A student and data-driven presentation of a Business Analytics Course at Wichita State University

1. 1
An assessment of factors that correlate
with Boxed Beef Cutout Values
Patrick Burrus, Eric Holmes, Will Fellhoelter,
Ciaban Peterson
February 9th 2018

2. 2
Content Outline
Overview
Flow of Presentation
Assessment and Variables
Conclusion

3. 3
Overview
• The purpose of our assessment is to provide a prioritized list of
factors (with definitions) and arguments that support the
relationship between our variables and boxed beef cutout
values.

4. 4
• Summary
• Factors
• Embedded
Priority
“Theme”
• Key factors
• Embedded
Priority
• Variable
Definitions
Factor
How did we prioritize our content and assessment?
- Strongest to weakest Correlation
- Themes, Factors, Variables
Assessment Layout
4

5. 5
Theme: Summary
Our assessment has two major themes to encompass our factors that we found to
correlate with choice and select Boxed Beef cuts. These are in relation from strongest
to weakest correlation.
1.Economic Factors
•Beef Exports
•Feed Prices Increase
•Farmer Income
•Chicken as a Substitute
•Income inconsistency or inequities (red meat)
•Weather in the Midwest
Diet Factors (social and health)
•Change in eating habits
• American Social/Guilt Misconceptions in
diet

6. 6
Theme: Economic
Beef Exports
Feed Prices
Increase
Farmer income
Weather in the
Midwest
Income
inconsistency
Chicken as a
substitute

7. 7
Economic Factors
Argument: Beef Exports
• Throughout the last ten years the beef exports have risen exponentially and along with that the amount of beef
consumed in the states has decreased. The rise of exports has driven an impact to the price of beef in the states
because with the lower supply comes higher value.
• Between the years 2007-2016 beef exports have risen by 60% and between 2005-2014 beef consumption in the
states has decreased 19%. The overall trend between the two signifies that consumption levels with American meat
are leaving the states and attending customers overseas. Economically concluding that the supply of beef
is decreasing within the states. A lower supply increases the value to paying customers, thus a higher price in meat.
The higher the rate of exports, the higher the price in the states.
•Evidence
• As exports increase the demand for US beef lowers, creating a price shift upward.
• In 2007 the US exported 46,744 Metric tons of beef to Japan while in 2016 that number has increased to 258,653
• In 2007 The US exported 25,166 metric tons of beef to South Korea while in 2016 that number has increased to
179,280.

8. 8
Economic Factors
Argument: Feed Price Increases
•Hay is a vital resource for the production of feed for cattle. While the trend of hay production decreases over the past decade, the
opposite goes with the price of cattle. When the supply of hay decreases, the price of hay increases creating a higher cost for the
producer of beef.
•From the year 2001-2016 hay production has decreased from 63,516,000 to 53,784,000 acres harvested. The years 2009-2012
have shown daily beef cutout price has increased by 159% while total hay production has decreased 9%. With the given number
of 9% decrease in hay you can speculate that number affects the overall food for cattle production in the states. Making
producers' job of getting hay to be more tough by having less as well as paying more for it.
•Evidence
•From the years 2001 to 2016 there has been a downward trend in the total amount of hay production. The reason why doesn't
matter in this case, what matters is how do hay and boxed beef cutout prices correlate. Hay production has decreased from
63,516,000 acres harvested in 2001 to 53,784,000 acres harvested in 2017.
•From 2009 to 2012 total acres of hay production decreased by 5,122,000 acres. From 2009 to 2012 the average Daily Beef
Cutout Range High price increased by $154.10. Daily Beef Cutout price increased by 1.59% while the total production of hay
decreased 9%.

9. 9
Economic Factors
Argument: Farmer income
• - Farmer income is steadily decreasing year by year
•Evidence:
• Net farm income, a broad measure of profits, is forecast to decrease $4.3 billion (6.7 percent) to $59.5 billion in
2018, which would be the lowest level in nominal terms since 2006. Net cash farm income is forecast to decrease
$5.0 billion (5.1 percent) to $91.9 billion, the lowest level since 2009.

10. 10
Economic Factors
Argument: Weather in the Midwest
(Texas specifically as that is where a majority of cattle come from)
•Weather factors like precipitation, prolonged or severe heat/cold, or natural disasters could massively effect the supply of cattle
throughout the Midwest.
•Texas, Nebraska, Kansas, and Oklahoma have the most cattle, so the weather in these regions would have the biggest effect on
Cattle supply.
•With favorable weather and rainfall, cattle supply should grow making the cost per head of cattle decrease. Decreased cattle cost
could boost the beef industries profit margin and allow the companies to sell at a lower price if necessary.
•
• Good weather allows them to grow their herd and rely less on imports and purchasing new heads of cattle.
• If demand is held constant and supply increases, more quantity of beef will be sold at a lower price.
•Evidence
• Adversely, poor weather can kill off a substantial amount of the herd forcing the beef industry to butcher and sell at a
reduced price to avoid spoiling, or accept the net loss. If quantity supplied is greater than quantity demanded, you
end up with a surplus and a loss of inventory.
• Further, this hurts breeding and will result in less supply later on.
• Limitations
• Weather variety over regions
• Unforeseen natural disasters that could skew the data

11. 11
Economic Factors
Argument: Income Inconsistency
• red meat is expensive in both choice and select which is having an impact of consumer
meat selection.
Evidence:

12. 12
Economic Factors
Argument: Chicken as a Substitute
• If the price of meat is too high, Chicken (a substitute) might see their sales increase which would cause the demand
for beef to decrease and profits to plummet
• The Chicken industry is easier to mass produce and rely less on weather than beef does. When beef is hurting,
chicken can maintain their supply and prices.
• Public perception can cause the demand for red meat to decrease and the demand for chicken to increase (inversely
related)
•Limitations
• Feed is a major factor in chicken production and can drive the price upward

13. 13
Diet Factors (Health/Social)
Changing of
Eating Habits
American
Social/Guilt
Misconceptio
ns in diet

14. 14
Diet Factors
Argument: Changing of Eating Habits
• such as to vegan or vegetarian. Both option eliminate consumption of beef, pork,
and poultry or replacement with seafood. These are growing trends in eating habits
due to an increase in food allergies.
• Increase in diabetes has led to necessary diet reevaluations.
•Evidence
• The most impactful diet adjustments relate to the reduced consumption of specific products.
• US Consumption of Beef has remained Moderate

15. 15
Diet Factors
Argument: American Social/Guilt Misconceptions in diet
• Misinformation and misconceptions have led to erratic changes in diets within red
meats
• Interest in the US has fluctuated in recent years with a saturation of information
outside the domain of “Boxed Beef” (or, there is little interest shown by US consumers
specifically looking for Boxed Beef cuts) especially compared to Different
diets/choices.
•Evidence
•(google trends)

16. 16
Conclusion
Scope of Influence on US Boxed
Beef Cutout value relations
Economic
Factors
Diet
Factors
Research
Data
From our arguments and evidence there is strong
evidence and support for Economic Factors having a
strong relationships with Boxed Beef Factors. The
Diet/Social Factors also have relation but are weaker.
These factors play a critical role in Beef Cutout: Sales,
Choices, and US Consumer Interest.

17. 17
Thank you!