Livestock Situation and Outlook

1. Livestock Situation and Outlook Dr. Curt Lacy Extension Economist-Livestock

2. Outline • 2008 Recap and Overall Meat Complex • Beef Outlook • Poultry Outlook • Dairy Outlook • Aquaculture (catfish) Outlook

3. 2008 Recap • Record production in 2008. • Feed, fuel and fertilizer prices hit this sector especially hard in 2008. • Weakened economy + record production = lower prices in 2008.

4. Increasing Amounts of Meat Stocks in Cold Storage Indicate Decreased Demand

5. As a result, beef pork and poultry supplies will ALL be lower in 2009. 1st time EVER! Livestock Marketing Information Center

6. Overall Outlook for Livestock Products in 2009 • Lower production should be supportive of prices. • Economy and input prices will the wild cards. • IF the economy stabilizes and IF feed prices stay “lower” then profits should be no worse than/maybe even better in 2009.

7. Beef Cattle Production and Supply Beef Outlook

8. Drought and other factors had a major impact this past year • Historically high: • Feed costs • Fertilizer prices • Fuel prices • Cow herd liquidation • Herd reduction • No interest in expansion

9. Impact of Fuel & Fertilizer Prices on Cost of Production

10. Livestock Marketing Information Center

11. Livestock Marketing Information Center

12. Feed and Trucking Costs Change the Price Relationships Between Calves and Feeders

13. Feeder and Fed Cattle Prices (Futures) Are Also Impacted by Other Factors

14. Narrow Ch-Sel Spread Indicates Weaker Beef Demand Livestock Marketing Information Center

15. Outlook for 2009 • Price Projections – equal to or slightly better than 2nd half of 2008 • Calves - $90-$100 (Basis Mid-South) • Feeders - $85-$95 (Basis Mid-South) • Fed - $85-$95 • Depending on feed costs, could see another narrowing of calf vs. feeder prices. • Cull cow prices should remain fairly strong in 2009, $48-$58/Cwt. • Current market signals suggests adding as much “grass-weight” as economically feasible.

16. Outlook for 2009 and Beyond

17. Summary of Jan 1 Cattle Inventory Report • All cattle and calves 94.5 million head, -2% • Beef cows, at 31.7 million -2% • Milk cows, @ 9.33 million +1% • Cattle and calves on feed for slaughter in all feedlots, 13.9 million -7% • Stockers/feeders outside of feedlots +6% • Stockers on winter pastures 1.65 mil. -6%

18. 2009 = 31.7 million beef cows, down 2.0% from last year 4th year in a row we have seen a decline. Livestock Marketing Information Center Data Source: USDA/NASS

19. The Net Effect is Lower Beef Production through 2011

20. CHANGE IN BEEF COW NUMBERSJANUARY 1, 2000 TO JANUARY 1, 2009(1000 Head) Alaska Hawaii US Total

21. Long-Range Beef Cattle Outlook • Contraction of cow herd means lower supplies in future years likely through 2011. • Price improvement will be sharp when economy makes the turn. • Projections for continued high feed prices indicate that heavy-weight feeders (700 # +) will be desired over lighter-weights. • Don’t be surprised if in 5 years we see: • Fed cattle $110+ • Feeders $105-$115 • Calves $125-$150 (depending on weight) • Trick is staying in the game that long!

22. Poultry Situation and Outlook

23. Poultry Situation & Outlook • Poultry producers bore brunt of increased feed and fuel prices. • Considerable financial uncertainty in the industry. • Export markets are a moving target. • 2009 feed prices will be the difference.

24. Best Cure for Low Prices?? Livestock Marketing Information Center

25. Best Cure for Low Prices??Decrease Production! Livestock Marketing Information Center

26. 2009 Poultry Outlook • Broilers • Almost 2% decline in production  will it stick? • Slightly lower exports • Lower per capita consumption (marginal) • Lower supplies should increase price (slightly) • Profits  hopefully yes, depends on cost!

27. 2009 Poultry Outlook • Eggs • Slight INCREASE in production • Stable exports • Slightly less utilization • Lower prices than 2008 but still favorable • Profits Maybe?

28. Dairy Situation & Outlook Special thanks to Dr. Tommie Shepherd, CAED, UGA

29. 46% drop in 8 months! Dairy Producers Have Experienced a Price Drop of Historical Proportion

30. Milk Price Drivers In 2009 • Milk Production (supply) • Fewer cows • Lower production per cow • Total production up 1% or less from 2008 • Increasing Stocks of Manufactured Dairy Products (Cheese, Butter, NFDM) • EU will increase production with the aid of export subsidies • AUS and NZ recovering from drought • Milk Consumption (demand) • Strengthening U.S. Dollar makes our product more expensive internationally • Weak world economy will slow demand U.S. and International • CCC already purchasing some products

31. Milk Price Forecast for 2009 • Continued lower prices • MILC payments coming in April • Accelerated culling likely coming later in the year.

32. Aquaculture Situation & Outlook

33. Acres of Water for Aquaculture in LA More Stable than U.S.

34. Aquaculture (Catfish) Situation & Outlook • Feed prices will continue to plague catfish producers. • Fewer operations, ↓20% U.S. • Fewer acres • ↓10% U.S. • ↓1.5% LA • ↓12.5% MS/AR • Stronger dollar will not deter imports (102 mil. lbs. in 2008). • Prices will likely remain at current levels. Significant increase not likely. • Processing ($2.44/lbs. in 2008) • Producer ($0.79/lbs. in 2009)

35. Livestock Summary • 2009 is going to be another difficult year for livestock producers. • Supplies of meat will be lower which should help prices. • However, economy and input prices will be the two biggest factors. • Once the economy DOES turn the corner, prices for our products could recover very rapidly. • The trick is making it from until then 