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2021 Q2 Big Picture Market Outlook Webinar

Gain key market intelligence on the North American cattle & beef and hogs & pork markets. This webinar also features a special report on the resurgence of African Swine Fever (ASF) in China.

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2021 Q2 Big Picture Market Outlook Webinar

  1. 1. Q2 BIG PICTURE OUTLOOK HOSTED BY: J.S. Ferraro DATE: April 21, 2021 Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. WEBINAR ASF Resurgence - Challenges & Effects on the Global Protein Market
  2. 2. Meat Procurement Advisors. We deliver strategies to help meat users manage markets, risk, sourcing, and logistics. ABOUT J.S. FERRARO 2 |
  3. 3. 3 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. Q2 BIG PICTURE MARKET OUTLOOK: SPECIAL REPORT ASF RESURGENCE: Todd Thurman Swine Consultant | SwineTex Challenges & The Effects In The Global Protein Market
  4. 4. PANELIST | DR. ROB MURPHY DR. ROB MURPHY, BS, MS, PhD Agri Economics Executive Vice President, Research and Analysis J.S. Ferraro www.jsferraro.com An agricultural economist and business leader with over 27 years in the industry, Dr. Rob Murphy has a wealth of experience in the North American meat and livestock industries studying, analyzing and predicting market movements. His expertise spans commodity analysis, econometric modelling, forecasting, futures markets, hedging, and risk management. Rob holds a Ph.D. in Agricultural and Applied Economics from Virginia Tech and has developed his market expertise over the past three decades by serving as an economist with the Chicago Mercantile Exchange, Sparks Companies and Informa Economics. At Informa, Rob held two senior leadership roles (Senior VP of Livestock, Meat, Dairy and Poultry group and Vice President) over 13 years. He focused on the development of risk management programs and directed the division’s work in commodity analysis in the protein sector. He has spoken internationally on many topics, including agri supply chain-development and international protein demand. Currently, Rob is the Executive Vice President, Research and Analysis at J.S. Ferraro & Co. leading the team in commodity analysis, financial modelling, and the development of trading and risk management strategies. 4 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution.
  5. 5. PANELIST | KEVIN GRIER KEVIN GRIER Market Analyst Kevin Grier Market Analysis & Consulting www.kevingrier.com Kevin Grier is a noted Canadian Agriculture & Food Market Analyst providing economic and market outlook for livestock, meat and grocery industries over the last 20+ years. His critical market insight and analysis helps his clients - from government and producer groups to small to large businesses - drive profitable bottom line decisions. Kevin is a regular contributor and respected expert across media platforms throughout North America - Global News, CTV, National Post, Globe & Mail, National Hog Farmer and Grocery Business. Kevin speaks with clarity on a range of topics including market analysis, economic impacts, consumer trends and commodity analysis. He provides regular commentaries on the market and is a national and international keynote speaker known for his approachable yet pragmatic style. His breadth of knowledge was developed over 18 years at the George Morris Centre, a leader in economic research in the agriculture and food industry. Prior to that Kevin was a manager with the Ontario Farm Products Marketing Commission, the supervisory body of the provincially regulated marketing boards. Currently, Kevin is Principal of Kevin Grier Market Analysis and Consulting, a company specializing in livestock, meat, poultry and grocery industry market insight and analysis working across a breadth of organizations internationally. 5 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2020. Not for distribution.
  6. 6. 1. MARKET OUTLOOK | CATTLE & BEEF • US Market • Canadian Market 2. SPECIAL REPORT | HOGS & PORK • ASF Resurgence: Challenges & Effects on the Global Protein Market 3. LIVE Q&A DISCUSSION OUTLINE 6 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution.
  7. 7. Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. 7 | HOUSEKEEPING Questions can submitted within the Q&A box at the bottom of your screen Participants video and microphones will be muted for the presentation Technical questions can be submitted using the CHAT box at the bottom of the screen. Contact HELP & SUPPORT participant Use the side-by-side view to easily see the speakers and presentation
  8. 8. • SUPPLY, DEMAND & PRICING • INSIGHTS Q2 BIG PICTURE MARKET OUTLOOK CATTLE & BEEF | US 8 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution.
  9. 9. Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. 9 | US Beef Markets on Fire! • US beef prices have surged in recent weeks, pushing the Choice cutout over $275 • Outside of the Covid-related disruptions last spring, the cutout has struggled to exceed $235 in the last two years • Tighter-than-normal spring supplies will play a role in further advances • However, the major story in the beef complex has been astounding domestic beef demand
  10. 10. Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. 10 | Cattle Prices Surge, Packer Margins Very Strong • The cash cattle market began moving higher in late March after seven weeks stuck at $114 • Last week’s market averaged near $122, with stronger pricing in the Northern Plains and weaker pricing in the South • Packers can easily afford to pay more for cattle because surging cutouts have lifted to their profit margins to over $500/hd • Packers could pay as much as $164 for cattle and still not have a negative margin
  11. 11. Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. 11 | Tighter-Than-Normal Spring Supply Coming • A sharp drop in feedyard placements back in Q4 is now beginning to influence the supply of market-ready fed cattle • This drop in Q4 placements was 443,000 less than Q4 of 2019. That amounts to about 34k fewer steers and heifers each week • Timing is not exact however, since there is a lot of flexibility in when feedyard cattle will be ready for slaughter
  12. 12. Fed Slaughter Much Tighter During April & May • Here we compare the forecast for this year against the 2017-2019 average since 2020 was so disrupted due to Covid • Weekly average S&H slaughter in April looks like it will be down about 2.5% and in May that grows to a 4.5% deficit • By June, the industry will be beyond the dip in cattle availability and kills during the summer will be closer to the longer- run averages • Keep in mind, packer margins have been running extremely large this year 12 |Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. +6.9% -2.5% -4.5% $126 $124 $116 $114 $110 2017-19 Avg Cattle Pr:
  13. 13. Carcass Weights Starting to Raise Concerns 13 |Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. • In early 2021, carcass weights were running very heavy, but the “deep freeze” event in mid February helped bring weights quickly down to last year’s level • Not much bad weather since then, and cattle have been gaining well in feedyards • The de-trended and de-seasonalized carcass weights are currently around +10 lbs, but projected to move higher • This raises concerns that cattle feeders might not gain the leverage advantage expected this spring
  14. 14. Beef Demand is Incredibly Strong 14 |Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. • The price-quantity scatter diagram for April shows demand in 2021 stronger than it has ever been • This April was even stronger than demand in April, 2015 when very tight supplies were causing “panic” demand • The bar chart to the right shows our calculated demand index for Q1 through time. This year is the strongest on record • 2021 even beats 2020 Q1 demand when consumers were in stockpiling mode due to Covid spread
  15. 15. Possible Causes for Current Demand Strength • Changes in Consumer Dietary Patterns: Remember the Atkins Diet Fad back in the early 2000s? This market is acting a lot like it did back then with unexplained demand strength across all proteins • Increased Disposable Income: Three rounds of stimulus checks have boosted consumer purchasing power. Biggest round signed March 11. Could be inflationary. 15 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2020. Not for distribution. • Vaccination Inspires Consumer Confidence: Yes, but that is more likely to generate spending on travel, entertainment than on a basic necessity like food. • Foodservice Ramping Back Up: Inventories likely needed to be replenished, but that is a one- time event and would only last a week or two. The shift away from foodservice during the pandemic boosted demand, so if foodservice comes back that would point to weaker demand. Most Likely Causes of This Demand Boost: Possible, but Less Likely:
  16. 16. Strong Spring Pricing Should Boost Placements 16 |Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. • In the short-run, strong demand and tighter-than-normal cattle supplies should lead to rising cutout and cattle prices. That makes the Apr and Jun futures look too low • Longer-term however, we expect demand to cool somewhat and the dip in supplies will pass • High pricing this spring is likely to lead to high feedyard placements which will hit the market in Q4 • As a result, all of the 2021 contracts from August onward look too rich
  17. 17. INSIGHTS: Cattle & Beef Main Take-Aways • Super-strong beef pricing is being driven by the perfect storm of tight cattle supplies meeting extremely strong demand • The tight supply situation should resolve by mid June, but the strong demand environment could continue a lot longer. • Much improved feedyard profitability will likely drive large placements in the next few months and those big supplies will be market ready this fall/winter. • This demand “bubble” feels different from the typical demand cycle. It may be driven by a change in consumer dietary habits as consumers move toward high protein diets to lose weight gained during the pandemic • Fall and winter futures look way too high—buyers should resist the temptation to extend forward pricing beyond mid-summer. 17 |Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2020. Not for distribution.
  18. 18. • FOODSERVICE UPDATE • SUPPLY, DEMAND & PRICING • INSIGHTS Q2 BIG PICTURE MARKET OUTLOOK CATTLE & BEEF | CAD 18 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution.
  19. 19. Foodservice Update • Foodservice tanking hard again • New lockdowns sales back to April 2020 levels? 19 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2020. Not for distribution. 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 J F M A M J J A S O N D Billions $ Canadian Foodservice Sales Monthly 2020, 2021, 2015-2019 Avg 2015-2019 average 2020 2021 2021 Estimate/Forecast -80% -70% -60% -50% -40% -30% -20% -10% 0% Total Foodservice Special Services Drinking places Full Service Limited Service Foodservice Sales Change by Venue January 2021 vs 2020
  20. 20. Supermarket Update • Easing off last year’s pace, • Food price inflation Canada vs. U.S. major difference 20 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2020. Not for distribution. 5.0 6.0 7.0 8.0 9.0 10.0 J F M A M J J A S O N D Billions Canadian Supermarket Sales Monthly 2020, 2021, 2015-2019 Average 2015-2019 Average 2020 2021 2021 Estimate/Forecast 0% 1% 2% 3% 4% 5% 6% Mr Ap My Jn Jl Au Se Oc Nv De 2021 Fe Year over Year Change Source: StatsCan, U.S. Bureau of Labor Stats Food From Stores Inflation Canada and United States Monthly Latest 12 Months United States Canada
  21. 21. Cdn Quarterly Cattle Slaughter 2019-2021 • Q1 +3% (vs +2% forecast) • Q2 getting tight -3% vs 2019 21 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2020. Not for distribution. 500 550 600 650 700 750 800 850 900 Q1 '19 Q2 Q3 Q4 Q1 '20 Q2 Q3 Q4 Q1 '21 Q2 Thousand Head
  22. 22. Alberta and Ontario Steer Price Spread 22 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2020. Not for distribution. -30 -20 -10 0 10 20 30 JA FE MR AP MY JN JL AU SE OC NV DE C$/cwt Live Souce: Beef Farmers of Ontario, Texas Cattle Feeders Association Ontario-Texas Panhandle Fed Steer Price-Spread Weekly 2020, 2021, 2015-2019 Average 2015-19 Avg 2020 2021 -20 -15 -10 -5 0 5 10 15 JA FE MR AP MY JN JL AU SE OC NV DE C$/cwt Source: Canfax and Texas Cattle Feeders Association Alberta-Texas Panhandle Price-Spread Weekly 2020, 2021, 2015-2019 Average 2015-2019 Avg 2020 2021
  23. 23. Confidential. © Copyright Retail Ready Foods Inc. All Rights Reserved, 2018. Not for distribution. 23 Alberta Packer Gross Margins 0 100 200 300 400 500 600 700 800 900 1000 J F M A M J J A S O N D C$/head source: Canfax, USDA and Grier Calculations Alberta Packer Gross Margins, Weekly 2020, 2021 and 2015-2019 Average 2015-2019 Average 2020 2021
  24. 24. Weekly Beef Wholesale Price Differential vs 2017-2019 Average 24 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2020. Not for distribution. -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Feb 27 Mar 6 Mar 13 Mar 20 Mar 27 Apr 3 Apr 10 Apr 17 Price Differential Canadian Beef Versus Chicken and Pork Wholesale Price Differential Compared to the 2017-2019 Average Differential Beef-Chicken Beef-Pork
  25. 25. Retail Beef Margins vs 2017-19 Average Latest 8 weeks 25 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2020. Not for distribution. -8% -6% -4% -2% 0% 2% Feb 27 Mar 6 Mar 13 Mar 20 Mar 27 Apr 3 Apr 10 Apr 17 Margin vs. Average Retail Grocery Beef Margins 2020-2021 Weekly Compared to 2017-2019 Average
  26. 26. Ontario Beef Feature Share Monthly vs 2015-2019 Average 26 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2020. Not for distribution. -35% -25% -15% -5% 5% Ap My Jn Jl Au Se Oc Nv De 2021 Fe Mr Ontario Beef Features Monthly Share of Fresh Meat Features Vs 2015-2019 Average Share
  27. 27. SPECIAL GUEST PANELIST | TODD THURMAN TODD THURMAN Swine Consultant | Founder SwineTex Consulting Services www.swintex.com Todd Thurman is an International Swine Management Consultant and the owner of SwineTex Consulting Services. With an A.S. degree from Clarendon College and a B.S. degree in Animal Science, Production Emphasis from Texas Tech University, Todd has built a successful career spanning over 20 years in the swine industry. Todd’s expertise in the field have allowed him to work in 17 countries across the world. Most notably, helping grow a 25,000 sow farrow-to-finish startup in Russia into one of the top five pork production facilities in the country. SwineTex Consulting Services was founded in 2017 with an overarching goal to help pork producers improve actual, measurable results in farms. He is a frequent radio and podcast guest and his works have been featured in notable publications such as the Wall Street Journal. 27 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution.
  28. 28. 28 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. SPECIAL REPORT ASF RESURGENCE: Todd Thurman Swine Consultant Challenges & The Effects In The Global Protein Market Q2 BIG PICTURE MARKET OUTLOOK
  29. 29. Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. 29 | AUGUST 2018 – JANUARY 2020 65% of the Chinese Herd *Official SwineTex Estimate
  30. 30. Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. 30 | THREE WAVES • First Outbreak: August 2018 • Wave One: August 2018 – Spring 2019 • Wave Two: Late Spring / Early Summer – Late Fall 2019 • Wave Three: Winter / Spring 2021
  31. 31. Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. 31 | WHAT’S DIFFERENT NOW? • Extraordinary Pig Density • Poor Biosecurity • Ineffective Control Procedures: • Panic Selling • Improper Disposal • “Pulling the Tooth” • Many of the Same Issues as Before Plus: • Mutation, likely caused by usage of rogue, illegal vaccines • Mutated virus is less deadly, but harder to identify FIRST TWO WAVES THIRD WAVE
  32. 32. Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. 32 | WAVE 3 • Over the winter, significant losses in Northern China • Estimates range from <20% to 50%+ • Weighted Toward North/Central China but Outbreaks in Many Provinces Including the South • Big producers heavily affected • “Bad PRRS Year” Maybe ASF? • Some wild strain outbreaks, but heavily weighted towards mutated strain
  33. 33. Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. 33 | CHINESE PIG PRICE-HEADLINES 21.00 23.00 25.00 27.00 29.00 31.00 33.00 35.00 37.00 39.00 1/1/2021 2/1/2021 3/1/2021 4/1/2021 Weekly China Pig Price (RMB/kg) ©SwineTex Consulting Services, LLC, ALLRIGHTS RESERVED Source Data: China Pig “Chinese Hog Prices Down 30%+ Since January” “Chinese Pork Industry to Fully Recover by Mid 2021” Source Data: China Pig Network
  34. 34. 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 WEEK ENDING 3/15/2019 4/5/2019 4/26/2019 5/17/2019 6/7/2019 6/28/2019 7/19/2019 8/9/2019 8/30/2019 9/20/2019 10/11/2019 11/1/2019 11/22/2019 12/13/2019 1/3/2020 1/24/2020 2/14/2020 3/6/2020 3/27/2020 4/17/2020 5/8/2020 5/29/2020 6/19/2020 7/10/2020 7/31/2020 8/21/2020 9/11/2020 10/2/2020 10/23/2020 11/13/2020 12/4/2020 12/25/2020 1/15/2021 2/5/2021 2/26/2021 3/19/2021 4/9/2021 Weekly China Pig Price 3/15 to Present (RMB/kg) ©SwineTex Consulting Services, LLC, ALLRIGHTS RESERVED Source Data: China Pig Network COP Previous Record SwineTex Analysis Source Data: China Pig Network “Normal” Prices CHINESE PIG PRICE IN CONTEXT Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. 34 |
  35. 35. Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. 35 | CURRENT STATUS • Government reports last December indicated rapid recovery (80-90% of Pre-ASF) with full recovery expected in mid 2021 • We believed those numbers to be overstated at the time: • Poor reproductive productivity-poor quality breeding stock • Inaccurate reporting • No lag between sow and growing pig population increases • Prices 2-3X pre-ASF levels • Recent developments essentially guarantee that recovery will be significantly delayed. 11.5 33.8 0 5 10 15 20 25 30 35 40 Dec (2018) Dec (2020) China Average Pig Price* Source : SwineTex *RMB/KG
  36. 36. Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. 36 | THIS SUMMER • Will we see a repeat of 2019 with a waning problem in North China going into summer but a growing outbreak in the South? • Some similar indicators: • Pig Prices • Geographical Patterns • Also differences: • Less widespread use of illegal vaccines • Different disease characteristics
  37. 37. Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. 37 | SHORT-TERM OUTLOOK • Continued Poor Performance • Poor Quality Breeding Stock (20% Worse Reproductive Performance than Normal) • Ongoing Disease Challenges • Two Steps Forward, One Step Back • Periods of progress interrupted by setbacks • Lower Prices this Spring/Summer that go back up Late Summer/Fall
  38. 38. Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. 38 | CHINA IMPORTS 0 1000 2000 3000 4000 5000 6000 2018 2019 2020 China Meat/Chicken Imports (MT) Pork Beef Chicken Source: USDA FAS 0 20 40 60 80 100 120 January February March China Meat Imports 2021 (10000 T) Source: China Customs Record
  39. 39. Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. 39 | LONGER-TERM OUTLOOK • Again, depends heavily on ASF status • Full Recovery • What is full recovery? • 95% of Previous? • What is Previous? • Our Definition of Full Recovery: 95% of ~37 Million Sows of proper breeding stock • 2014 or Later • Steady Progress After 3rd Wave • Vaccine?
  40. 40. Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. 40 | WHAT TO WATCH FOR • Pig Prices • Piglet Prices as a Leading Indicator (careful) • Genetics Imports • Slaughter Weights • Pork Imports • Consider Price Differentials • Official Chinese Government Reports • “Directionally Correct”
  41. 41. Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. 41 | Todd Thurman Swine Consultant | Founder SwineTex Consulting Services www.swintex.com . THANK YOU
  42. 42. You can email our panelists directly at: • Rob.Murphy@jsferraro.com • Kevin@KevinGrier.com Please complete our brief survey to help us continue to shape great discussions. ADDITIONAL QUESTIONS: SESSION SLIDES: SURVEY: Session recording and deck will be emailed to registered participants 24-48hrs after the session. Please feel free to connect/follow us and our speakers on LinkedIn OR Twitter CONNECT: 42 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. THANK YOU
  43. 43. We provide members of the meat & livestock industry with complimentary market intelligence to make smarter procurement decisions. As part of our service suite, access: RED MEAT OUTLOOK: monthly market intelligence reports for both Cattle & Beef and Hogs & Pork markets; BIG PICTURE MARKET OUTLOOK: quarterly market outlook webinars featuring prominent North American meat & livestock analysts; AUTOMATED MARKET ALERTS: reliable and timely information (supply, demand & pricing) to stay abreast of the market. Subscribe Now 43 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2020. Not for distribution. JSF MARKET INTELLIGENCE SERVICES WEEKLY MEAT WRAP NEWSLETTERS: Weekly analysis on beef and pork markets delivered right to your inbox;
  44. 44. Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2020. Not for distribution. 44 | No matter where you sit on the supply chain spectrum, rely on market intelligence that provides the Canadian perspective you need. Download a sample report or subscribe now! ACCESS INTELLIGENCE WITH A CANADIAN FOCUS SIGN UP NOW Receive your FREE 2 MONTH TRIAL when you sign up Today! CANADIAN CATTLE MARKET REPORT CANADIAN PORK MARKET REPORT CANADIAN BOXED BEEF REPORT CANADIAN CHICKEN MARKET REPORT CANADIAN GROCERY TRADE REPORT Kevin@KevinGrier.com (519) 823-9868 www.kevingrier.com GET IN TOUCH:
  45. 45. THANK YOU J.S. Ferraro 130 Adelaide Street, Suite 810 Toronto, Ontario M5H 3P5 CANADA 43.6496° N -79.3838° W T: (416) 306-8787 E: marketintel@jsferraro.com | W: www.jsferraro.com 45 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2020. Not for distribution.
  46. 46. 46 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. AUDIENCE QUESTIONS: How is US pork export competitiveness in China given current prices? DR. ROB MURPHY The US is less competitive in pork exports to China for 2 reasons: 1) The Trump-era tariffs that were placed on US pork into China as retaliation for Trump’s steel tariffs and, 2) US domestic pork prices are currently higher than those in competing geographies such as the EU and Brazil.
  47. 47. 47 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. AUDIENCE QUESTIONS: How much industry cold storage capacity (retail and food service) do you think exists for pork beyond the official USDA reported capacity in terms of days / weeks of production? DR. ROB MURPHY I really have no way to know this, but would guess somewhere between 20-40% more that what USDA reports on.
  48. 48. 48 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. AUDIENCE QUESTIONS: Is there enough “proper” genetics in the world to backfill the China/ASF hole? TODD THURMAN The short answer is no and it’s very difficult to ramp up production for a short term opportunity. The reality is that producers are going to have to find a way to multiply these animals in China while maintaining health and competitive levels of genetic progress. That is much easier said than done but it’s an enormous opportunity for whoever can accomplish it.
  49. 49. 49 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. AUDIENCE QUESTIONS: Given the change in structure of the Chinese industry, how much more soybean meal per animal will be consumed once pork production returns to normal? TODD THURMAN That’s a good question and I must admit it’s not something I’ve given much though. Clearly, as the trend away from backyard production towards large, commercial production continues, there’ll be less non-users of SBM. There are some mitigating factors like improving feed efficiency in large operations and a significant effort within the Chinese industry to push for lower protein diets (and more extensive use of synthetic amino acids). I don’t know that I can give a number, but it’s certainly something I’ll have my team consider.
  50. 50. 50 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. AUDIENCE QUESTIONS: What impact will tight feed supplies have on rebuilding effort? TODD THURMAN I don’t see feed supplies, or ultimately, feed costs as being much of an obstacle in the near term. If feed prices continue to go up and pig prices drop significantly, that could change, but we don’t anticipate that will happen anytime soon.
  51. 51. 51 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. AUDIENCE QUESTIONS: What’s the best source for China piglet prices, slaughter weights? TODD THURMAN There are several sources. It’s always best to try to find multiple sources when possible, but one little know source is China Pig Network. The website is all in Chinese but it can be google translated with good effect.
  52. 52. 52 | Confidential. © Copyright J.S. Ferraro. All Rights Reserved, 2021. Not for distribution. AUDIENCE QUESTIONS: How much of the gain in US pork export is correlated to restrictions placed on Canadian export to China? TODD THURMAN A small portion, maybe like 5-10%.

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