Npb swine educators sept 2013
This presentation is the property of its rightful owner.
Sponsored Links
1 / 61

NPB Swine Educators – Sept. 2013 PowerPoint PPT Presentation


  • 90 Views
  • Uploaded on
  • Presentation posted in: General

NPB Swine Educators – Sept. 2013. Meat Sector Economics Update and Outlook. Government shutdown – What is running?. “Essential services” – SS, Medicaid, law enforcement, air traffic control, firefighters Packing plants and processors – meat inspection is “essential”

Download Presentation

NPB Swine Educators – Sept. 2013

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Npb swine educators sept 2013

NPB Swine Educators – Sept. 2013

Meat Sector Economics Update and Outlook


Government shutdown what is running

Government shutdown – What is running?

“Essential services” – SS, Medicaid, law enforcement, air traffic control, firefighters

Packing plants and processors – meat inspection is “essential”

Import inspection – generates import data but no one will be at AMS to use it!

Fee-based USDA programs – beef grading, checkoff oversight


What isn t running

What isn’t running?

  • USDA websites – none of them so even historic data are not available

  • AMS Market News

    • Price reporting for hogs and pork (and cattle, beef, chicken, etc.)

    • Slaughter and production data

    • Weekly live animals imports, meat exports

  • NASS – Hogs & Pigs report beat the bell!

    • This week: Broiler Hatchery

    • Next week: Crop Production, WASDE


What about hog and pork markets

What about hog and pork markets?

About 50% of hogs are priced off negoti-ated hogs or the cutout value

Hogs will still be traded but prices will be negotiated in a vacuum – no information

CRITICAL DAY: October 15 when October futures expires – CME LH Index???

Talk of voluntary reporting to an independent third party – devil is in the details and timing.


Key factors affecting meats and poultry

Key factors affecting meats and poultry . . .

Drought has been a game changer whose impacts will be felt for another 2 years

Grains/feed costs – has 2013 weather changed the game again?

Demand – performing well in spite of some lingering macro concerns

Pork and chicken supplies are growing

Beef supplies will not grow for 2 years – but incentives are in place


2011 drought is still critical esp for beef

2011 drought is still critical – esp. for beef!!!


12 drought much larger 77 44 severe

’12 drought: Much larger (77%, 44%> severe)

. . . And MUCH larger impact on feed supplies


And weather has remained critical in 13

And weather has remained critical in ‘13. . .

. . . as WCB has gotten progressively dryer

  • Severe drought: Up to 28% vs. 36% in ‘12

  • High Plains 38%, South 44%, West 53%

  • Note dry conditions in IA, MO, NE, IL, MN


Slow planting but better conditions yr yr

Slow planting but better conditions, yr/yr . . .

Harvest vs. 5yr: SB 3 vs 9, corn 7 vs 15


Looks like we dodged the early frost bullet

Looks like we dodged the early frost bullet!


World corn situation is much better for 14

World corn situation is MUCH better for ‘14

Record high world production (+11%) and consumption (+6%)

Highest year-end stocks since 2001-02

BUT S/U RATIO IS 5TH LOWEST SINCE ‘75


Big increases for all corn uses exc ethanol

Big increases for all corn uses – exc ethanol

. . . But still less feed availability than pre-’09


Ethanol s challenge is not margins

Ethanol’s challenge is NOT margins. . .

. . . The problem is SHARPLY LOWER gas usage


World soybean situation is different

World soybean situation is different . . .

. . . Record high output, consumption, stocks

World output +6.2% in ‘13-’14

Consumption +4.4%

Ending stocks +20%, S/U tied for 3rd high


But sb prices are still near 13

But SB prices are still near $13 . . .

. . . Primarily due to China’s appetite & means


Key result lower but still high costs

KEY RESULT: Lower – but still HIGH -- costs


The macro economy improving

The macro-economy – Improving

  • Good things:

    • GDP growth, improving housing market, low interest rates, job growth (++167k in Aug)

    • Wealth effect has been positive -- mainly

    • U (7.3%) is falling but U-6 is still at 13.7%

  • Question marks:

    • Personal disposable income is still FLAT, yr/yr


Dec real per capita pdi was false security

Dec Real per capita PDI was false security . . .

. . . Average for 2013 YTD has been -0.1%


The macro economy improving1

The macro-economy – Improving

  • Good things:

    • GDP growth, improving housing market, low interest rates, job growth (++167k in Aug)

    • Wealth effect has been positive -- mainly

    • U (7.3%) is falling but U-6 is still at 13.7%

  • Question marks:

    • Personal disposable income is still FLAT, yr/yr

    • Deficit & spending – must be reigned in

    • How will economy react when the Fed actually slows on Quantitative Easing?


Pc cons stayed above 200 pounds in 12

PC cons stayed above 200 pounds in ‘12 . . .

. . . And is falling due to supplies/costs!


Retail prices are at or near record highs

Retail prices are at or near record highs . . .

. . . Would not be if demand was, in fact, soft


Meat poultry demand has been good in 13

Meat/Poultry demand has been good in’13


Beef chicken demand are up turkey lower

Beef & chicken demand are up, turkey lower


Pork demand has been good so far in 13

Pork demand has been good so far in ‘13

. . . July was +4.7% yr/yr, YTD RPCE is +2.8%


Large stocks but 1 4 vs july 0 6 yr yr

Large stocks but -1.4% vs. July, +0.6% yr/yr . . .

. . . Aug pork was -0.7% vs. July, -7.8% yr/yr


Npb swine educators sept 2013

CHICKEN


Poultry reductions in 07 and 11 but

Poultry: Reductions in ‘07 and ’11 but . . .

. . . ~+2% Jan-June and then +4.5% July & Aug


Broiler egg sets are 5 yr yr last 2 wks

Broiler egg sets are +5% yr/yr last 2 wks.


Chicken prices esp breasts have fallen

Chicken prices – esp breasts – have fallen


Npb swine educators sept 2013

BEEF


Better pasture conditions have allowed

Better pasture conditions have allowed. . .

. . . Cow slghtr to fall 10-15% since mid-July

Data Source: USDA-NASS


Beef cow herd is smallest since the 40 s

Beef cow herd is smallest since the ’40’s . . .

. . . But we may stabilize the herd this year


Just as in 12 the sector is poised to grow

Just as in ‘12, the sector is poised to grow . . .

. . . But will Mother Nature allow it to do so?


Beef long term trends plus droughts

Beef: Long-term trends PLUS droughts . . .

. . . ‘13 will be smallest calf crop since 1949


Lower numbers are finally reducing supply

Lower numbers are finally reducing supply!


Production maintained by higher weights

Production maintained by higher weights . . .

. . . But can that continue – Zilmax situation?


Fc supplies grew by 0 7 vs jan 12

FC supplies grew by 0.7% vs. Jan ‘12. . .

. . . But are still near record low at 25.56 mil.


Fc imports from mexico are down 46 ytd

FC imports from Mexico are down 46% YTD

. . . And 46% is 450,000 head

Data Source: USDA-AMS & APHIS


No turn around in sight for availability

No turn-around in sight for availability . . .

. . . Per-cap: -3% in ‘13 and -5.5%+ in ’14 @ 52.6


Sept 1 cof lower than expected bullish

Sept 1 COF – Lower than expected-- bullish


Can beef be competitive at 180 200 cwt

Can beef be competitive at $180 - $200/cwt.?

. . . As competitors lower their prices?


Npb swine educators sept 2013

PORK


Pork exports the 2013 issue but improving

Pork exports: THE 2013 issue but improving

. . . July: 1st positive (+2%) month since Oct


July exports growth in all but china korea

July exports – growth in all but China, Korea . .

. . YTD: Canada +3%, Mexico +2%, Others +18%


Imports from canada are 10 ytd

Imports from Canada are -10% YTD . . .

. . . Risk issue for ‘14: MCOOL retaliation


September hogs and pigs surprise

September Hogs and Pigs – Surprise!!!!


Record high litter size and return to 2

Record-high litter size and return to 2%+ . . .


But what about pedv

But what about PEDv??? . . .

. . . Missed losses or robust prod’ivity growth?


The june h p was dead on until labor day

The June H&P was dead on until Labor Day . . .

. . Sept slghtr. was -7.4% yr/yr, -3-5% vsfrcst.


One reason for low slaughter low margins

One reason for low slaughter: Low margins . .

. . . Nothing new: Lower vs. 5-yr avg for 2 yrs


Sept h p growth in q4 sizable growth in 14

Sept H&P: Growth in Q4, sizable growth in ‘14


14 prod costs continue to fall now 78

‘14 prod costs continue to fall – now <$78 . . .

. . . Or roughly $32/head lower than in ‘13


Key issue for pork is slaughter weights

Key issue for pork is slaughter weights . . .

. . . Currentness? Prod increase this fall?


Pork cutout value has held very well

Pork cutout value has held VERY well . . .

. . . How long can the counter-seasonal last?


Hog rally went to my pre march highs

Hog rally went to my “pre-March” highs. . .

. . . Then seasonal, then the rally of last 2 wks


14 forecast profits are now best since 05

‘14 forecast profits are now best since ‘05. . .

. . . For those who have avoided PEDv


Slaughter forecasts from sept h p report

Slaughter forecasts – from Sept H&P Report


Price forecasts lower that 13 in 14

Price forecasts – Lower that ‘13 in ‘14 . . .

. . . 2014 futures are offering opportunity now


Big challenge for future growth capacity

BIG challenge for future growth -- capacity!

. . . And disincentives for current players


Closing thoughts

Closing thoughts . . .

  • Feed costs are lower – will drive expansion, especially for pork and chicken

  • Demand is good in spite of lackluster macro conditions – positive prefs for meat?

  • Beef supplies will continue tight – high prices and opportunities for competitors

  • MUCH STILL DEPENDS ON WEATHER

    • Beef still needs pasture/range recovery

    • Still hand-to-mouth for grains each year


Npb swine educators sept 2013

Questions or Comments?


  • Login