SWINE MARKET OUTLOOK

Transcription

1 2017 IOWA PORK REGIONAL CONFERENCES February 20-24, 2017 SWINE MARKET OUTLOOK Lee Schulz, Department of Economics, Iowa State University (515) ;

2 U.S. Corn Supply and Use Area Planted (mil. acres) Yield (bu./acre) Production (mil. bu.) 13,829 14,216 13,602 15,148 14,060 Beg. Stocks (mil. bu.) 821 1,232 1,731 1,737 2,320 Imports (mil. bu.) Total Supply (mil. bu.) 14,686 15,479 15,401 16,940 16,430 Feed & Residual (mil. bu.) 5,040 5,280 5,131 5,600 5,500 Ethanol (mil. bu.) 5,124 5,200 5,206 5,350 5,325 Food, Seed, & Other (mil. bu.) 1,369 1,401 1,429 1,445 1,440 Exports (mil. bu.) 1,920 1,867 1,898 2,225 1,950 Total Use (mil. bu.) 13,454 13,748 13,664 14,620 14,215 Ending Stocks (mil. bu.) 1,232 1,731 1,737 2,320 2,215 Season-Average Price ($/bu.) Source: USDA/WAOB

3 U.S. Soybean Supply and Use Area Planted (mil. acres) Yield (bu./acre) Production (mil. bu.) 3,358 3,927 3,926 4,307 4,050 Beg. Stocks (mil. bu.) Imports (mil. bu.) Total Supply (mil. bu.) 3,570 4,052 4,140 4,528 4,500 Crush (mil. bu.) 1,734 1,873 1,886 1,930 1,935 Seed & Residual (mil. bu.) Exports (mil. bu.) 1,638 1,842 1,936 2,050 2,100 Total Use (mil. bu.) 3,478 3,862 3,944 4,108 4,165 Ending Stocks (mil. bu.) Season-Average Price ($/bu.) Source: USDA/WAOB

4 Corn Yields Top: 2016 Yield Bottom: Change from last year Units: Bushels/acre Source: USDA/NASS

5 Soybean Yields Top: 2016 Yield Bottom: Change from last year Units: Bushels/acre Source: USDA/NASS

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7 South American Weather Source: NOAA, Climate Prediction Center

8 World Corn Production Source: USDA/WAOB

9 World Soybean Production Source: USDA/WAOB

10 Corn Export Sales Source: USDA/FAS

11 Change in Corn Export Sales Source: USDA/FAS

12 Soybean Export Sales Source: USDA/FAS

13 Change in Soybean Export Sales Source: USDA/FAS

14 Current Corn Futures Source: CME Group

15 Current Soybean Futures Source: CME Group

16 2016/17 Crop Actual Yields Source: Iowa State University

17 2017/18 Crop Margins Source: Iowa State University

18 Relative Changes in Pork & Hog Prices IA/MN CASH/ PORK TOTAL WTD FORMULA RETAIL PORK AVG BASE LB PRICE CUTOUT LEAN HOG PIG $/lb $/cwt $/cwt $/head 2008 $2.94 $69.23 $65.12 $ $2.92 $58.04 $57.04 $ $3.11 $81.01 $72.51 $ $3.43 $93.82 $86.56 $ $3.47 $84.60 $83.54 $ $3.64 $92.71 $86.83 $ $4.02 $ $ $ $3.85 $79.27 $69.31 $ $3.75 $78.51 $63.76 $36.55 YR/YR Change (%) % -16.2% -12.4% -5.4% % 39.6% 27.1% 29.9% % 15.8% 19.4% -8.8% % -9.8% -3.5% 0.9% % 9.6% 3.9% 10.3% % 18.9% 16.1% 39.8% % -28.1% -31.3% -35.8% % -1.0% -8.0% -4.1% Source: USDA/ERS, USDA/AMS

19 Source: CME Group

20 Mil. Pounds 160 US PORK EXPORTS TO MAJOR MARKETS Carcass Weight, Monthly Japan South Korea Hong Kong China-Mainland Data Source: USDA-ERS & USDA-FAS Livestock Marketing Information Center 02/08/17

21 Source: Trade Atlas

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23 Source: CME Group

24 2013 = +$6.21 [-$25.60 to +$24.57] 2014 = +$61.85 [+$13.15 to +$107.25] 2015 = +$7.93 [-$18.40 to +$26.25] 2016 = -$1.26 [-$35.52 to +$32.92] 2017 f = +$11.09 [-$9.00 to +$25.93]

25 Historical and Projected Iowa Farrow to Finish Returns (as of 2/17/17) ( Closeout Total Cost Lean Hog Price Net Return Net Return Month Year $/carcass cwt $/carcass cwt $/carcass cwt $/head Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar 2017 f Apr-Jun 2017 f Jul-Sep 2017 f Oct-Dec 2017 f f Jan-Mar 2018 f Apr-Jun 2018 f * Projected using basis adjusted futures prices.

26 USDA Quarterly Hogs and Pigs Report United States December 23, as % Pre-Report Pre-Report Actual of 2015 Range Estimate Estimate Inventories on Dec 1 * All hogs and pigs 68,919 71, Kept for breeding 6,002 6, Market 62,917 65, Under 50 pounds 20,008 20, pounds 17,262 18, pounds 13,370 13, pounds and over 12,276 12, Farrowing ** Sep Nov sows farrowed 2,929 3, Dec Feb intentions 2,927 2, Mar May intentions 2,968 2, Sep Nov Pig Crop * 30,848 32, Sep Nov Pigs per Litter * 1,000 head ** 1,000 litters Source: USDA/NASS. Urner Barry pre-report estimates

27 Mil. Head 7.5 DECEMBER 1 HOG BREEDING HERD U.S. Inventory Data Source: USDA-NASS Livestock Marketing Information Center H-N-09 12/23/16

28 Number of sows 2,275,939 Number of farms 789 Source: Swine Health Monitoring Project

29 Number of sows 2,829,183 Number of farms 1026 Source: Swine Health Monitoring Project

30 Source: USDA/AMS & APHIS

31 National Direct Delivered Feeder Pig Report: Week Ending February 17, 2017 Weekly Summary of prices on a delivered farm to farm basis Source: USDA/AMS

32 Mil. Head 70 DECEMBER 1 MARKET HOGS U.S. Inventory Data Source: USDA-NASS Livestock Marketing Information Center H-N-10 12/23/16

33 Source: USDA/AMS

34 Retail (57.9%), 14 = 53.3%, 15 = 62.1%, 16 = 60.0%, 17 = 57.5% Farmer (29.3%), 14 = 32.8%, 15 = 22.7%, 16 = 21.4%, 17 = 22.1% Packer (13.6%), 14 = 13.9%, 15 = 15.1%, 16 = 18.6%, 17 = 20.4% Source: USDA/ERS

35 U.S. Packing Capacity Under Construction New pork packing Fall 2016 Summer/Fall 2017 Summer/Fall 2018 plants Daily Annual Daily Annual Daily Annual Pleasant Hope, MO 2, ,000 2, ,000 2, ,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 24,000 6,000,000 Coldwater, MI 10,000 2,500,000 10,000 2,500,000 Wright County, IA 10,000 2,500,000 Total 6,500 1,625,000 28,500 7,125,000 50,500 12,625,000 Head per week 31, , ,788 % of '15 avg = mil 1.4% 6.2% 11.1% % of '15 max = mil 1.2% 5.5% 9.7% Source: Steve Meyer. Published in National Hog Farmer Magazine, July 19, Source: Seaboard Triumph Foods plans to expand for second shift at Sioux City plant, February 17, 2017

36 Source: USDA/AMS. * Steve Meyer, EMI.

37 Source: USDA/AMS

38 Source: USDA/AMS

39 2013 = +$4.77 [-$14.80 to +$22.07] 2014 = +$39.48 [+$1.62 to +$84.64] 2015 = -$14.32 [-$30.32 to +$4.70] 2016 = -$13.10 [-$45.69 to +$17.05] 2017 f = +$1.74 [-$16.04 to +$20.19]

40 Historical and Projected Iowa Wean to Finish Returns (as of 2/17/17) ( BE BE Place Market Net LH SEW BE LH SEW Mo-Yr Mo-Yr Return* FCOG** Price Price* FCOG** Price Price* Jul-Sep 2015 Jan-Mar Oct-Dec 2015 Apr-Jun Jan-Mar 2016 Jul-Sep Apr-Jun 2016 Oct-Dec Jul-Sep 2016 Jan-Mar 2017 f Oct-Dec 2016 Apr-Jun 2017 f Jan-Mar 2017 Jul-Sep 2017 f Apr-Jun 2017 Oct-Dec 2017 f f Jul-Sep 2016 Jan-Mar 2018 f Oct-Dec 2016 Apr-Jun 2018 f Net return and SEW price is $/head and all other values are $/carcass cwt. ** FCOG = Feeding cost of gain. f Projected using basis adjusted futures prices.

41 Percent 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% HOGS SOLD BY TRANSACTION National Monthly Negotiated Purchases Other Market Formula Swine or Pork Mkt Formula Other Purchase Packer Sold Packer Owned Data Source: USDA-AMS Livestock Marketing Information Center

42 HOGS SOLD BY TRANSACTION Negotiated: Cash or spot market purchase by a packer of livestock from a producer under which the base price for livestock is determined by seller-buyer interaction and agreement on a delivery day. The livestock are scheduled for delivery to the packer no more than 14 days after the date on which the livestock are committed to the packer. Other Market Formula: A purchase of swine by a packer in which the pricing mechanism is a formula price based on any market other than the market for swine, pork, or a pork product. The term other market formula purchase includes a formula purchase in a case in which the price formula is based on one or more futures or options contracts. Swine or Pork Market Formula: A purchase of swine by a packer in which the pricing mechanism is a formula based on a market for swine, pork, or a pork product, other than a future or option for swine, pork, or a pork product. E.g., WCB + $1.75 or Cutout - $9.00. Other Purchase Arrangement: A purchase of swine by a packer that is not a negotiated purchase, swine or pork market formula, or other market formula, and does not involve packer-owned swine. E.g., COP, Corn price matrix. Data Source: USDA/AMS

43 Data Source: USDA/AMS

44 IOWA/MINNESOTA DAILY DIRECT PRIOR DAY HOG REPORT BASED ON PLANT DELIVERED, LM_HG204, Annual Average Price Year Negotiated Other Mkt Formula Swine/pork Mkt Formula Other Purchase Arrangement Total Wtd Avg 2002 $45.41 $49.24 $45.10 $53.36 $ $51.85 $54.31 $51.13 $55.84 $ $69.82 $61.15 $68.33 $67.11 $ $66.94 $61.98 $65.46 $64.77 $ $62.69 $59.41 $61.99 $62.52 $ $61.89 $64.85 $61.72 $64.10 $ $63.64 $69.37 $63.21 $68.04 $ $55.18 $63.79 $54.78 $61.59 $ $72.61 $71.24 $72.69 $72.82 $ $87.70 $83.86 $87.23 $86.49 $ $83.47 $83.55 $82.53 $85.73 $ $86.94 $84.04 $86.53 $88.53 $ $ $94.50 $ $ $ $67.51 $71.42 $68.00 $71.93 $ $60.91 $64.48 $62.31 $67.01 $ YTD $65.08 $64.27 $65.86 $68.76 $66.52 Data Source: USDA/AMS

45 Bil. Pounds 120 Beef: Q4 100 Pork: Q1 Total Poultry: Q COMMERCIAL MEAT & POULTRY PRODUCTION By Type of Meat, Annual Beef Pork Lamb & Veal Chicken Turkey Data Source: USDA-NASS, Compiled & Analysis by LMIC Livestock Marketing Information Center M-S-03A 02/05/17

46 LMIC Pork Production and Price Quarterly Forecasts (2/17/17) Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC Year Comm l % Chg. Avg Carcass % Chg. Comm l Pork % Chg. Quarter Slaughter Year Ago Weight Year Ago Production Year Ago 2015 (1,000 hd) (lbs) (mil. Lbs) I 28, , II 27, , III 28, , IV 30, , Year 115, , I 29, , II 28, , III 29, , IV 31, , Year 118, , I 29, , II 29, , III 29, , IV 32, , Year 120, , I 30, , II 29, , III 29, , IV 33, , Year 123, ,

47 Shortage is a loaded term in economic thinking

48 Data Source: USDA/ERS, BLS

49 Data Source: USDA/ERS, BLS

50 Advertised Prices at Major Retail Supermarket Outlets 02/17 thru 02/23 NATIONAL RETAIL REPORT - PORK THIS WEEK LAST WEEK LAST YEAR Feature rate 87.8% 84.5% 71.4% Special rate 17.0% 19.3% 19.1% NATIONAL RETAIL REPORT - BEEF THIS WEEK LAST WEEK LAST YEAR Feature rate 74.3% 76.3% 81.3% Special rate 9.2% 16.5% 15.9% NATIONAL RETAIL REPORT - CHICKEN THIS WEEK LAST WEEK LAST YEAR Feature rate 64.9% 75.4% 72.3% Special rate 8.2% 17.4% 6.8% NATIONAL RETAIL REPORT - TURKEY THIS WEEK LAST WEEK LAST YEAR Feature rate 42.3% 30.0% 27.3% Special rate 1.8% 0.9% 1.8% Source: USDA/AMS

51 $ Per Pound PORK PRICE-QUANTITY RELATIONSHIP Annual, Retail Weight, Deflated Retail Price lbs per capita & -4.0% Pork Price = -3.0% Demand Change Pounds Per Capita 94 Data Source: Bureau of Economic Analysis & USDA-ERS, Compiled and Analysis by LMIC Livestock Marketing Information Center H-P-12 04/10/16

52 2016: Per Capita Consumption = +0.7% (Year over Year) Real Pork Prices = 4.0% IF Real All Fresh Beef Prices 1.0% = 0% Demand Change

53 2.00 Hog Production Costs by Country (Euro/kg hot weight) Source: InterPig

54 Source: Policy Analysis Computing & Information Facility In Commerce

55 Source: Policy Analysis Computing & Information Facility In Commerce

56 U.S. Pork Exports, Jan-Dec 2016 (Volume excluding byproducts & variety meats) Dec-16/Nov-16 Dec-16/Dec-15 Year-to-Date Country Percent Percent 1,000 lbs Percent Japan -21% -6% -62,218-5% Mexico 8% 23% 50,480 3% Canada -2% 6% 8,488 2% South Korea 20% 14% -87,182-18% China (Mainland) -12% 67% 245,965 98% Hong Kong 5% -26% 22,267 18% Australia 21% 10% 10,562 6% Philippines -16% -1% 3,560 5% China (Taiwan) 101% 10% -18,565-49% Colombia -21% 164% 9,820 9% Honduras -41% 12% 10,879 17% Dominican Republic 10% 29% 9,134 14% Guatemala -44% -3% 2,162 6% Chile -65% 113% 5,675 14% Other Countries 8% 28% 13,111 7% Total -3% 15% 224,138 4% Source: USDA/ERS

57 USDA Long term Pork Projections, February Item Units Beginning stocks Mil. lbs Commercial production Mil. lbs. 24,501 24,946 25,800 25,653 26,009 26,447 26,788 27,156 27,330 27,685 28,055 28,443 Chg from previous yr Percent Farm production Mil. lbs Total production Mil. lbs. 24,517 24,961 25,816 25,669 26,025 26,463 26,804 27,172 27,346 27,701 28,071 28,459 Imports Mil. lbs. 1,116 1,106 1,095 1,000 1,040 1,058 1,072 1,086 1,093 1,107 1,122 1,138 Total supply Mil. lbs. 26,192 26,657 27,536 27,304 27,700 28,156 28,516 28,903 29,089 29,468 29,863 30,277 Exports Mil. lbs. 5,009 5,179 5,440 5,445 5,566 5,778 5,843 5,946 6,082 6,200 6,330 6,458 Ending stocks Mil. lbs Total consumption Mil. lbs. 20,593 20,853 21,461 21,224 21,499 21,738 22,028 22,307 22,347 22,598 22,853 23,129 Per capita, retail weight Pounds Chg from previous yr Percent Prices: Hogs, farm $/cwt National base, live equiv $/cwt National base, lean equiv $/cwt Feed price ratio: Hog-corn Ratio Hog inventory, December 1, previous yr 1,000 head 67,776 68,919 69,925 69,900 70,429 71,080 71,586 72,132 72,390 72,918 73,467 74,043 Hog Inventory 2016 to 2021: +4% 2016 to 2026: +7% Commercial Prod to 2021: +7% 2016 to 2026: +14% Lean Hog Prices, $/cwt 2017 to 2021 Avg = $59.91 Min = $53.33, Max = $66.55 Exports 2016 to 2021: +13% 2016 to 2026: +25%

58 Thank You! More information available at: Iowa Farm Outlook & News Ag Decision Maker ISU Estimated Livestock Returns ISU Livestock Crush Margins