Global Pork and Dairy Market Outlook - AMAP€¦ · 10/10/2018 · Global Pork and Dairy Market...
Transcript of Global Pork and Dairy Market Outlook - AMAP€¦ · 10/10/2018 · Global Pork and Dairy Market...
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Global Pork and Dairy Market Outlook
October 17, 2018 - International Ingredient Corporation
Dr. Scott Brown
Agricultural Markets and Policy Division of
Applied Social Sciences
http://web.missouri.edu/%7Ebrowndomailto:[email protected]
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Hog Outlook: Ample Global Supplies Ahead
We know 2 major problems on supply/demand balance US Production: faster growth than US population 15 of 16 quarters Exports: have helped offset production growth, but at lower prices Cold Storage: pork stocks above year ago 8 of last 9 months
Domestic demand strength has performed well Good meat demand has moderated price pain Demand for pork products has been mixed
Feed prices may moderate cost increases This appears the only bright spot for profitability Large 2018 crop nearly in the bin
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African Swine Fever Remains The Wild Card for Global Pork Markets
Swine Health Information Center
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Pork Availability per U.S. Resident
45
46
47
48
49
50
51
52
53
54
1986 1990 1994 1998 2002 2006 2010 2014 2018(p)
Poun
ds (r
etai
l wei
ght)
1986-2016 hog prices: AVG MAX MIN8 years with 51 lbs. 42.73 52.50 34.00
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Feed Costs Remain LowISU U.S. Farrow-Finish Returns
2030405060708090
100110
2001 2003 2005 2007 2009 2011 2013 2015 2017
Dol
lars
per
Cw
t.
Selling price Costs
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World Pork Production
0
20
40
60
80
100
120
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)
Milli
on M
etric
Ton
s
China EU US Brazil Russia ROW
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World Pork Consumption
0
20
40
60
80
100
120
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)
Milli
on M
etric
Ton
s
China EU US Russia Brazil ROW
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Trade: Why is it Important?
1.00
1.05
1.10
1.15
1.20
1.25
1.30
1.35
1.40
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Inde
x, 1
990-
95 a
vg. =
1.0
0
U.S. Population ROW Population
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Trade: Why is it Important?
1.0
1.2
1.4
1.6
1.8
2.0
2.2
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Inde
x, 1
990-
95 a
vg. =
1.0
U.S. Real GDP ROW Real GDP
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World Pork Exports
0123456789
10
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)
Milli
on M
etric
Ton
s
EU US Canada Brazil China ROW
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Major Pork Importers
0123456789
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)
Milli
on M
etric
Ton
s
China Japan Mexico ROW U.S. exports
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China Tariffs for Selected Products
0
10
20
30
40
50
60
70
Soybeans Swineoffal
frozen
Swinecuts
frozen
Hamsbone-infrozen
Bovinemeat
Perc
ent
April 2 increase July 6 increase current applied rate
Value of exports since Jan 2015 (Million U.S. $)
$39,711M
$723M
$46M
$596M $239M
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Ham Primal Value
4550556065707580859095
1 5 9 13 17 21 25 29 33 37 41 45 49
Dol
lars
per
Cw
t.
2018 2017 2013-16 avg. 2018 + tariff
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U.S. Pork Production Expanding Rapidly
-6-4-202468
1012
2011 2012 2013 2014 2015 2016 2017 2018 2019
Perc
ent G
row
th v
s. P
revi
ous
Year
Production U.S. Population
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U.S. Breeding Herd Inventory
5.6
5.7
5.8
5.9
6.0
6.1
6.2
6.3
6.4
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Milli
on H
ead
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Sow Number Changes vs. Profitability
-15-10-5051015202530
-5%-4%-3%-2%-1%0%1%2%3%4%
2002 2004 2006 2008 2010 2012 2014 2016 2018
Cha
nge
vs. Y
ear A
go
Sow Inventory Prior 9 month avg. returns (right axis)
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Breeding Herd Growth by State
-10 0 10 20 30 40 50 60 70 80 90
IllinoisMissouri
S. DakotaN. Carolina
TexasIowa
NebraskaOklahoma
OhioPennsylvania
Other states combined
Thousand Head, June 2018 vs. June 2014
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Pork per Sow Growth
-4
-2
0
2
4
6
8
10
12
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Perc
ent v
s. Y
ear A
go
2.2% avg. growth since 20001.4% avg. growth since 2010
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H-S-0510/12/18
17001800190020002100220023002400250026002700
JAN APR JUL OCT
Thou. Head
HOG SLAUGHTERFederally Inspected, Weekly
Avg. 2012-16 2017 2018
Data Source: USDA-AMS & USDA-NASS
Livestock Marketing Information Center
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H-S-2410/12/18
202
204
206
208
210
212
214
216
JAN APR JUL OCT
Pounds
BARROW AND GILT DRESSED WEIGHTFederally Inspected, Weekly
Avg. 2012-16 2017 2018
Data Source: USDA-AMS & USDA-NASS
Livestock Marketing Information Center
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U.S. Pork Production/Exports Changes
-300-200-100
0100200300400500600
2012 2013 2014 2015 2016 2017 2018 2019
Milli
on P
ound
s vs
. Pre
viou
s Ye
ar
Production Exports
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30
40
50
60
70
80
90
2012 2013 2014 2015 2016 2017 2018 2019 (p)
Dol
lars
per
Cw
t
-300-200-100
0100200300400500600
2012 2013 2014 2015 2016 2017 2018 2019
Milli
on P
ound
s vs
. Pre
viou
s Ye
ar
Production Exports
Pork Production/Exports Changes
Barrow and Gilt Price
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U.S. Pork Exports
0
5
10
15
20
25
30
35
40
1990 1993 1996 1999 2002 2005 2008 2011 2014 2017
Perc
ent
as % of U.S. production as % of world exports
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U.S. Pork Markets
0
10
20
30
40
50
60
2001 2003 2005 2007 2009 2011 2013 2015 2017
Perc
ent o
f Tot
al P
ork
Expo
rts
Mexico Japan Canada S. Korea China other
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10/10/18
10
15
20
25
30
35
40
45
1/10/15 7/11/15 1/9/16 7/9/16 1/7/17 7/8/17 1/6/18 7/7/18
1000 MT
TOTAL US EXPORTS OF PORK MUSCLE CUTSWeekly
Data Source: USDA-FAS
Livestock Marketing Information Center
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10/10/18
0
2
4
6
8
10
12
14
16
1/4/14 1/10/15 1/9/16 1/7/17 1/6/18
1000 MT
US EXPORTS OF PORK MUSCLE CUTSWeekly
Canada Japan Mexico Korean Rep.
Data Source: USDA-AMS & USDA-APHIS
Livestock Marketing Information Center
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U.S. Pork Export Value to China/HK
0
200
400
600
800
1,000
1,200
2010 2011 2012 2013 2014 2015 2016 2017
Milli
on $
Including Variety Meat Not Including Variety Meat
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Meat Production and Trade, Oct. WASDE
Projected 2017 2018 2019 Production (billion lbs.) 99.8 102.2 105.5 Beef 26.3 27.1 28.0 Pork Chicken
25.6 41.2
26.4 42.1
27.8 42.9
Other 6.7 6.6 6.8
Exports (billion lbs.) 16.0 16.7 17.2 Beef Pork Chicken Other
2.9 5.6 6.8 0.7
3.2 6.0 6.9 0.6
3.2 6.2 7.0 0.8
Imports (billion lbs.) 4.5 4.5 4.6 Beef Pork Other
3.0 1.1 0.4
3.0 1.1 0.4
3.1 1.1 0.4
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Projected
2017
2018
2019
Production (billion lbs.)
99.8
102.2
105.5
Beef
26.3
27.1
28.0
Pork
Chicken
25.6
41.2
26.4
42.1
27.8
42.9
Other
6.7
6.6
6.8
Exports (billion lbs.)
16.0
16.7
17.2
Beef
Pork
Chicken
Other
2.9
5.6
6.8
0.7
3.2
6.0
6.9
0.6
3.2
6.2
7.0
0.8
Imports (billion lbs.)
4.5
4.5
4.6
Beef
Pork
Other
3.0
1.1
0.4
3.0
1.1
0.4
3.1
1.1
0.4
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Retail Meat Prices
2.503.003.504.004.505.005.506.006.507.00
2010 2011 2012 2013 2014 2015 2016 2017 2018
Dol
lars
per
Pou
nd
Pork Choice Beef Bacon
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Selected Retail Meat Prices
-20 0 20 40 60
Ground beefChuck roastRound roast
Beef for stewRound steakSirloin steak
Bacon, slicedPork chops
Ham, boneless
Chicken legs, bone-inChicken breast, boneless
Percent Change, 2017 vs. 2010
Jan-Sep 2018 vs. 2017:
-4.5%-2.9%
+5.0%-2.6%-4.8%
+4.3%-1.4%N/A
-1.2%+0.6%+2.1%
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Pork Bellies in Cold Storage
0
20
40
60
80
100
120
Jan 08 Jan 10 Jan 12 Jan 14 Jan 16 Jan 18
Milli
on P
ound
s
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Wholesale Pork Prices
6080
100120140160180200220240
01/09/15 07/09/15 01/09/16 07/09/16 01/09/17 07/09/17 01/09/18 07/09/18
Dol
lars
per
Cw
t.
Belly Primal Pork Cutout
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Meat Availability and Prices, Oct. WASDE
Projected 2017 2018 2019 Availability (lbs. / capita) 216.8 219.4 224.3 Beef 56.9 57.2 58.8 Pork Chicken
50.1 90.8
50.8 92.4
53.1 93.4
Other 19.0 19.0 19.0
Prices (cents / lb.) Fed steer Barrow and gilt Chicken Turkey
121.52 50.48 93.5 96.1
116.29 45.23
97.1 81.1
113 - 122 40 - 43 92 - 99 81 - 88
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Projected
2017
2018
2019
Availability (lbs. / capita)
216.8
219.4
224.3
Beef
56.9
57.2
58.8
Pork
Chicken
50.1
90.8
50.8
92.4
53.1
93.4
Other
19.0
19.0
19.0
Prices (cents / lb.)
Fed steer
Barrow and gilt
Chicken
Turkey
121.52
50.48
93.5
96.1
116.29
45.23 97.1
81.1
113 - 122
40 - 43
92 - 99
81 - 88
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June 2019 Lean Hog Futures
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Hog Price (Quarterly)
30
40
50
60
70
80
90
2012 2013 2014 2015 2016 2017 2018 2019 (p)
Dol
lars
per
Cw
t
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Farrow-Finish Returns Projection
-15
-10
-5
0
5
10
15
20
25
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019(p)
Dol
lars
per
Cw
t.
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Know What to Look For Moving Forward
Average profitability will struggle through 2019 Heavy supplies weigh on prices and limit any rallies The market will struggle to assess tariff impacts Feed prices will move on weather and tariff news
Locking in positive profits will be difficult That does not mean that you can’t limit losses Know what keeps you afloat and lock that in when you can
Domestic demand could offset a lot of other negatives Economic projections still bright The majority of our pork is still consumed in this country
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What Are the Key Dairy Issues?
U.S. milk supply growth continues Cow numbers slow to respond to lower returns Productivity growth adding to the supply Modest output growth to continue next few quarters
Good news on the international front Prices moving higher US exports growing
Margin Protection Program Debate of the next farm bill underway Senate ag appropriations makes changes to MPP
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What’s Wrong With This Picture?
8.94
9.00
9.06
9.12
9.18
9.24
9.30
9.36
9.42
10
12
14
16
18
20
22
24
26
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Dol
lars
per
Cw
t. / M
illion
Hea
d
All Milk Price Dairy Cows (right axis)
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Global Dairy Product Prices
0.0
0.5
1.0
1.5
2.0
2.5
3.0
7 Jan2014
1 Jul2014
6 Jan2015
1 Jul2015
Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18
Dol
lars
per
Pou
nd
Butter Cheese SMP
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Quarterly U.S. All Milk Prices
101214161820222426
1997 2001 2005 2009 2013 2017
$ pe
r cw
t
USDA Oct. Forecast
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World SMP Production
0
1
2
3
4
5
6
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)
Milli
on M
etric
Ton
s
EU US India New Zealand Australia ROW
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World SMP Consumption
0.00.51.01.52.02.53.03.54.04.5
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)
Milli
on M
etric
Ton
s
EU India US Mexico China ROW
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World SMP Exports
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)
Milli
on M
etric
Ton
s
EU US New Zealand Australia Belarus ROW
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World WMP Consumption
0.00.51.01.52.02.53.03.54.04.5
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)
Milli
on M
etric
Ton
s
China Brazil EU Algeria Indonesia ROW
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World WMP Exports
0.0
0.5
1.0
1.5
2.0
2.5
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)
Milli
on M
etric
Ton
s
New Zealand EU Argentina Australia Mexico ROW
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Dairy Markets Continue To Transistion
Larger operations growing fast Small operations being squeezed Increase in dairy operations leaving the business Price outlook remains low for 2019 Inelastic demand markets can move quickly!
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Questions
Dr. Scott BrownUniversity of Missouri222 Mumford HallColumbia, MO 65211
(573) 882 – 3861
Twitter @MUScottBrown
Weekly Livestock Update, Brownfield Ag Newshttps://brownfieldagnews.com/brownfield-livestock-market-updates/
http://mycafnr.missouri.edu/templates/logos/jpg/cmyktwolines-test.jpghttps://brownfieldagnews.com/brownfield-livestock-market-updates/
Global Pork and Dairy Market OutlookHog Outlook: Ample Global Supplies AheadAfrican Swine Fever Remains The Wild Card for Global Pork MarketsPork Availability per U.S. ResidentFeed Costs Remain Low�ISU U.S. Farrow-Finish ReturnsWorld Pork ProductionWorld Pork ConsumptionTrade: Why is it Important?Trade: Why is it Important?World Pork ExportsMajor Pork ImportersChina Tariffs for Selected ProductsHam Primal ValueU.S. Pork Production Expanding RapidlyU.S. Breeding Herd InventorySow Number Changes vs. ProfitabilityBreeding Herd Growth by StatePork per Sow GrowthSlide Number 19Slide Number 20U.S. Pork Production/Exports ChangesSlide Number 22U.S. Pork ExportsU.S. Pork MarketsSlide Number 25Slide Number 26U.S. Pork Export Value to China/HKMeat Production and Trade, Oct. WASDERetail Meat PricesSelected Retail Meat PricesPork Bellies in Cold StorageWholesale Pork PricesMeat Availability and Prices, Oct. WASDEJune 2019 Lean Hog FuturesHog Price (Quarterly)Farrow-Finish Returns ProjectionKnow What to Look For Moving ForwardWhat Are the Key Dairy Issues?What’s Wrong With This Picture?Slide Number 40Global Dairy Product PricesQuarterly U.S. All Milk PricesWorld SMP ProductionWorld SMP ConsumptionWorld SMP ExportsWorld WMP ConsumptionWorld WMP ExportsDairy Markets Continue To TransistionQuestions