounds
1/4/142/8/14
3/15/144/19/14
5/24/146/28/14
8/2/149/6/14
10/11/1411/15/14
12/20/14
780
790
800
810
820
830
840
850
860
2012 2013
2014 2009-2013 Ave.
Copyright 1991-2014
Combined Steer & Heifer Carcass WeightsPounds
1/4/142/8/14
3/15/144/19/14
5/24/146/28/14
8/2/149/6/14
10/11/1411/15/14
12/20/14
775
800
825
850
875
Copyright 1991-2014
19791984
19891994
19992004
20092014*
85,000
90,000
95,000
100,000
105,000
110,000
115,000
120,000
20,000
21,000
22,000
23,000
24,000
25,000
26,000
27,000
28,000Cattle Inventory (Y1) Beef Production (Y2)
U.S. Beef Production EfficiencyThousand head Million pounds
Copyright 1991-2014
19501954
19581962
19661970
19741978
19821986
19901994
19982002
20062010
2014
30,000
35,000
40,000
45,000
50,000
55,000
60,000
200
300
400
500
600
700
800Cow Herd (Y1) Beef Production per Cow (Y2)
The U.S. Cow Herd & Beef Production per CowThousand head Pounds per cow
Copyright 1991-2014
19501954
19581962
19661970
19741978
19821986
19901994
19982002
20062010
2014*
0
20
40
60
80
100
120
140
Per Capita Beef Consumption – Carcass wt.Pounds (carcass wt.)
1950 = 63.4
2014 = 76.5
Summary
• Cattle weights, live and carcass, have risen significantly nearly year over the past 5 decades.
• The predominance of grain finished cattle, coupled with advances in genetic research, nutrition, and management have all contributed to this trend.
• Though the cattle inventory is now the lowest in 60 years, in 2013, the U.S. produced nearly 3X as much beef we did 60 years ago.
Summary• In 2013, Merck discontinued sales of Zilmax ™ a feed additive which
increased carcass weights and feeding efficiency.
• Discontinued feeding of Zilmax ™, has not led to a sharp drop in carcass weights as many industry observers expected.
• Weights will remain relatively high . . . . .
– Many feedlots continue to use Optaflex ™, another beta agonist,
– Corn prices (feed costs) have fallen about 30% from a year earlier,
– Cost of gain are below breakeven prices and the current and expected Choice steer price.