NPB Pork Management Conference -- 2016
Livestock & Poultry Outlook
Steve R. Meyer, Ph.D.
Vice-President, Pork Analysis
EMI Analytics
Consumer attitudes have not improved . . .
Attitudes mirrored by RPI – softer but >100 . . .
3-species RPCE was down, yr/yr, again in April . .
. . . Reversion to the mean but still on uptrend
Beef, chicken still down in April, pork gained. . .
Pork uptrend is still intact as well – for now . . .
Nice yr/yr gain for pork share of RPCE in April . . .
. . . YTD ‘16 average is 25.7% vs. 28.8% in ‘15
‘15 was the year of a BIG jump in avail/cons . . . .
. . . growth in ‘16 will be smaller – ’17 ????
Pork prices incresed in March & April . . .
. . . reflecting continuing strong demand!
Pork still has a big advantage on beef at retail . . .
EMI Analytics
Broiler Outlook
Sue Trudell
Vice President, EMI Analytics
[email protected]
Supply flock: +1.9% in ’15 but +0.5 & 0.6% next 2 yrs
Broiler Hatchery Supply Flock
USDA, first of month, quarterly
59
58
57
million hens
56
55
54
53
52
51
50
May 2016 forward forecast
49
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Weight growth slowing to <1% this year . . .
US Broiler Average Liveweight
USDA, annual
6.4
6.2
6.0
5.8
pounds
5.6
5.4
5.2
5.0
4.8
4.6
4.4
4.2
Apr 2016 forward forecast
4.0
3.8
1980
1984
1988
1992
1996
2000
2004
2008
2012
2016
Output growth slowing: 2.6% to 1.1% to 0.6% in ‘17
US Broiler RTC Production
billion pounds
Annual
44
42
40
38
36
34
32
30
28
26
24
22
20
18
16
14
12
10
8
6
4
2
0
Apr 2016 forward forecast
1980
1985
1990
1995
2000
2005
2010
2015
Exports will rebound – but remain short of ‘14
Annual US Broiler Meat Exports
million pounds, paws excluded
8,000
7,500
Apr 2016 forward forecast
7,000
6,500
million pounds
6,000
5,500
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
10
12
14
16
18
Small increase in PC supply in ‘16 – none in ’17 & ‘18
US Broiler Per Capita Availability
retail weight basis
93
91
89
87
85
pounds per capita
83
81
79
77
75
73
71
69
67
65
63
Apr 2016 forward forecast
61
59
57
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
Steady prices for whole birds . . .
EMI Wogs
110
90
EMI Wog 2.5-4.0 lbs
left axis, recently 6.4-7.5 mp/wk
105
100
EMI Wog, marinated
right axis, recently 18.2-19.8 mp/wk
85
90
80
85
80
75
75
70
65
70
60
May 2016 forward forecast
55
50
65
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
cents per pound
cents per pound
95
Some growth for breast meat prices . . .
EMI B/S Breast Meat
monthly wtd average wholesale price
220
EMI B/S Breast, Small
210
EMI B/S Breast, Med
200
EMI B/S Breast, Jumbo
cents per pound
190
180
170
160
150
140
130
120
110
100
May 2016 forward forecast
90
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
And continued trouble for leg quarters . . .
EMI Frozen Leg Quarters
60
May 2016 forward forecast
55
cents per pound
50
45
40
35
30
25
20
EMI Frozen LQ, regular
15
EMI Frozen LQ, jumbo
10
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
EMI Analytics
Turkey Outlook
Amanda Martin
Senior Analyst
[email protected]
‘15 HPAI losses have made turkey PROFITABLE!
Calculated Average Spot Market Returns Index
Deboning Tom Turkeys
45
40
35
--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
30
Index 2000-2002 Base
25
20
15
10
5
0
-5
-10
EMI Analytics analysis of
USDA and industry data,
May 2016 forward forecast
-15
-20
-25
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Quite logical reaction: Higher output!
Quarterly Turkey Poult Placements
USDA
10%
7%
5%5%
5%
4%
3%
4%
3%
3%
2%
4%
2%
1%1%
1%
% change
6%
3%3%
1%
0%
-1%
-3%
-2%
-1%
-10%
-5%
-5%
-7%
-3%
-3%
-5%
-6%
0%
0%
-1%
-2%
-6%
-7%
-7%
-10%
-10%
-11%
-7%
April 2016 forward forecast
-12%
-15%
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Total turkey output +4% in ‘16, +3.5% in ‘17 . . .
Total Turkey RTC Production
USDA, annual
6,500
6,000
April 2016 forward forecast
5,500
million pounds
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
And exports have NOT RECOVERED AT ALL . . .
Monthly US Turkey Exports
90
85
80
million pounds
75
70
65
60
55
50
45
40
35
30
Jan
Feb
Mar
© EMI Analytics, All Rights Reserved
Apr
May
2013
Jun
Jul
2014
Aug
2015
Sep
Oct
2016
Nov
Dec
Some pressure on whole birds – more in ‘17 . . .
Whole Turkeys, FOB Basis,USDA
Monthly
140
USDA National Toms (16-24 lb), FOB Basis
130
Cents per Pound
120
USDA National Hens (8-16 lb), FOB Basis
May 2016 forward forecast
110
100
90
80
70
60
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
BIG pressure on breast meat – impact on hams?
Turkey Tom Breast Meat,USDA
Monthly
600
550
USDA Tom Breast Meat, frozen
500
USDA Tom Breast Meat, fresh
Cents per Pound
450
May 2016 forward forecast
400
350
300
250
200
150
100
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
EMI Analytics
Beef and Pork Outlook
Steve R. Meyer, Ph.D.
Vice President, Pork Analytics
[email protected]
Weather is still a key factor for beef . . .
. . . And conditions are great! – better even in CA!
Record low national poor/very poor ratings
Cow/calf profits: Tremendous incentive to grow!
Beef cow numbers are back above 30 million . . .
. . . After falling from 33 to 29 million!
And feeder cattle supplies have FINALLY increased
May COF: Higher numbers, sales & more current!
7.5%
1.3%
1.1 – 7.1 in
April
7-5.3%
Fed slaughter has gained steadily on ’15 levels. . .
. . . Weights are at ‘15 levels – still BIG!!!
Higher slaughter & weights = higher output . . .
. . . We expect Q3 and Q4 to be +3.1 & +3.8%
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 trimmings – but well below last year’s levels

May placements expected to be +7-9%,
marketings remain brisk – more current
HOGS & PORK
Higher corn, SBM – Costs up $5+ from April
. . . But still the lowest since 2010
‘17 still looks good in spite of cost increases . . .
. . . With ‘17 roughly breakeven at present
April exports were down but due to April ‘15! . . .
. . . We are now finished with goofy yr/yr comps.
ALL China/HK – up 95% yr/yr, YTD now +136% . . .
. . . ALL others down in April except Canada (+5%)
May China exports were up 8% from April . . .
. . . NOT indicative of a ‘08 or ‘11 surge
Pork inventories are finally back to normal . . .
March H&P – The numbers were slightly bullish . . .
USDA QUARTERLY HOGS & PIGS REPORT
March 25, 2016
Category
Inventories on March 1
All hogs and pigs
Kept for breeding
Kept for marketing
Under 50 lbs.
50-119 lbs.
120-179 lbs.
180 lbs. and over
Farrowings
Dec-Feb sows farrowed
Mar-May Intentions
June-Aug Intentions
Dec-Feb Pig Crop
Dec-Feb pigs per litter
2015
2016
Pre- Actual
'16 as
Pct of Report minus
'15
Est.
Est's1
67,399
5,982
61,418
19,454
17,129
13,580
11,255
67,644
5,980
61,664
19,382
17,263
13,744
11,274
100.4
100.0
100.4
99.6
100.8
101.2
100.2
2,895
2,854
3,017
29,627
10.23
2,873
99.2
2,839
99.5
2,912
96.5
29,582
99.8
10.30 100.6
*Thousand head ** Thousand Litters
1
100.3
100.6
100.3
100.7
100.1
99.9
100.2
0.0
98.3
100.1
100.3
100.1
101.8
0.1
-0.6
0.1
-1.1
0.7
1.3
0.0
0.9
-0.6
-3.8
-0.3
-1.2
Source: Urner Barry
PEDv has proven to be a non-factor in ‘16 . . .



Data from 1022 sow farms, 25 of 28 large systems reporting,
2.578 mil. sows!
ZERO breaks since week of 5/27, EWMA now BELOW the
epidemic threshold
Our outlook still contains NO PEDv ADJUSTMENTS
There are some questions about PRRS though . . .


Note 3 bad weeks – last of which was 3/30
Other weeks were very normal -- so will
this even show up in the slaughter data?
We still believe USDA missed the BH low . . .
. . . Profits, anecdotal evidence of expansion
And the state data raise serious questions . . .
STATE BREEDING HERD INVENTORIES
March '15 Dec '15 Mar '16
Colorado
140
145
150
Illinois
490
490
500
Indiana
280
270
260
Iowa
1030
1030
980
Kansas
175
175
175
Michigan
110
110
110
Minnesota
570
560
560
Missouri
400
395
385
Nebraska
420
420
420
North Carolina
890
870
880
Ohio
180
190
185
Oklahoma
440
470
480
Pennsylvania
100
100
110
South Dakota
165
175
190
Texas
100
105
110
Utah
75
75
75
Other States
417
422
410
United States
5982
6002
5980
Change versus:
March '15 Dec '15
10
5
10
10
-20
-10
-50
-50
0
0
0
0
-10
0
-15
-10
0
0
-10
10
5
-5
40
10
10
10
25
15
10
5
0
0
-7
-12
-2
-22
USDA’s farrowing intentions are probably good . . .
. . . But USDA’s yr/yr changes are BAD – revisions
A more useful representation of farrowings . . .
Brdg Herd
Litter
Annual
USDA
Growth Rate/Brdg Farrowings Report*
2016
1.0%
1.940
11,702
11,499
2017
0.5%
1.935
11,701
2018
-1.0%
1.930
11,613
*Assume Sep-Nov farrowings are same as '15
We still believe USDA’s Dec-Feb pigs/litter is low
. . . Green line = “normal”; we are splitting for now
Higher Canadian imports continue . . .
. . . Especially for feeder/weaner pigs post-MCOOL
Slaughter has been very close to our forecasts . . .
. . . Tight capacity this fall – much better in ‘17
How much capacity growth and WHEN?
U.S PACKING CAPACITY UNDER CONSTRUCTION
Fall 2016
Daily Hd Ann Hd
Pleasant Hope, MO 2,500
625,000
Windom, MN
4,000 1,000,000
Sioux City,IA
Coldwater, MI
Prestage Plant*
Total
6,500 1,625,000
Head per week
31,250
Pct of '15 avg = 2.195 mil.
1.4%
Fall 2017
Fall 2018
Daily Hd Ann Hd
Daily Hd
2,500
625,000
2,500
4,000 1,000,000
4,000
12,000 3,000,000 12,000
10,000 2,500,000 10,000
10,000
28,500 7,125,000 38,500
137,019
6.2%
*Timing of this plant is in doubt. It may not be on line until 2019.
Ann Hd
625,000
1,000,000
3,000,000
2,500,000
2,500,000
9,625,000
185,096
8.4%
6/6/2016
Not much help for ‘16 – but big growth afterward
Slaughter forecasts from March report . . .
March 2016 Hogs & Pigs -- Commercial Slaughter Forecasts
ISU
Mil. Hd
2013 Year
2014 Q1
Q2
Q3
Q4
Year
2015 Q1
Q2
Q3
Q4
Year
2016 Q1**
Q2
Q3
Q4
Year*
2017 Q1
LMIC
% Chnge
Mil. Hd
% Chnge
EMI
Mil. Hd
ACTUAL
% Chnge
Mil. Hd
% Chnge
112.124
-1.0%
27.131
25.575
25.558
-2.6%
-4.5%
-7.6%
28.612
106.876
-4.0%
-4.7%
27.650
1.9%
27.398
1.0%
27.405
1.0%
28.723
5.9%
27.186
27.839
30.500
113.176
6.3%
8.9%
6.6%
5.9%
27.358
27.779
30.400
112.935
7.0%
8.7%
6.2%
5.7%
27.237
28.446
30.098
113.186
6.5%
11.3%
5.2%
5.9%
27.848
28.474
30.369
115.414
8.9%
11.4%
6.7%
8.0%
29.240
27.971
28.759
1.8%
0.4%
1.0%
29.597
27.918
28.749
3.0%
0.3%
1.0%
28.860
27.870
28.720
0.5%
0.1%
0.9%
28.989
0.9%
30.648
116.618
0.9%
1.5%
30.222
116.519
-0.5%
1.0%
31.248
116.827
2.9%
1.2%
29.099
0.4%
29.433
1.5%
29.830
2.9%
*Annual total uses actuals to-date plus forecasts for the rest of the year.
** 1 more day in qtr vs. yr. ago
Red figures are analysts' last FORECAST for the given quarter (Q1 done in Dec, Q2 done in Mar, etc.)
Blue figures are estimated using USDA data
3/29/2016
Weights as expected so far . . . Higher in Q4 . . .
. . . Unless feed items stay at today’s futures levels
Price forecasts – It appears exports will carry us!
. . . I added $3-$4 for both Q3 and Q4
March 2016 Hogs & Pigs -- Price Forecasts
2014 Year
2015 Q1
Q2
Q3
Q4
Year
2016 Q1
Q2
Q3
Q4
Year
2017 Q1
ISU
LMIC
Ia-Mn
National Wtd
Producer-Sold
Avg. Base Price
Neg'd Base
102.50
100.31
64.35
68.67
71.59
73.56
73.43
74.60
58.95
61.91
67.08
69.69
60.20
62.18
72 - 76
73 - 75
73 - 77
73 - 76
62 - 66
62 - 66
67 - 70
68 - 71
61 - 65
61 - 66
Blue figures are estimated using USDA data
Green figures are revisions since the latest USDA Hogs and Pigs report.
EMI
National Net
Neg'd Price,
Wtd. Avg.
102.95
66.03
73.22
74.92
59.80
68.49
59.84
72 - 74
77 - 81
60 - 64
67 - 70
58 - 62
CME
CME Lean Hog
Futures/Index
104.99
68.59
74.36
74.64
62.77
70.09
62.85
75.30
83.81
68.03
72.50
68.23
6/7/16
Futures have rallied three times . . .
Risks
 Negative: Major export disruption – small






prob, HUGE impact
Neg. or Pos.: PEDv/HPAI – not likely now
Negative: Feed costs
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?