Dr. Ron Plain - Economics: Hog and Pork Outlook
79
Ron Plain D. Howard Doane Professor of Agricultural Economics University of Missouri-Columbia http://web.missouri.edu/~plainr/ Hog & Pork Outlook Boehringer-Ingelheim Summer Health Seminar Wrightsville Beach August 20, 2015
-
Upload
john-blue -
Category
Economy & Finance
-
view
357 -
download
1
Transcript of Dr. Ron Plain - Economics: Hog and Pork Outlook
Ron PlainD. Howard Doane Professor of Agricultural EconomicsUniversity of Missouri-Columbiahttp://web.missouri.edu/~plainr/
Hog & Pork Outlook
Boehringer-Ingelheim Summer Health Seminar Wrightsville Beach August 20, 2015
The size of the swine herd is driven by last year’s
profitability
Iowa Farrow to Finish Profits,1965-2014
-30
-20
-10
0
10
20
30
40
50
60
70
65 68 71 74 77 80 83 86 89 92 95 98 01 04 07 10 13
$ Per Head
Source: Lee Schulz, Iowa State University
Cost of Production - Live
30
35
40
45
50
55
60
65
70
7519
79
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Source: Lee Schulz, Iowa State University
$/cwt
Barrow & Gilt 51-52% Lean Live Price
30
35
40
45
50
55
60
65
70
75
8019
79
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Source: USDA ERS
$/cwt
Weekly Hog Slaughter
1600
1700
1800
1900
2000
2100
2200
2300
2400
JAN
FEBM
ARAPR
MAY
JUN
JUL
AUGSEP
OCT
NOV
DEC
Th
ousa
nd
Hea
d
2013 2014
Source: AMS - USDA
2014 hog slaughter was down 4.6%
Weekly Pork Production
340
360
380
400
420
440
460
480
500
520
JAN
FEBM
ARAPR
MAY
JUN
JUL
AUG
SEPOCT
NOV
DEC
Mil
lion
Pou
nd
s
2013 2014
Source: AMS - USDA
2014 pork production was down 1.5%
Cost of Production
U.S. Monthly Average Corn Price
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00Ja
n-00
Jan
01
Jan
02
Jan
03
Jan
04
Jan
05
Jan
06
Jan
07
Jan
08
Jan
09
Jan
10
Jan
11
Jan
12
Jan
13
Jan
14
Jan
15
Jan
16
Dolla
rs P
er B
ushe
l
Cash fut ures
Cost of Slaughter Hog Production, 2000-2015
35
40
45
50
55
60
65
70
75
8020
00
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Marketing Month
$ Per Live Cwt
Old New Forecast
Source: Iowa State University & University of Missouri
Cost of Slaughter Hog Production, 2000-2015
45
55
65
75
85
95
105
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Marketing Month
Old New Forecast
Source: Iowa State University & University of Missouri
$ per Cwt Carcass
Meat Supply
U.S. Meat Production
0
5
10
15
20
25
30
35
40
45
1945
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
f
Billion Pounds
Pork Beef Broilers Turkey
Source: USDA/OCE, July 2015
Competing Meats
Forecast Change in Meat Production
---Percent Change--- Type 2014-15 2015-16
Beef - 2.0% +4.5%
Pork +7.6% +0.5%
Chicken +4.4% +2.8%
Turkey - 2.2% +6.7%
All Meats +3.0% +2.9%Source: USDA-OCE WASDE, August 2015
U.S. Per Capita Meat Consumption
150160170180190200210220230240250
1945
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
f
Pounds
Source: USDA/ERS
Meat Demand
Index of Retail Meat DemandBase Elasticity = - 0.75
98
100
102
104
106
108
110
112
11419
98
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
1998 = 100
Source: Ron Plain, MU
Index of Domestic Pork DemandBase Elasticity = - 0.75
80
85
90
95
100
105
110
11520
09
2010
2011
2012
2013
2014
2015
1998 = 100
Source: Ron Plain, MU
Retail Boneless Pork Prices Retail Prices, Monthly, 2001-2015
250
300
350
400
450
500
550
600
650
20
01
>
20
02
>
20
03
>
20
04
>
20
05
>
20
06
>
20
07
>
20
08
>
20
09
>
20
10
>
20
11
>
20
12
>
20
13
>
20
14
>
20
15
>
Cents/lb Bacon Chops Ham
Source: USDA/ERS
International Trade
U.S. Meat Exports, 1988-2014
0
1
2
3
4
5
6
7
819
88
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Billi
on p
ound
s
Beef Pork Broiler Turkey
Source: USDA /ERS
Value of U.S. Pork Exports
0
10
20
30
40
50
60
7019
86
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
$/hog slt
Pork ByProduct
Source: U.S. Meat Export Federation
2014 exports equaled $62.45/ hog slaughtered
U.S. Share of World Pork Trade
0
5
10
15
20
25
30
35
401
99
3
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Per
cen
t
ExportsImports
Source: USDA-NASS
Pork Variety Meat Exports
25000
30000
35000
40000
45000
50000
55000
201
1
Ap
r
Jul
Oc
t
201
2
Ap
r
Ju
l
Oct
201
3
Ap
r
Jul
Oct
201
4
Ap
r
Ju
l
Oc
t
201
5
Ap
r
Met
ric
Ton
s
Source: U.S. Meat Export Federation
DOLLAR EXCHANGE RATE
West Coast Dock SlowdownA labor dispute between the International Longshoreman
and Warehouse Union and the Pacific Maritime Association slowed movement of goods through west coast ports.
This caused serious problems for U.S. meat exporters during January and February of 2015. Containers of meat destined for export piled up and grew old at west coast docks.
Roughly 21% of U.S. pork production, 10% of beef and 19% of chicken are exported each month, with most going out from the west coast.
A new contract was agreed to on February 20, 2015.
Change in Export Pork DemandBase Elasticity = - 0.5
-40
-20
0
20
40
60
8020
14
Feb Mar
Ap
r
May
Jun
Jul
Au
gS
ep Oct
No
v
Dec
2015
Feb Mar
Ap
r
May
Jun
% C
han
ge
Source: Ron Plain, MU
U.S. Pork Imports & Exports as % of U.S. Pork Production, 2006-2015
Monthly Carcass Weight Equivalent
0
5
10
15
20
25
30 J
an 0
6M
AY
SEP
Jan
07
MA
YSE
P J
an 0
8M
AY
SEP
Jan
09
May
Sep
Jan
10
May
Sep
Jan
11
May
Sep
Jan
12
May
Sep
Jan
13
May
Sep
Jan
14
May
Sep
Jan
15
May
% o
f Pro
duct
ion
Imports Exports
Source: USDA ERS
U.S. Pork Exports, 2006-2015Monthly Carcass Weight Equivalent
0
20
40
60
80
100
120
140
160
Ja
n 0
6
Ja
n 0
7
Ja
n 0
8
Ja
n 0
9
Ja
n 1
0
Ja
n 1
1
Ja
n 1
2
Ja
n 1
3
Ja
n 1
4
Ja
n 1
5
Mil. lbs. Japan Canada Mexico S Korea China HK
Source: USDA ERS
U.S. Hog Imports & Exports
0
2
4
6
8
10
121
98
0
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
Mil. head
Imports Exports
Source: USDA ERS
U.S. Hog Imports from Canada
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Head per mo.
Slaughter Hogs Feeders Pigs
Source: USDA - ERS
Productivity Growth
Pigs Per Sow Per Year, 1930-2014USDA Hogs & Pigs Reports
0
5
10
15
20
25
1930
1935
1940
1945
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
Head
Source: USDA/NASS
Average U.S. Hog Carcass Weight, 1930-2014
110
130
150
170
190
210
230
19
30
19
35
19
40
19
45
19
50
19
55
19
60
19
65
19
70
19
75
19
80
19
85
19
90
19
95
20
00
20
05
20
10
Pounds
Source: USDA/NASS
Annual U.S. Pork Production Per Sow, 1930-2014
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
1930
1935
1940
1945
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
Pounds
1930-80 growth rate: 2.03%
1980-10 growth rate 2.70%
Annual U.S. Pork Production, 1930-2014
0
5
10
15
20
25
19
30
19
35
19
40
19
45
19
50
19
55
19
60
19
65
19
70
19
75
19
80
19
85
19
90
19
95
20
00
20
05
20
10
Billion Poundsactual 1.5% trend
Source: USDA/NASS
Annual U.S. Hog Slaughter, 1930-2014
0
20
40
60
80
100
120
140
193
0
19
35
194
0
19
45
195
0
19
55
196
0
19
65
19
70
197
5
19
80
19
85
19
90
199
5
20
00
200
5
20
10
actual 0.9% trend
Source: USDA/NASS
Million head
Annual U.S. Sow Inventory, 1930-2014
0
2
4
6
8
10
12
14
16
19
30
19
35
194
0
19
45
19
50
195
5
19
60
19
65
197
0
19
75
19
80
198
5
19
90
19
95
200
0
20
05
20
10
actual 0.993% trend
Source: USDA/NASS
Million head
Porcine Epidemic Diarrhea Virus
PED Virus• Identified in Europe in 1971
• First cases in Asia in 1982
• First cases in U.S. in April 2013
• First identified in May
• Found on 8,898* hog farms by 11/2/14
• Near 100% death loss in young pigs
• Not a zoonotic disease (no risk to people)
• Not a food safety concern*unknown amount of double counting
New PED & PDCo Virus Cases by WeekNAHLN Reports
0
50
100
150
200
250
300
350
4-1
5 5
-06
5-2
7 6
-16
7-0
7 7
-28
8-1
8 9
-08
9-2
910
-20
11-1
012
-01
12-2
21-
122-
022-
233-
164-
064-
275-
186-
086-
297-
208-
108-
319-
2110
-12
11-0
211
-23
12-1
4 0
1/04
01/
25 0
2/15
03/
08 0
3/29
04/
19 0
5/10
05/
31 0
6/21
07/
12
2013-15 Week Ending
New Cases
PDCoPED
Source: AASV & NAHLN
New PED Virus Cases by WeekNAHLN Reports
0
50
100
150
200
250
300
350
4-0
8 4
-22
5-0
6 5
-20
6-0
3 6
-16
6-3
0 7
-14
7-2
8 8
-11
8-2
5 9
-08
9-2
210
-06
10-2
011
-03
11-1
712
-01
12-1
512
-29
1-1
4 1
-28
2-1
1 2
-25
3-1
1 3
-25
Week Ending
New Cases
2013-142014-152015-16
Source: AASV & NAHLN
U.S. Pigs Per Litter by Month
8.6
8.8
9
9.2
9.4
9.6
9.8
10
10.2
10.4
10.62
00
3
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Head
Source: USDA - NASS
U.S. Pigs Per Litter by Quarter
7.0
7.5
8.0
8.5
9.0
9.5
10.0
10.5
11.0D
82
D8
4
D8
6
D8
8
D9
0
D9
2
D9
4
D9
6
D9
8
D0
0
D0
2
D0
4
D0
6
D0
8
D1
0
D1
2
D1
4
Head
Actual1% Trend
Source: USDA - NASS
Inventory Surveys
June Hog InventoryAll Hogs & Pigs 108.7 Kept for Breeding 101.2 Kept for Marketing 109.4 Under 50 lbs 106.6 50-119 lbs. 108.7 120-179 lbs. 111.5 180 lbs. and over 113.4 Sep-Nov Farrowings 107.7 Dec-Feb Farrowings 102.5 Mar-May Farrowings 101.4 Jun-Aug Farrowing Intentions 97.5 Sep-Nov Farrowing Intentions 95.7
Source: USDA - NASS
U.S. Sows Farrowed by Quarter
-6
-4
-2
0
2
4
6
8
10D
JF
99
DJ
F0
0
DJ
F0
1
DJ
F0
2
DJ
F0
3
DJ
F0
4
DJ
F0
5
DJ
F0
6
DJ
F0
7
DJ
F0
8
DJ
F0
9
DJ
F1
0
DJ
F1
1
DJ
F1
2
DJ
F1
3
DJ
F1
4
DJ
F1
5
% change from yr. ago
Source: USDA - NASS
Estimated Gilt Retention & Sow Loss, 2012-15GG Cattle & Hog Fax
0
20
40
60
80
100
120
140
1602
01
2
20
13
20
14
20
15
Th
ou
san
d H
ead
Per
Wee
k Gilts Retained
Sow Loss
Actual & Predicted Change in B&G SlaughterU.S. Weekly F.I. Hog Slaughter, 2013-15
-12
-8
-4
0
4
8
12
20
14
Fe
b
Ma
r
Ap
r
Ma
y
Ju
n
Ju
l
Au
g
Se
p
Oc
t
No
v
De
c
20
15
Fe
b
Ma
r
Ap
r
Ma
y
Ju
n
Ju
l
Au
g
Se
p
% change from yr. ago
Actual USDA June Forecast
Production
U.S. Commercial Hog Slaughter
70
75
80
85
9095
100
105
110
115
12019
86
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
million head
Source: USDA/NASS
2014 slaughter lowest since 2006
Barrow & Gilt Live WeightsIowa-Minnesota Weekly Average
260
265
270
275
280
285
290
JAN
FEBM
ARAPR
MAY
JUN
JUL
AUG
SEPOCT
NOV
DEC
Pounds
2012
2013
2014
2015
record
Source: USDA - AMS
2014 average 284.4 lbs, up 8.4 from 2013
Barrow & Gilt Live WeightsIowa-Minnesota Weekly Average
260
265
270
275
280
285
290
'2011
2012
2013
2014
2015
Pounds
record
Source: USDA - AMS
2014-15 Weekly Hog Slaughter, Percent Change from Year Ago
-15
-10
-5
0
5
10
15
JAN
FEBM
ARAPR
MAY
JUN
JUL
AUGSEP
OCT
NOV
DECJa
nFeb M
ar AprM
ay Jun
Jul
Aug
% Change
Source: AMS - USDA
2014 hog slaughter was down 4.6%YTD 2015 hog slaughter is up 8.4%
2014-15 Weekly Pork Production, Percent Change from Year Ago
-10
-5
0
5
10
15
JAN
FEBM
ARAPR
MAY
JUN
JUL
AUGSEP
OCT
NOV
DECJA
NFeb M
ar AprM
ay Jun
Jul
% Change
Source: AMS - USDA
2014 pork production was down 1.5%YTD 2015 pork production is up 7.7%
-15
-10
-5
0
5
10
15
2014
FEBM
ARAPR
MAY
JUN
JUL
AUGSEP
OCTNOV
DEC20
15 Feb Mar Apr
May Ju
nJu
lAug
% C
han
ge Y
ear
Ago
HogsPork
Source: AMS - USDA
Change in Hog Slaughter & Pork Production, 2014-15
Packers
Gross Hog Packing Margin
0
5
10
15
20
25
30
35
4020
02
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
$/head
Source:
Weekly Pork Packer Gross Margin, 200 Pound Carcass
0
10
20
30
40
50
60
JAN APR JUL OCT
$ pe
r H
ead
Avg 03-12 20132014 2015
Calculation: Byproduct + Cutout – Negotiated net
New Pork Packing Plants
1995 Seaboard opened Guyman plant
2006 Triumph opened St Joseph plant
2017 new plants in:
Sioux City, IA – Seaboard/Triumph
Coldwater, MI – Clemens Foods
Cargill & JBSCargill has agreed to sell its pork operations:
two packing plants - Ottumwa, IA & Beardstown, IL
five feed mills - Missouri (2), Iowa, Arkansas & Texas
four hog farms - Arkansas (2), Oklahoma & Texas
to JBS USA Pork for $1.4 billion JBS USA Pork already has three hog slaughter plants - Marshalltown, Iowa;
Worthington, MN and Louisville, KY. The sale is contingent on regulatory approval.
Percent of Hogs Sold on the Spot Market
62
4336
26
17 15 13 11 11 10 9 9 7 6 5 4 3 3
0
10
20
30
40
50
60
70
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
How Packers Acquired Barrows & Gilts in 2014
• 4.0% Non MPR Packers• 96.0% MPR Packers
– 0.8% negotiated, live-weight purchase
– 2.6% negotiated, carcass-weight purchase– 38.9% market formula contract
• Reported hog price• Reported pork price
– 10.0% other market formula(CME futures)
– 12.5% other purchase agreement
– 4.0% purchased from another packer
– 27.2% raised them
Country of Origin Labeling - COOL
On May 18 the WTO ruled against the U.S. COOL meats program for the fourth time. A hearing will be held September 15-16 in Geneva to finalize tariffs for Canada and Mexico. The U.S. House has voted to repeal COOL for meats. If the Senate does not act, retaliatory tariffs will go into effect this fall.
Prices
0
100
200
300
400
500
600
700
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Cen
ts p
er P
ound
Beef Pork Chicken Turkey
Source: USDA/ERS
RETAIL MEAT PRICES, MONTHLY
H-P-1008/17/15
Data Source: USDA-AMS, Compiled & Analysis by LMIC
Livestock Marketing Information Center
08/17/15Data Source: USDA-AMS
Livestock Marketing Information Center
H-P-0908/17/15
Data Source: USDA-AMS, Compiled & Analysis by LMIC
Livestock Marketing Information Center
Forecast
Commercial Pork Production Forecast Million Pounds
*forecast
2014 2015 2016
Qtr 1 5,784 6,161 6,115*
Qtr 2 5,504 5,925 5,845*
Qtr 3 5,424 5,990* 6,115*
Qtr 4 6,131 6,505* 6,630*
Year 22,843 24,581* 24,705*
------Change------
14-15 15-16.
+ 6.5% - 0.7%
+ 7.6% - 1.4%
+10.4% +2.1%
+ 6.1% +1.9%
+ 7.6% +0.5%
Source: USDA – OCE, August 2015
Iowa-Minn Hog Price ForecastNegotiated Base Price Per Carcass Hundredweight
2013 2014 2015 2016
Qtr 1 $80.17 $95.15 $64.10 $61-65*
Qtr 2 $89.33 $115.67 $72.84 $68-72*
Qtr 3 $95.37 $111.79 $68-72* $67-71*
Qtr 4 $82.36 $ 88.84 $59-63* $59-63*
Year $86.87 $102.83 $66-68* $64-68*
*forecast price – prior day purchased
Net Slaughter Hog Price, Monthly Average 2002-2015
30
50
70
90
110
130
150 J
an 0
2
Jan
03
Jan
04
Jan
05
Jan
06
Jan
07
Jan
08
Jan
09
Jan
10
Jan
11
Jan
12
Jan
13
Jan
14
Jan
15
Jan
16
Dolla
rs P
er C
wt
Cash Futures
Profit
Iowa Farrow to Finish Profits, 2007-2016
Iowa State University Calculations
-60-40-20
020406080
10020
07
2008
2009
2010
2011
2012
2013
2014
2015
2016
$ Per Head
Actual Forecast
Forecast Source: Ron Plain, University of Missouri
Hog Slaughter & Lagged Profit 1983-2015
-15
-10
-5
0
5
10
15
20
25
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
% c
hang
e in
dai
ly h
og s
laug
hter
-60
-40
-20
0
20
40
60
80
100
Prof
it pe
r hea
d $
%ChDaHogSlt ISU Profit
Source:
Questions?
