What s Happening in the U.S. Pork Industry? Steve Meyer, Ph.D. Vice President, Pork Analysis EMI Analytics

Transcription

1 Ontario Pork Industry Council What s Happening in the U.S. Pork Industry? Steve Meyer, Ph.D. Vice President, Pork Analysis EMI Analytics

2 Key factors impacting the U.S. pork sector... Domestic demand economy, consumers Exports World economy, U.S. dollar Beef supplies esp. long-fed, HEAVY cattle PEDv how bad will it be this year? Sow herd expansion equity, incentive? U.S. corn and soybean crops Done deal HPAI: Market impact positive or negative? Broiler expansion flock size, productivity

3 Record high meat/poultry prices an indicator of strong consumer demand

4 Total frozen meat/poultry: 4 th highest in Sept, +18%... With beef +31%, chicken +27%, pork +19%

5 16 hog production cost will be lowest since With best operations at $63-$64/cwt carcass

6 LH selloff has pushed Q4 to $25-$30 losses And taken 16 average well below breakeven

7 The biggest demand challenge is EXPORTS but yr/yr gains will end 15 up; 16 will be +2-4%

8 U.S. dollar Yr/yr +20% on 7/ But had stabilized until late October

9 Hog/Pork Supply: Key issue is PEDv status high wk. of 3/15 at 161 vs. 291 last year Recent surge was technical vets could confirm cases

10 More important: Sow herd breaks = death loss Data from 995 sow farms, 22 of 26 large systems, mil. sows! FIRST CASE OF 15 confirmed last week Expected!

11 Sept H&P report was much as expected - neutral Still large front-end supplies, 16 much like 15 USDA QUARTERLY HOGS & PIGS REPORT Category Inventories on September 1 All hogs and pigs 65,979 68, Kept for breeding 5,929 5, Kept for marketing 60,059 62, Under 50 lbs. 20,390 20, lbs. 17,458 17, lbs. 12,112 13, lbs. and over 10,098 11, Farrowings Jun-Aug sows farrowed 2,991 2, Sep-Nov Intentions 2,994 2, Dec-Feb Intentions 2,895 2, Jun-Aug Pig Crop 30,402 30, Jun-Aug pigs saved per litter *Thousand head ** Thousand Litters September 25, 2015 '15 as Pct of '14 Pre- Report Est's 1 1 Source: Urner Barry Actual minus Est.

12 5 wks prior to last wk: FI Slghtr -2.7% vs. forecast..... Consistently low even w/o plant shutdown

13 Slaughter forecasts from Sept H&P September 2015 Hogs & Pigs -- Commercial Slaughter Forecasts Mizzou ISU LMIC EMI ACTUAL Mil. Hd % Chnge Mil. Hd % Chnge Mil. Hd % Chnge Mil. Hd % Chnge Mil. Hd % Chnge 2013 Year % 2014 Q % Q % Q % Q % Year % 2015 Q % % % % % Q % % % % % Q % % % % % Q % % % Year* % % % 2016 Q % % % Q % % % Q % % % Red figures are analysts' last FORECAST for the given quarter (Q1 done in Dec, Q2 done in Mar, etc.) 6/29/15 Blue figures are estimated using USDA data *Annual total uses actuals to-date plus forecasts for the rest of the year.

14 U.S. pork packing capacity: 453k/day, 2.447M/wk.

15 JBS s purchase of Cargill What were the drivers? - Cargill: #4 was not good enough, not ones to fall in love with assets, good price - JBS: Probably not world domination, belief (true!) that they would run plants better, hog production including pen gest, NFA Implications not many - Approved (as it should have been) by DOJ - Some issues in eastern Iowa one less bid - Better long-term competitiveness of JBS

16 2016 changes/forecasts are not encouraging!

17 Historically: The U.S. has been just in time and Canada has been just in case

18 Two new plants: Coldwater, MI & Sioux City, IA Seaboard/Triumph Plant Clemens Plant

19 Eastern U.S. share of total Dec 1 inventory: 31% EASTERN U.S. PORK SLAUGHTER PLANTS Barrrow and Gilts Sows/Boars Company City Head/Day Company City Head/Day Smithfield Tar Heel, NC 32,500 Tyson Newbern, TN 2,800 Gwaltney, VA 10,200 Bob Evans Xenia, OH 500 Cliton, NC 10,600 Hillsdale, MI 500 Tyson Logansport, IN 15,300 Swaggerty Sausage Kodak, TN 800 JBS Louisville, KY 10,000 F. B. Purnell Sausage Simsonville, KY 450 Indiana Packing Delphi, IN 17,500 Pioneer Packing Bowling Green, OH 425 Clemens Foods Hatfield, PA 11,500 Williams Sausage Untion City, KY 400 J.H. Routh Sandusky, OH 4,200 Dean Sausage Atalla, AL 300 Greenwood Packing Greenwood, SC 3,000 Wampler's Sausage Lenior City, TN 300 USA Pork Hazellton, PA 2,000 Southern Quality Meats Pontotoc, MS 160 Leidy's Souderton, PA 1,350 Gunnoe Sausage Goode, VA 110 Martin's Falcon, NC 1,300 Total, Eastern U.S. 6,745 Vin-Lee-Ron Mentone, IN 1,100 Eastern Share of Total U.S. Capacity 36.6% The Pork Co. Warsaw, NC 950 Parks Meats Warsaw, NC 250 Dealaman Enterprises Warren, NJ 200 Weltin Packing Minden City, MI 175 Total, Eastern U.S. 122,125 Eastern Share of Total U.S. Capacity 28.1%

20 +2500 hd/day this fall but... +2% BH, +2% ps/l Puts 2016 near or above capacity for 10 weeks!

21 And with the new plants late 17 onward?

22 Summary U.S. crops have pushed costs LOWER Strong domestic demand has outweighed tepid exports so far what about 16? Other species are moving to expansion Producers want to expand and have the wherewithal to do it incentive? 2016 packing capacity could be TIGHT!!! Two new plants are on the way but where does all the new pork go?

23 QUESTIONS AND DISCUSSION?