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Global Outlook and Demand for US Pork

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Brett Stuart, Global AgriTrends, 2015 Pork Management Conference, June 16-19 in New Orleans.

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Global Outlook and Demand for US Pork

  1. 1. June 17, 2015 Brett Stuart Global Demand and Outlook for U.S. Pork NPB Pork Management Conference
  2. 2. Outline • Global Protein & Pork • U.S. Pork Challenges and Opportunities • Forecasts
  3. 3. Global Protein & Pork Protein Supply, Demand, Prices Global Protein Shifts
  4. 4. Source: USDA/FAS
  5. 5. Source: USDA/FAS 0 20 40 60 80 100 120 Beef Pork Broiler MMT Global Meat and Broiler Production 2006-2015F
  6. 6. 2015 IS NOT 2014 Mood and Money • Does crude matter? • Petro-economies as importers (Africa and Middle East nations) Competing Meats • PEDv a non-issue, ABUNDANT pork & poultry • Poultry breeding flock expansion • Strong dollar pulling imports/hindering exports • HPAI
  7. 7. Global HPAI
  8. 8. U.S. HPAI • 45+ million birds affected – 3% of turkeys, 11% of layers, <.0001% of broilers • Virus now coming under control – Assisted by warmer temps – But what about fall/winter (when birds fly south) • But trade bans are problematic – China (and lesser others) banned all U.S. poultry – Roughly 40+ others banning states, or counties – MEXICO: allowing U.S. poultry for processing – Estimated 17% of 2014 broiler export access now closed
  9. 9. Source: Urner Barry
  10. 10. Source: USDA/FAS
  11. 11. Source: GTIS, AgriTrends Petro Economies: Russia, Saudi Arabia, Angola, Venezuela, United Arab Emirates, Iraq, Kuwait, Qatar, Iran, Algeria, Kazakhstan, Niger
  12. 12. Source: USDA/FAS, AgriTrends 2015 forecasts
  13. 13. 0.0 0.5 1.0 1.5 2.0 2.5 MillionMetricTons Global Pork Imports China+Hong Kong Japan Mexico U.S. Russia S. Korea Source: GTIS, AgriTrends
  14. 14. Source: USDA/FAS
  15. 15. U.S. Pork Challenges and Opportunities Supply/Demand Export Challenges: US$, EU pork, China Export Opportunities: China, Africa, Competitive pricing?
  16. 16. Source: USDA, AgriTrends 2015 export forecast
  17. 17. Source: USDA/ERS, YTD through April 2015
  18. 18. Source: Pacific Exchange, AgriTrends
  19. 19. Source: Pacific Exchange, AgriTrends
  20. 20. Source: BPEX, USDA
  21. 21. Source: BPEX, USDA
  22. 22. Source: World Pork Import Report, Feb. 28, 2015, GTIS,
  23. 23. The Dilemma • Ractopamine is an FDA-approved and Codex recommended compound that adds $2- 4/head benefit for pork producers ($220-440 million/year) • China is the largest and potentially largest pork export market on earth with enormous market diversity and opportunities • China has a zero-tolerance for ractopamine residues
  24. 24. Even more complicated by… • An impending pork gap is building in China as as many as 9 million sows have been liquidated over the past 19 months • Prices will rise, import demand will surge • Remember 2008/2011 – China/HK bought 6% of our entire pork production for 4 months in the fall of 2011 – U.S. prices surged • U.S. pork production is up +7% YTD; forecast +6% for 2015
  25. 25. Source: China Ministry of Agriculture (calculated based on y/y percentage changes by AgriTrends)
  26. 26. Source: Average of various Chinese market reports
  27. 27. U.S. Pork to China The China Pork Paradox: Forego the largest pork market on earth, or bow to non-scientific barriers that reduce U.S. competitiveness • This is a “theoretical debate” • Is the customer always right? • Is this a “slippery slope”? • Are we entering a new phase of “customer- driven trade policy”?
  28. 28. Source: GTIS, AgriTrends
  29. 29. Source: USDA, AgriTrends forecasts 2014: $450 million
  30. 30. Source: GTIS, AgriTrends
  31. 31. Forecasts
  32. 32. Source: USDA, AgriTrends forecasts
  33. 33. Source: USDA, AgriTrends forecasts
  34. 34. Outlook With larger domestic production, and export challenges, EXPORTS HINGE ON: • CHINA: Will the U.S. have meaningful access, and if not, how much EU pork will be pulled away from Japan, Korea, and others? and • RUSSIA: Will EU pork be allowed (ASF ban)? And will the food import ban be lifted (main impact – Canada)?
  35. 35. Trade Policy Acronyms • MCOOL – The clock is ticking… • TPA: Trade Promotion Authority – TAA: Trade Adjustment Assistance – precursor needed, next step, by end of July? • TPP: Trans Pacific Partnership – Will progress quickly once TPA is granted – Could be HUGE for U.S. pork longer term
  36. 36. Denver, Colorado 36 Services Offered: • Global market research • Specific market reports • Email alerts/analysis • Monthly newsletter • Webinars / presentations Brett Stuart bstuart@globalagritrends.com 303-803-8716 www.globalagritrends.com Get plugged in!

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