The Great North American Drought:
Industry Impacts One Year Later
August 8, 2013
Welcome to Today’s Webcast
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Before We Get Started
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Webcast:
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su...
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Today’s Speakers
5
Mr. Ryland Maltsbarger
Principal Economist, Agriculture
...
Copyright © 2013 IHS Inc. All Rights Reserved.
Today’s Speakers
6
Mr. Brandon Kliethermes
Senior Economist, Agriculture
IH...
US & Global
Agriculture Market
Outlook
Great North American drought:
Industry impacts one year later
Ryland Maltsbarger & ...
Copyright © 2013 IHS Inc. All Rights Reserved
Outline
• Introduction
• US outlook
• Supply implications
• World grains
• W...
Copyright © 2013 IHS Inc. All Rights Reserved
Large impacts of last half-decade: corn and
wheat
Once upon time Then came t...
Copyright © 2013 IHS Inc. All Rights Reserved.
US drought and recovery: May
2012 2013
Abnormally Dry Drought – Moderate Dr...
Copyright © 2013 IHS Inc. All Rights Reserved.
US drought and recovery: August
2012 2013
Abnormally Dry Drought – Moderate...
Copyright © 2013 IHS Inc. All Rights Reserved.
IHS GISCPI
The IHS Global Insight Soft Commodity Price Index (GISCPI) has p...
Copyright © 2013 IHS Inc. All Rights Reserved.
Where we are today
• The US weather forecast looks to keep pollination stre...
Copyright © 2013 IHS Inc. All Rights Reserved.
Quarterly price outlook
Downward trend for corn and soybean prices while wh...
Copyright © 2013 IHS Inc. All Rights Reserved.
Past corn area revisions—USDA
Given prior years of delayed plantings, corn ...
Copyright © 2013 IHS Inc. All Rights Reserved.
Past soybean area revisions—USDA
Unlike corn, soybean area is variable and ...
Copyright © 2013 IHS Inc. All Rights Reserved.
Area scenario and price midpoints—corn
• Bearish: Planted area is adjusted
...
Copyright © 2013 IHS Inc. All Rights Reserved.
Area scenario and price midpoints—
soybeans
• Bearish: Planted area is adju...
Copyright © 2013 IHS Inc. All Rights Reserved.
Increased area planted supply capacity
Potential implications of adding sup...
Copyright © 2013 IHS Inc. All Rights Reserved.
Implications of increased capacity—corn
Supply scenario 2014/15 2015/16 201...
Copyright © 2013 IHS Inc. All Rights Reserved.
Implications of increased capacity—soybeans
Supply scenario 2014/15 2015/16...
Copyright © 2013 IHS Inc. All Rights Reserved.
Looking ahead
• Expect higher harvest price volatility this fall as a resul...
Copyright © 2013 IHS Inc. All Rights Reserved.
USDA Reports
• 12 August WASDE report
• Possible area revision for US soybe...
Copyright © 2013 IHS Inc. All Rights Reserved.
Global commodity market implications
• Corn exporters, Chinese demand
• Whe...
Copyright © 2013 IHS Inc. All Rights Reserved.
US and Brazil corn area harvested and
exports
0
10
20
30
40
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60
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3...
Copyright © 2013 IHS Inc. All Rights Reserved.
China’s corn
0
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30
40
06/07 07/08 08/09 09/10 10/11 ...
Copyright © 2013 IHS Inc. All Rights Reserved.
US, EU-28, and Russia wheat area harvested
and exports
0
5
10
15
20
25
30
3...
Copyright © 2013 IHS Inc. All Rights Reserved.
China’s wheat
0
5
10
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25
30
100
105
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115
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125
06/07 07/08 08/09 ...
Copyright © 2013 IHS Inc. All Rights Reserved.
World rice
One of the only grains that have actually seen price pressure
fr...
Copyright © 2013 IHS Inc. All Rights Reserved.
0
5
10
15
20
25
30
35
06/07
07/08
08/09
09/10
10/11
11/12
12/13
13/14
14/15...
Copyright © 2013 IHS Inc. All Rights Reserved.
Canola/rapeseed area
0
1
2
3
4
5
6
7
8
9
10
06/07
07/08
08/09
09/10
10/11
1...
Copyright © 2013 IHS Inc. All Rights Reserved.
Sunflower seed area
0
1
2
3
4
5
6
7
8
06/07
07/08
08/09
09/10
10/11
11/12
1...
Copyright © 2013 IHS Inc. All Rights Reserved.
US cattle supply issues
• Cattle inventory cycle
• Cattle supplies
• Beef p...
Copyright © 2013 IHS Inc. All Rights Reserved.
5,000
5,250
5,500
5,750
6,000
6,250
6,500
69,00071,00073,00075,00077,00079,...
Copyright © 2013 IHS Inc. All Rights Reserved.
Cattle supply
• Heifer slaughter slowed during the first half of 2013, allo...
Copyright © 2013 IHS Inc. All Rights Reserved.
Cattle supply continued
• Total inventories to stall in 2014:
• Strong star...
Copyright © 2013 IHS Inc. All Rights Reserved.
Beef production
(Million pounds)
22,500
22,750
23,000
23,250
23,500
23,750
...
Copyright © 2013 IHS Inc. All Rights Reserved.
5,000
5,100
5,200
5,300
5,400
5,500
5,600
5,700
5,800
5,900
69,00071,00073,...
Copyright © 2013 IHS Inc. All Rights Reserved.
$40
$50
$60
$70
$80
$90
$100
$110
$120
$130
$140
$150
$160
$170
2008 2009 2...
Copyright © 2013 IHS Inc. All Rights Reserved
Join IHS in an upcoming multi-client study
• Long-term increased variability...
Thank You!
Questions?
Copyright © 2013 IHS Inc. All Rights Reserved.
42
We Want Your Feedback on Today’s Topics
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s...
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Participate in the IHS Multi-Client Study…
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The Great North American Drought: Industry Impacts One Year Later

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Scientists and historians have called the 2012–13 dry spell, which caused more than 60% of the continental United States to experience drought conditions, the worst drought since the 1950s.

Last year’s drought will have a lasting impact on industry, causing a serious ripple effect on food availability, regional stability, and industry sectors around the globe. Join this one-hour webcast, where IHS economists will analyze the constrained agriculture supply and the lasting impacts from the drought.

The presentation will answer questions, including:

- What will the Fall of 2013 supply and demand market outlook look like?
- What are the price risks?
- What are the implications for the prolonged downturn in the beef production cycle?
- What are the potential implications of adding supply capacity without a new supply shock?
- How will ongoing weather variability affect your global supply chain?

This webcast will help you develop informed market forecasts, and identify risks affecting the bottom line for farmers, corporations, and governments. Get answers to your questions from leading industry economists.

A recording of this presentation can be viewed here: http://www.slideshare.net/ihs_supplychain/the-great-north-american-drought-industry-impacts-one-year-later-26356696

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The Great North American Drought: Industry Impacts One Year Later

  1. 1. The Great North American Drought: Industry Impacts One Year Later August 8, 2013 Welcome to Today’s Webcast
  2. 2. Copyright © 2013 IHS Inc. All Rights Reserved. Before We Get Started • Ask questions any time • Type questions into the “Ask a Question” area, click ‘submit’ • The slides advance automatically throughout the event • Need help? Click the Help(?) icon below
  3. 3. Copyright © 2013 IHS Inc. All Rights Reserved. Live Tweet Today’s Webcast: #IHSWebcast Join the Conversation: Follow @IHS4SupplyChain on Twitter 3
  4. 4. Copyright © 2013 IHS Inc. All Rights Reserved. We Want Your Feedback on Today’s Topics 4 Everyone completing the entire survey at the conclusion of today’s live event will be entered into a drawing to win a
  5. 5. Copyright © 2013 IHS Inc. All Rights Reserved. Today’s Speakers 5 Mr. Ryland Maltsbarger Principal Economist, Agriculture IHS Supply Chain Pricing & Purchasing Ryland Maltsbarger is a principal economist of the IHS Pricing & Purchasing Agriculture Service. He supervises the long-term Global Crops and Livestock Services along with the monthly update of the quarterly price forecast. Ryland is directly responsible for the global sugar and cotton forecasts. Other duties include the publication and forecast of the Global Crops Cost of Production Service. Ryland joined IHS in 2008 as an economist. His service with the company has included the creation of the global sugar partial-equilibrium model along with the expansion of the global cotton model. He created the system behind the quarterly price forecast as well as the format for the publication. Other projects have included work on 2050 Global Crops service and expansion and reformatting of the Global Crops Cost of Production Service.
  6. 6. Copyright © 2013 IHS Inc. All Rights Reserved. Today’s Speakers 6 Mr. Brandon Kliethermes Senior Economist, Agriculture IHS Supply Chain Pricing & Purchasing Brandon Kliethermes is an economist with IHS Agriculture Pricing & Purchasing group. Brandon's key area of focus is the continued development, maintenance, and forecasting of US crops. He also provides daily and weekly commentary on current issues affecting agricultural markets worldwide. Brandon created and maintains the Global Insight Softs Commodity Price Index (GISCPI) to evaluate weekly prices changes for food components such as feed grains, food grains, meals and oils, dairy, fiber, sugar, and meats and products. Brandon joined IHS Global Insight in April 2010 after completing an M.S. in Agriculture Economics in December 2009 and a B.S. in Agriculture Economics in 2008, both from the University of Missouri-Columbia. Brandon has held positions as a licensed commodity broker for Allendale Inc. and worked under the board members at the Kansas City Board of Trade. His agricultural background and continued involvement with production agriculture gives him a unique perspective for market/industry analysis.
  7. 7. US & Global Agriculture Market Outlook Great North American drought: Industry impacts one year later Ryland Maltsbarger & Brandon Kliethermes IHS Agricultural Service 8 August 2013
  8. 8. Copyright © 2013 IHS Inc. All Rights Reserved Outline • Introduction • US outlook • Supply implications • World grains • World oilseeds • US cattle • Multi-client study
  9. 9. Copyright © 2013 IHS Inc. All Rights Reserved Large impacts of last half-decade: corn and wheat Once upon time Then came the four shocks 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 • World grain prices increased modestly • Grain prices began fluctuating markedly, corn prices almost tripled, wheat prices more than doubled • Corn and wheat area harvested experienced very slight increase • While corn area grew almost 10 times faster, wheat area did not change much • Corn and wheat yield improved very marginally • Yields outpaced their trend growth for both grains (growth was twice as fast) Demand-driven shocks 1-US Biofuel mandate 2-Financial crises Supply-driven shocks 3-Drought (FSU-12, EU-27, CAN) 4-Drought (US, ARG)
  10. 10. Copyright © 2013 IHS Inc. All Rights Reserved. US drought and recovery: May 2012 2013 Abnormally Dry Drought – Moderate Drought – Severe Drought – Extreme Drought - Exceptional
  11. 11. Copyright © 2013 IHS Inc. All Rights Reserved. US drought and recovery: August 2012 2013 Abnormally Dry Drought – Moderate Drought – Severe Drought – Extreme Drought - Exceptional
  12. 12. Copyright © 2013 IHS Inc. All Rights Reserved. IHS GISCPI The IHS Global Insight Soft Commodity Price Index (GISCPI) has pulled back from its 2012 highs from the drought. The most recent break lower was in reaction to old crop futures collapsing from net long liquidation from traders, which spilled over into grains. The IHS GISCPI falls to an index value of 1.8 by first-quarter 2014.
  13. 13. Copyright © 2013 IHS Inc. All Rights Reserved. Where we are today • The US weather forecast looks to keep pollination stress to a minimum this year. • Weather in Russia and Ukraine has been conducive for an early start to the harvest, but dry warm weather in late spring had cut production outlooks slightly. • Brazil’s summer corn crop has sidestepped a major yield-reducing scenario. • Weekly wheat imports from China have shocked the trade. As a result, the US Department of Agriculture has increased 2013/14 Chinese wheat imports to 8.5 million metric tons. • Bottom line: commodity prices are being pressured by the growing reality that world grain balance sheets may actually loosen.
  14. 14. Copyright © 2013 IHS Inc. All Rights Reserved. Quarterly price outlook Downward trend for corn and soybean prices while wheat sees seasonal price gains. Our lower price outlook is also conditional on average growing weather in 2014.
  15. 15. Copyright © 2013 IHS Inc. All Rights Reserved. Past corn area revisions—USDA Given prior years of delayed plantings, corn area typically falls in the October WASDE report. Using 2009 as a proxy, revisions in abandonment might actually offset planted area losses. Current USDA harvested percentage is at 91.5%.
  16. 16. Copyright © 2013 IHS Inc. All Rights Reserved. Past soybean area revisions—USDA Unlike corn, soybean area is variable and a wet year such as 2008 showed producers moved to soybeans. On a percentage basis, soybean abandonment changes very minimally year to year. The current USDA harvested percentage is at 99%.
  17. 17. Copyright © 2013 IHS Inc. All Rights Reserved. Area scenario and price midpoints—corn • Bearish: Planted area is adjusted higher to 97.5 million acres with harvested area at 89.2 million acres. Yield is 156.5 bushels per acre. • Bullish: Planted area is reduced to 96.7 million acres with harvested area at 88.0 million acres. Yield is 155 bushels per acre. • June acreage: Planted area is at 97.4 million acres and harvested area at 89.1 million acres. Yield is 156.5 bushels per acre.
  18. 18. Copyright © 2013 IHS Inc. All Rights Reserved. Area scenario and price midpoints— soybeans • Bearish: Planted area is adjusted higher to 79.2 million acres with harvested area at 78.4 million acres. Yield is 44 bushels per acre. • Bullish: Planted area is reduced to 77.1 million acres with harvested area at 75.5 million acres. Yield is 43.5 bushels per acre. • June acreage: Planted area is at 77.7 million acres and harvested area at 76.9 million acres. Yield is 44.5 bushels per acre.
  19. 19. Copyright © 2013 IHS Inc. All Rights Reserved. Increased area planted supply capacity Potential implications of adding supply capacity without another supply downturn • Area pulled from pasture and Conservation Reserve Program (CRP) remain in row crop production for the next few years. • Producers continue to hope for higher prices in the following 12 months. • One factor to consider is as world production increases, supply disruptions in the two hemispheres may offset supply gluts in each other. • In this example IHS looks strictly at the price impact of three prolonged years of higher-than-expected planted area for the United States only.
  20. 20. Copyright © 2013 IHS Inc. All Rights Reserved. Implications of increased capacity—corn Supply scenario 2014/15 2015/16 2016/17 Production (Million bushels) 14,216 14,181 14,123 Feed and residual 5,208 5,175 5,236 Exports 2,153 2,280 2,171 Ending stocks 1,632 1,496 1,390 Average farm price (Dollars per bushel) $3.83 $4.06 $4.22 May forecast Production (Million bushels) 13,527 13,438 13,906 Feed and residual 5,042 5,018 5,165 Exports 1,968 1,789 1,901 Ending stocks 1,402 1,189 1,214 Average farm price (Dollars per bushel) $4.41 $4.60 $4.50 Percentage change Production (Million bushels) 5% 6% 2% Feed and residual 3% 3% 1% Exports 9% 27% 14% Ending stocks 16% 26% 15% Average farm price -13% -12% -6% • Scenario: Corn planted area falls from 97.4 million acres in 2013/14 to 94.3 million acres in 2014/15, 91.8 million acres in 2015/16, and 90.2 million acres in 2016/17. • Harvested percentage remains constant at 91% and yields fall in line with the May forecast. • Corn for ethanol remains aligned with the May forecast at 5 billion bushels, but a lower farm price increases food seed and industrial use by under 1%. • Risk surrounding the robust export path would pressure prices to a greater extent .
  21. 21. Copyright © 2013 IHS Inc. All Rights Reserved. Implications of increased capacity—soybeans Supply scenario 2014/15 2015/16 2016/17 Production (Million bushels) 3,497 3,516 3,519 Crush 1,820 1,824 1,809 Exports 1,465 1,541 1,579 Ending stocks 264 249 225 Average farm price (Dollars per bushel) $8.23 $8.45 $9.23 May forecast Production (Million bushels) 3,351 3,408 3,481 Crush 1,796 1,796 1,803 Exports 1,438 1,538 1,573 Ending stocks 246 214 212 Average farm price (Dollars per bushel) $9.01 $9.37 $9.57 Percentage change Production 4% 3% 1% Crush 1% 2% 0% Exports 2% 0% 0% Ending stocks 7% 16% 6% Average farm price -9% -10% -3% • Scenario: Soybean planted area is flat with 2013/14 at 77.7 million acres in 2014/15, 77.1 million acres in 2015/16, and 76.3 million acres in 2016/17. • Harvested percentage remains constant at 99% and yields fall in line with the May forecast. • For soybeans, there is greater risk surrounding crush estimates rather than exports. • US exports of soy products increase, pulling crush higher.
  22. 22. Copyright © 2013 IHS Inc. All Rights Reserved. Looking ahead • Expect higher harvest price volatility this fall as a result of the delayed US crop. • The National Oceanic and Atmospheric Administration stated in its May Atlantic Hurricane Outlook and Summary that “An above-normal season is most likely, with the possibility that the season could be very active.” It will release an updated forecast in August. • Frost concerns will begin to spill into headlines by the end of August, with the end of September being a key point for northern states. • Prices should continue to be pressured lower but should see some level of support after the beginning of 2014. • How strongly will South America react to lower prices? • IHS expects producers in Brazil and Argentina to switch to more soybeans at the expense of corn as margins squeeze. • The second corn crop area is forecast to pull back in Brazil.
  23. 23. Copyright © 2013 IHS Inc. All Rights Reserved. USDA Reports • 12 August WASDE report • Possible area revision for US soybean plantings as producers are resurveyed and possibly even corn? • Given the current weather outlook there is greater chance today for corn yields to be increased while soybean yields are still up in the air. • 12 September WASDE report • Fall harvested yields will be adjusted. • 30 September Quarterly Grain Stocks report • The stocks in this report will represent the ending stock level for all September/August marketing year crops, i.e., corn and soybeans. • This report will also set the level of beginning stocks in the 2013/14 marketing year. • This report will indicate whether wheat feedings during the summer months of 2013 fell within expectations. • 11 October WASDE report • This brings us one step closer to final production numbers for the 2013/14 marketing year. • Planted and harvested area for all spring planted crops will be updated.
  24. 24. Copyright © 2013 IHS Inc. All Rights Reserved. Global commodity market implications • Corn exporters, Chinese demand • Wheat exporters, China wheat • World rice • Oilseeds area
  25. 25. Copyright © 2013 IHS Inc. All Rights Reserved. US and Brazil corn area harvested and exports 0 10 20 30 40 50 60 0 10 20 30 40 50 60 70 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 US-Exports Brazil-Exports US-Area Brazil-Area Millionhectares Millionmetrictons
  26. 26. Copyright © 2013 IHS Inc. All Rights Reserved. China’s corn 0 1 2 3 4 5 6 7 8 0 10 20 30 40 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Imports Exports Area Harvested Millionhectares Millionmetrictons
  27. 27. Copyright © 2013 IHS Inc. All Rights Reserved. US, EU-28, and Russia wheat area harvested and exports 0 5 10 15 20 25 30 35 40 0 5 10 15 20 25 30 US-Exports EU-Exports Russia-Exports US-Area EU-Area Russia-Area Millionmetrictons Millionhectares
  28. 28. Copyright © 2013 IHS Inc. All Rights Reserved. China’s wheat 0 5 10 15 20 25 30 100 105 110 115 120 125 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Domestic Feed Imports Production Millionmetrictons Millionmetrictons
  29. 29. Copyright © 2013 IHS Inc. All Rights Reserved. World rice One of the only grains that have actually seen price pressure from growing supplies since 2012 The major risk for rice is the continued fog surrounding the Thai rice paddy program.
  30. 30. Copyright © 2013 IHS Inc. All Rights Reserved. 0 5 10 15 20 25 30 35 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Millionhectares US Argentina Brazil China Soybean area South American soybeans see modest expansion of area in 2013/14, although stronger inventories weaken price incentives and keep expansion stagnant the following couple marketing years, assuming no new negative weather events. China continues its slow retreat from the 2004/05 high, increasing reliance on imports to meet growing domestic demand.
  31. 31. Copyright © 2013 IHS Inc. All Rights Reserved. Canola/rapeseed area 0 1 2 3 4 5 6 7 8 9 10 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Millionhectares Canada EU Ukraine Australia Even with better winter rapeseed planting and growing conditions in several EU countries, Canada, Ukraine, and Australia look to remain the top exporters of canola/rapeseed globally. Following disappointing yields in 2012/13 due to hot, dry weather, Canada looks to return with record canola production in 2013/14 as closer-to-average sowing and growing conditions boost projected productivity, overcoming the year-over-year decline in area.
  32. 32. Copyright © 2013 IHS Inc. All Rights Reserved. Sunflower seed area 0 1 2 3 4 5 6 7 8 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Millionhectares Argentina EU Russia Ukraine Soybean and corn remain dominant crops in Argentina, limiting sunflower seed expansion, but it sees a modest recovery in 2013/14. Russia recovers much of the record harvestable area in 2013/14 following hot and dry conditions 2012/13.
  33. 33. Copyright © 2013 IHS Inc. All Rights Reserved. US cattle supply issues • Cattle inventory cycle • Cattle supplies • Beef production • Price outlook
  34. 34. Copyright © 2013 IHS Inc. All Rights Reserved. 5,000 5,250 5,500 5,750 6,000 6,250 6,500 69,00071,00073,00075,00077,00079,00081,00083,00085,000 LagJan1stNon-MilkHeifersRetained Jan 1st Non-Milk Cattle Inventory 2012 1986 1996 1990 2004 2014 Cattle inventory cycle (Thousand head) 1990–96 Industry growth follows higher exports to Asia and growing domestic demand. Inventory growth preceded by run-up in heifer retention and slowing inventory decline. Slowing inventory decline and increased heifer retention signal expansion. Beef cattle inventories look to be stalled in 2014 despite higher heifer retention. Which way will 2015 move?
  35. 35. Copyright © 2013 IHS Inc. All Rights Reserved. Cattle supply • Heifer slaughter slowed during the first half of 2013, allowing inventories to improve slightly, but how many have moved into beef cow inventories? • Cattle placements and cow slaughter suggest that it will not be enough. • Beef cow slaughter is up 2.3% during the first half of 2013 despite a 2.9% decline in 1 January inventories. • The number of cattle placed on feed during the first half of 2013 was nearly even with the first half of 2012, despite a 2.1% reduction in non-milk cattle inventories. • Placement weights trended higher during the second quarter, suggesting that heifers are begin held for additional weight gain, not for breeding. • Placements of cattle weighing more than 700 pounds increased 16.8% year over year in the second quarter, while placements of cattle weighing fewer than 700 pounds declined 16.9% during the same period.
  36. 36. Copyright © 2013 IHS Inc. All Rights Reserved. Cattle supply continued • Total inventories to stall in 2014: • Strong start to 2013 not expected to turn into better 2014 inventories • Smaller to even 2013 calf crop • Even to slightly lower beef heifer and cow inventories • Lower steer inventories, down by 1.5% • Improved to even dairy heifer and cow inventories • Beef production looks to suffer in 2014 and beyond: • Fewer steers available for placement and slaughter • Herd building reduces availability of heifers and cows for slaughter • Higher slaughter weights may help, but are not likely to be enough • Production is not likely to recover fully until 2018
  37. 37. Copyright © 2013 IHS Inc. All Rights Reserved. Beef production (Million pounds) 22,500 22,750 23,000 23,250 23,500 23,750 24,000 24,250 24,500 24,750 25,000 25,250 25,500 25,750 26,000 26,250 26,500 26,750 27,000 27,250 27,500 1985 1990 1995 2000 2005 2010 2015 2012 1986 1996 1990 2004 2014 Next year looks to have the lowest beef production in 20 years… …lower than the 2004 bovine spongiform encephalopathy (BSE) level
  38. 38. Copyright © 2013 IHS Inc. All Rights Reserved. 5,000 5,100 5,200 5,300 5,400 5,500 5,600 5,700 5,800 5,900 69,00071,00073,00075,00077,00079,000 LagJan1stNon-MilkHeifersRetained Jan 1st Non-Milk Cattle Inventory 2012 2015 2014 Cattle inventory 2015 (Thousand head) The first year of expanded inventories in eight years is expected to be 2015. Heifer inventories are likely to fall in 2014 because of low cow-calf returns in 2013 but they should recover beyond 2014 as the industry moves to expand.
  39. 39. Copyright © 2013 IHS Inc. All Rights Reserved. $40 $50 $60 $70 $80 $90 $100 $110 $120 $130 $140 $150 $160 $170 2008 2009 2010 2011 2012 2013 2014 2015 Feeder Steer Price, OK City, 600-650 lb, $/CWT Fed Steer Price, NE Direct, 11-1300 lb, $/CWT Ave Cost of Gain $/CWT Fed Steer Price - Feed Costs $/CWT Cattle price and returns (US dollars per hundredweight) Despite lower feed prices, fed steer remain higher on tight beef supplies. Weaker spring demand causes lower 2013 feeder steer price. Tighter cattle supplies pull prices back up in 2014.
  40. 40. Copyright © 2013 IHS Inc. All Rights Reserved Join IHS in an upcoming multi-client study • Long-term increased variability weather impact study • Increase frequency of yield variability across major producers and importers • El Niño & La Niña patterns on Australia/Oceania and South America • Increased rainfall shortages in North America, the European Union, and the Commonwealth of Independent States • Decreased monsoon in India • Participants • Agricultural input industries: chemicals, fertilizer, machinery, irrigation • Food chain participants: grain handlers, processors, retailers, and restaurant chains • Transportation industry players • Banking and investment: global potential risks of capital investments • All companies: global risks surrounding change in indirect costs
  41. 41. Thank You! Questions?
  42. 42. Copyright © 2013 IHS Inc. All Rights Reserved. 42 We Want Your Feedback on Today’s Topics Everyone completing the entire survey at the conclusion of today’s live event will be entered into a drawing to win a
  43. 43. Copyright © 2013 IHS Inc. All Rights Reserved. 43 Participate in the IHS Multi-Client Study… *Offer limited to qualified entities until August 30th, 2013. How to Participate? Recommended for all attendees…
  44. 44. Copyright © 2013 IHS Inc. All Rights Reserved. For More Information Send questions and requests for information to: Webcasts@ihs.com Visit IHS.com/PricingPurchasing for more information 44

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