Update on the Canadian Pork Sector & What Lies Ahead

Transcription

1 Update on the Canadian Pork Sector & What Lies Ahead Presented by: Ken McEwan

2 World Pork Production 2009* Canada 1.8% of World Production USA 10.4% of World Production EU % of World Production Russia 2.2% of World Production China 48.4% of World Production Japan 1.3% of World Production Mexico 1.1% of World Production Source: USDA, FAS. *Prelim. Brazil 3.1% of World Production Production % Change Consumption % Change ('000 Tonnes) ('000 Tonnes) China 48, % 48, % EU-27 22, % 20, % US 10, % 8, % Brazil 3, % 2, % Russia 2, % 2, % Canada 1, % % Japan 1, % 2, % Mexico 1, % 1, %

3 Cost of Production by Country ($C/kg cw) Country % Change 2006 to 2007 USA % Brazil % Canada % Denmark % Netherlands % France % Belgium % Spain % Germany % Britain % Source: Pig International, March/April 2009 adapted from InterPig reports. University of Guelph-Ridgetown Campus calculations.

4 1,000 MT Swine Meat, % of Total World Meat Consumption 120, ,000 80,000 60,000 40,000 20, % 44% 43% 42% 41% 40% Meat, Beef and Veal Meat, Swine Poultry, Meat, Broiler Poultry, Meat, Turkey Swine % of Total Meat Linear (Meat, Swine) Source: USDA, FAS. *Preliminary; **Forecast. Note: Beef, veal and swine meat numbers are carcass weight equivalent. Broiler and turkey meat are ready to cook equivalent.

5 Changes in Canadian Per Capita and Total Consumption,

6 World Pork Trade 2009* Exports ( 000 T) % of World Exports Imports ( 000 T) % of World Imports 1. US 1,887 35% 1. Japan 1,210 23% 2. EU-27 1,250 23% 2. Russia % 3. Canada 1,130 21% 3. Mexico % 4. Brazil % 4. Korea 375 7% Top 4 4,912 90% Top 4 2,935 55% Source: USDA, FAS. *Prelim.

7 Key Factors Influencing Competitiveness Canada US Brazil EU-27 China Domestic Consumption Export Dependency - pork + + Government Policy Product Quality Exchange Rate + + Marketings/sow Cost of Production + + Environmental Regulations + + Land Costs + Labour Availability + + Energy Costs + Animal Welfare Regulations + + +

8 Canadian Pig Production 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000, Hogs Slaughtered in Canada Slaughter Hogs Exported Feeder Pigs Exported Source: CFIA, Provincial Governments, USDA, APHIS

9 # of Head Total Pig Production by Province 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000, AB SK MB ON QC Source: USDA, APHIS; CFIA & provincial governments. Pig production = province of origin hogs slaughtered + weaner exports + market hog exports.

10 Canadian Production Pig #s i) Hogs Number Slaughtered* 21,642,151 21,521,403 ii) Pork Trade Processed Pork Exported (kg) 1,075,180,822 1,094,500,865 Processed Pork Imported (kg) 169,740, ,271,744 Net Processed Pork Trade (kg) 905,440, ,229,121 Conversion of net pork exports to live hog equivalents 1 9,841,746 10,002,490 iii) Consumption Consumption (Hogs slaughtered live hog equivalent of net pork exports) 11,800,405 11,518,913 iv) Live Pig Exports (to all countries) Exports Feeder Pigs 5,221,664 7,036,388 Exports Live Hogs 1,142,671 2,308,368 Total Live Pig Exports 6,364,335 9,344,756 A. Net Pork and Live Pig Exports 16,206,081 19,347,246 B. Total Production (slaughtered + live pig exports) 28,006,486 30,866,159 C. % of Production Exported as Pork or Live Pigs (C=A/B) 57.9% 62.7% Source: Statistics Canada; 1 Live hog equivalent = net pork trade/average carcass weight. Carcass weight = 92 kg. * Province of origin slaughtered pigs - hogs that are slaughtered within Canada.

11 Canada Pork Exports (1,000 MT CWE) Source: USDA, FAS. * Forecast

12 Canada s Pork Exports by Category, Top 3 Countries by Value 80% of total export value Pork Exports $2,602.1 million Fresh $975.1 million Frozen $1,103.2 million Processed $239.2 million Pig Fat $82.4 million Pork Offals $202.2 million US Japan South Korea Japan US Australia US Tajikistan Trinidad-Tobago Japan Russia US Hong Kong US Taiwan Source: Statistics Canada, 2009 data.

13 Canada Pork Imports (1,000 MT CWE) Source: USDA, FAS. * Forecast

14 Canada s Pork Imports by Category, Top 3 Products by Value Fresh $346.6 million Fresh/chilled cuts Back ribs Spare ribs Frozen $66.0 million Frozen cuts Back ribs Hams, shoulders Pork Imports $647.1 million Processed $199.6 million Meat & meat offal Pork sausages Hams, shoulders Pig Fat $4.3 million Pig fat lean meat free Lard Pig fat, excl lard Pork Offals $30.6 million Sausage casings Frozen edible offal Fresh edible offal Source: Statistics Canada, 2009 data.

15 Combined and US Breeding Herd (Head) Canadian Breeding Herd (Head) U.S., Canadian and Combined Breeding Herd, ,000,000 1,700,000 7,500,000 1,600,000 7,000,000 6,500,000 From Dec '04 to Dec '09 US decreased 2.2% Canada decreased 18.3% 1,500,000 1,400,000 6,000,000 1,300,000 5,500,000 1,200,000 Source: USDA; Statistics Canada Combined (US/Can) US Canada

16 2.2% 2.6% 2.2% 3.6% 2.1% 6.3% 1.4% 1.3% 2.0% 0.9% 0.9% 0.9% 1.2% 15.7% 2009 Sow Inventory - Top % 0.8% 0.7% 0.8% 0.7% 0.6% 52.2% Other Smithfield - VA Triumph - MO Seaboard - KS Iowa Select - IA Pipestone - MN Maschoffs - IL Prestage - NC Cargill - MN Carthage - IL Audubon Manning VC - IA Maxwell - NC Hormel -MN PST - NE Tyson - AR CVFF NPP - NE Wakefield - MN Holden - MN Texas Farms - TX TriOak - IA Successful Farming Pork Powerhouses 2009

17 # of Sows # of Sows/Gilts Over Time 450, , , , , , , ,000 50,000 0 From to AB -24.7% SK -30.0% MB -9.4% ON -21.2% QC -9.2% Alberta Saskatchewan Manitoba Ontario Quebec Source: Statistics Canada

18 Canadian Feeder Pig Exports to U.S.

19 # Head Canadian Live Pig Exports by Province 7,000,000 6,000,000 MB % Change % decrease 5,000,000 4,000,000 3,000,000 ON % Change % decrease 2,000,000 1,000,000 0 Alberta Saskatchewan Manitoba Ontario Quebec Feeder Pigs Slaughter Hogs Source: Statistics Canada; *Preliminary

20 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Price $/ckg, index 100 Ontario Weekly Pool Price $250 $200 $150 $100 $50 $0 Source: Ontario Pork

21 $ / head $190 $180 $170 $160 $150 Ontario Market Hog Revenue and Estimated Cost of Production, Jan Oct 2006 Average Revenue: $141 Average Cost: $133 Average Margin: $8 Nov Feb 2010 Average Revenue: $126 Average Cost: $159 Average Margin: -$33 $140 $130 $120 $110 $100 $90 Revenue Cost $80 J F MA M J J A SO ND J F MAM J J A SO ND J F MA M J J A SO ND J F MAM J J A SO ND J F MA M J J A SO ND J F MAM J J A SO ND Source: Ontario Pork, OMAFRA Swine Budgets

22 Weekly Estimated Hog Value, Canada 1 and U.S. 2 ($C/kg), Jan 5/07 to July 11/08: Can vs US -$0.15/kg July 18/08 to Mar 26/08: Can vs US -$0.16/kg 1 Canada price is Ontario Standard Contract price + index + $1 premium / carcass weight; 2 US price is CME 201 price / carcass weight

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24 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Estimated Margin ($C / kg) Weekly Estimated Processor Margins, Canada & US ($C/kg) $0.50 $0.40 Gross (U.S.) Gross (Canada) Net (U.S.) Net (Canada) $0.30 $0.20 $0.10 $0.00 ($0.10) ($0.20) ($0.30) Source: USDA; Ronald A. Chisholm Ltd.; Ontario Pork; Bank of Canada; industry sources. Note: Canadian calculation based on University of Guelph-Ridgetown Campus estimates.

25 Jan-70 Jan-71 Jan-72 Jan-73 Jan-74 Jan-75 Jan-76 Jan-77 Jan-78 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Price (U.S. cents / lb retail equivalent) Monthly US Pork Prices Farm Wholesale Retail

26 Price Outlook Period US (US$/100 lb lean) Ontario Equivalent (C$/100 kg dressed) Ontario Forward Contract Prices (C$/100 kg dressed)* 2010Q NA 2010Q Q Q (Year) Source: March 2010 Quarterly Hogs & Pigs Report Summary by Glen Grimes and Ron Plain, University of Missouri; Ontario Pork; University of Guelph-Ridgetown Campus calculations. Note: Assumed exchange rate of C$ 0.98 = US$ 1. Figures have been rounded. *Ontario forward contract prices as of March 26, 2010 (after basis adjustments).

27 Source: J. Bancroft, OMAFRA, Weekly Hog Market Facts, March 8, 2010 Ontario Price Outlook

28 $/cwt Hog Cutout Value $US/cwt $100 $90 $80 $70 $60 $50 Source: USDA $40 JAN APR JUL OCT Avg

29 謝謝 Thank you.

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31 Issues Affecting the Industry Feed costs Exchange rate Slaughter capacity COOL Maple Leaf Animal welfare

32 head Canada & US Breeding Stock ( 000 head) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Canada US Source: Statistics Canada, USDA

33 % of Breeding US/Canada Breeding Herd Inventory 100% 90% 80% Canada 14% of US/Can breeding herd Canada 21% of US/Can breeding herd Canada 19% of US/Can breeding herd 70% 60% 50% 40% 30% 20% 10% Breeding Herd ( ) Canada 1.33 million head US 5.85 million head 0% US Canada Source: Statistics Canada, USDA

34 Mar-01 Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Market Pigs (1,000 head) Breeding Stock (1,000 head) Canada/US Inventory 70,000 60,000 50,000 40,000 30,000 20,000 10,000 7,000 6,000 5,000 4,000 3,000 2,000 1, Source: Statistics Canada, USDA US Market Pigs US Breeding Stock Canada Market Pigs Canada Breeding Stock

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36 Ontario Corn and Hog Prices, Margins,

37 Value of Canadian Pork Exports ($/kg) Average Japan US Australia S Korea Hong Kong Total Source: Statistics Canada

38 Canadian Pork & Products Exports, 2009 Value $ 000 Cdn % of Total Quantity Tonnes % of Total 1. Japan 865, % 226, % 2. US 834, % 329, % 3. Australia 139, % 49, % 4. South Korea 5. Hong Kong 125, % 63, % 117, % 78, % Total 2,602,136 1,075,181

39 Pork Exports to US, 2009 $ 000 Cdn Fresh Pork $490,722 Frozen Pork 115,005 Processed Pork 196,055 Pig Fat 8,591 Pork Offals 23,914 Total $834,286 Source: Statistics Canada

40 Canadian Inventory Numbers (July 1) Source: Statistics Canada July % 09 vs 08 Ontario Sows/gilts % <20 kg 1, , , % kg 1, % >60kg 1, % Quebec Sows/gilts % <20 kg 1, , , % kg 1, , , % >60kg 1, , , % Manitoba Sows/gilts % <20 kg , % kg % >60kg % Canada Sows/gilts 1, , , % <20 kg 4, , , % kg 4, , , % >60kg 4, , , %

41 Estimated Cost ($C/head) Estimated Farrow-to-Finish Corn/Soymeal Costs for Ontario and Iowa ($C/head), Jan Jan Feb Mar Apr May Jun Jul Aug Sep-08 8-Oct-08 5-Nov-08 3-Dec Dec Jan Feb Mar Apr May Jun Jul Aug-09 9-Sep-09 7-Oct-09 4-Nov-09 2-Dec Dec Jan Feb-10 $110 Ontario Iowa $100 $90 Avg Ontario $76.79/head Avg Iowa $70.94/head Difference +$5.87/head ON vs IA -$6.52 to +$19.04 $80 $70 $60 $50

42 Estimated Canadian Hog Processor Margins $C/kg Wholesale Value Hog Cost Gross Margin Non-Hog Costs Net Margin Avg Source: AAFA; Ontario Pork; Ronald A. Chisholm Ltd.; industry sources. Note: Numbers may not add due to rounding.

43 Estimated US Hog Processor Margins $C/kg Wholesale Value Hog Cost Gross Margin Non-Hog Costs Net Margin Avg Source: USDA; CME Group; industry sources. Note: Numbers may not add due to rounding.

44 Overview Global situation Canada inventory, trade production vs slaughter vs consumption profitability producer & processor Outlook

45 Pig Production & Slaughter Capacity, 2009 A B C = A-B Total Production 1 Slaughter Capacity Estimate Difference (Total Production Slaughter Capacity) British Columbia 232, , ,829 Alberta 2,766,318 5,616,000-2,849,682 Saskatchewan 1,725,784 52,000 1,673,784 Manitoba 8,520,733 5,629,000 2,891,733 Ontario 6,454,165 5,473, ,165 Quebec 7,851,979 8,777, ,621 Atlantic Provinces 260, , ,462 Canada 27,811,688 26,457,600 1,354,088 1 Total Production = province of origin pigs slaughtered in Canada + weaner pigs exported to US + market hogs exported to US. Source: Statistics Canada, USDA, APHIS, Industry sources.

46 Movement of Pigs Exports, 2009 Alberta Manitoba British Columbia Saskatchewan Ontario Quebec 8,332 fdr 3,081 mrkt 571 fdr 175,933 mrkt 418,874 fdr 48,724 mrkt 1,137 fdr 260 mrkt 3,769,882 fdr 438,484 mrkt 714,365 fdr 508,499 mrkt Source: USDA, APHIS, AAFC. Fdr = feeder pig; Mrkt = market hog

47 Movement of Pigs Slaughter, 2009 BC Slaughter 216, ,398 4,121 AB Slaughter 2,271,530 25,220 32, ,099 34,341 1,668 MB Slaughter 545 4,279, SK Slaughter 927,959 39, ,461 21,829 PEI Slaughter QC Slaughter 2,207 59,419 7,818,738 NS Slaughter 4,031 NB Slaughter 22,123 70,566 10,198 ON Slaughter 2,999 43,500 4,945,220

48 Pork Per Capita Consumption (kg) Hong Kong EU Taiwan China South Korea United States Canada Russia Source: USDA, FAS.

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