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Pork Analysis VP Discusses Livestock Outlook
1. Steve R. Meyer, Ph.D.
Vice-President, Pork Analysis
EMI Analytics
World Pork Expo -- 2016
Livestock & Poultry Outlook
2. Macro variables are a mixed bag . . .
Latest labor market numbers are SOFT (?)
- May employment grew by only 38,000 –
October thru March averaged 239,000!
- Labor force is record large but participation
rate is still under 63% -- near record low
- Unemployment rate dropped to 4.7%
Real personal disposable income is still
growing – 2.5% YTD after 2.63% in ‘15
Median real household income, though, is
down 7.2% from ‘98 peak, 6.5% vs. ‘07
21. Calculated Average Spot Market Returns Index
Deboning Tom Turkeys
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
35
40
45
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Index2000-2002Base
EMI Analytics analysis of
USDA and industry data,
May 2016 forward forecast
--Cost structure is industry average cost & production mix
--Revenue calculations are wholesale spot market
--Results will not reflect individual firms, and are best used as a trend indicator
‘15 HPAI losses have made turkey PROFITABLE!
25. Whole Turkeys, FOB Basis,USDA
Monthly
60
70
80
90
100
110
120
130
140
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
CentsperPound
USDA National Toms (16-24 lb), FOB Basis
USDA National Hens (8-16 lb), FOB Basis
May 2016 forward forecast
Some pressure on whole birds – more in ‘17 . . .
26. Turkey Tom Breast Meat,USDA
Monthly
100
150
200
250
300
350
400
450
500
550
600
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
CentsperPound
USDA Tom Breast Meat, frozen
USDA Tom Breast Meat, fresh
May 2016 forward forecast
BIG pressure on breast meat – impact on hams?
27. EMI Analytics
Beef and Pork Outlook
Steve R. Meyer, Ph.D.
Vice President, Pork Analytics
smeyer@emianalytics.com
28. Weather is still a key factor for beef . . .
. . . And conditions are great! – better even in CA!
33. May COF: Higher numbers, sales & more current!
7.5%
1.1 – 7.1 in
April
1.3%
7-5.3%
34. Fed slaughter has gained steadily on ’15 levels. . .
. . . Weights are at ‘15 levels – still BIG!!!
35. Higher slaughter & weights = higher output . . .
. . . We expect Q3 and Q4 to be +3.1 & +3.8%
36. Beef summary and prices . . .
Beef prod up ~4% in ‘16 – same in ‘17
Ch. cutout is holding near $220 – implies
$138 with cash steers at $128 last week
- Cutout supported by middle meats
- Ribeyes retest March highs, Strip Loins retest
spring ’15 highs near $9
- Round and chuck items supported by trim-
mings – but well below last year’s levels
May placements expected to be +7-9%,
marketings remain brisk – more current
38. Higher corn, SBM – Costs up $4+ from April
. . . But still the lowest since 2010
39. ‘17 still looks good in spite of cost increases . . .
. . . With ‘17 roughly breakeven at present
40. April exports were down but due to April ‘15! . . .
. . . We are now finished with goofy yr/yr comps.
41. ALL China/HK – up 95% yr/yr, YTD now +136% . . .
. . . ALL others down in April except Canada (+5%)
42. More of the same – GOOD! – for PEDv. . .
Data from 1022 sow farms, 25 of 28 large systems reporting,
2.578 mil. sows!
ZERO breaks wk of 5/27, EWMA now BELOW the epidemic
threshold
Our outlook still contains NO PEDv ADJUSTMENTS
43. March H&P – The numbers were slightly bullish . . .
Inventories on March 1
All hogs and pigs 67,399 67,644 100.4 100.3 0.1
Kept for breeding 5,982 5,980 100.0 100.6 -0.6
Kept for marketing 61,418 61,664 100.4 100.3 0.1
Under 50 lbs. 19,454 19,382 99.6 100.7 -1.1
50-119 lbs. 17,129 17,263 100.8 100.1 0.7
120-179 lbs. 13,580 13,744 101.2 99.9 1.3
180 lbs. and over 11,255 11,274 100.2 100.2 0.0
Farrowings 0.0
Dec-Feb sows farrowed 2,895 2,873 99.2 98.3 0.9
Mar-May Intentions 2,854 2,839 99.5 100.1 -0.6
June-Aug Intentions 3,017 2,912 96.5 100.3 -3.8
Dec-Feb Pig Crop 29,627 29,582 99.8 100.1 -0.3
Dec-Feb pigs per litter 10.23 10.30 100.6 101.8 -1.2
*Thousand head ** Thousand Litters 1
Source: Urner Barry
Category 2015 2016
'16 as
Pct of
'15
Pre-
Report
Est's1
Actual
minus
Est.
USDA QUARTERLY HOGS & PIGS REPORT
March 25, 2016
44. We still believe USDA missed the BH low . . .
. . . Profits, anecdotal evidence of expansion
45. And the state data raise serious questions . . .
March '15Dec '15 Mar '16 March '15Dec '15
Colorado 140 145 150 10 5
Illinois 490 490 500 10 10
Indiana 280 270 260 -20 -10
Iowa 1030 1030 980 -50 -50
Kansas 175 175 175 0 0
Michigan 110 110 110 0 0
Minnesota 570 560 560 -10 0
Missouri 400 395 385 -15 -10
Nebraska 420 420 420 0 0
North Carolina 890 870 880 -10 10
Ohio 180 190 185 5 -5
Oklahoma 440 470 480 40 10
Pennsylvania 100 100 110 10 10
South Dakota 165 175 190 25 15
Texas 100 105 110 10 5
Utah 75 75 75 0 0
Other States 417 422 410 -7 -12
United States 5982 6002 5980 -2 -22
STATE BREEDING HERD INVENTORIES
Change versus:
52. How much capacity growth and WHEN?
Daily Hd Ann Hd Daily Hd Ann Hd Daily Hd Ann Hd
Pleasant Hope, MO 2,500 625,000 2,500 625,000 2,500 625,000
Windom, MN 4,000 1,000,000 4,000 1,000,000 4,000 1,000,000
Sioux City,IA 12,000 3,000,000 12,000 3,000,000
Coldwater, MI 10,000 2,500,000 10,000 2,500,000
Prestage Plant* 10,000 2,500,000
Total 6,500 1,625,000 28,500 7,125,000 38,500 9,625,000
Head per week 31,250 137,019 185,096
Pct of '15 avg = 2.195 mil. 1.4% 6.2% 8.4%
*Timing of this plant is in doubt. It may not be on line until 2019. 6/6/2016
Fall 2016 Fall 2017 Fall 2018
U.S PACKING CAPACITY UNDER CONSTRUCTION
57. Risks
Negative: Major export disruption – small
prob, HUGE impact
Neg. or Pos.: PEDv/HPAI – not likely now
Positive: If PRRS/PEDv were worse?
Negative: Slower demand growth
- Domestic: Prefs? Wages/incomes?
- Exports: CHINA/HK, $US
Negative: Packing capacity crunch in Q4?
Negative: Pork prices if plants are full in ‘18?