Delmarva Feed Grain Overview and Forecast 09/12/05 Delmarva Breeder, Hatchery and Grow Out Conference Salisbury, MD September 14, 2005 Marketing Sep 2005
Operating Organization Board of Directors Jim Perdue Chairman & CEO Poultry Group Mike Roberts President International Poultry Sales Division Bob Turley President & GM Grain & Oilseed Division Dick Willey President & GM Retail Grain and Soy Foodservice PACMA Co-products -Rendering -Venture Milling -Perdue-AgriRecycle The G&O Division merchandises and manufactures commodities such as grains, soy products, and poultry co-products for internal use as well as for external sales to domestic and international customers in feed, food and fertilizer markets. Marketing Sep 2005 2
Grain and Soy Maintain nearly 60 million bushels of grain storage space at more than 40 locations. Purchase approximately 180 million bushels of grains annually. Provide more than 130 million bushels of grains to Perdue feedmills and crush facilities annually. Crush more than 39 mln bu of soybeans at Salisbury, MD and Chesapeake, VA each year. Produce more than 875,000 tons/year of soymeal and more than 230,000 tons/year of crude soyoil. Produce approximately 300 million pounds of refined soyoil at Salisbury, MD. Marketing Sep 2005 3
PACMA Montreal, PQ In addition to grain and soy, Perdue feedmills require 800,000 tons/year of other ingredients. PACMA leverages Perdue Farms internal feed ingredient demand to trade commodities to external customers. Procures alternative ingredients for Perdue feedmills to lower feed cost. Identifies ingredients that can lower feed cost through freight, availability, regional pricing. Toronto, ON Lakeville, NY Palmyra, PA Greencastle, PA Upper Dauphin, PA Turbotville, PA Salisbury, MD Marketing Sep 2005 4
Co-Products Bone 9% Feathers 5% Blood 3% Offal 13% Human Edible 70% Converts poultry co-products into marketable value-added products for the feed, food and fertilizer industries. Perdue-Accomac, VA Rendering Raw material - 4,500 tons/week Finished product - 1,600 tons/week Perdue-Lewiston, NC Rendering Raw material - 3,600 tons/week Finished product - 1,300 tons/week Venture Milling-Seaford, DE Perdue - 900 tons/week External - 1,000 tons/week Venture Milling-Ansonville, NC Perdue - 1,000 tons/week External - 1,300 tons/week Perdue-AgriRecycle-Seaford, DE Permitted to process 60,000 tons/week Sales of pelleted and granular fertilizer Marketing Sep 2005 5
Agricultural Outlook Marketing Sep 2005 6
Supply World Corn Supply and Demand (in million tonnes) 00-01 01-02 02-03 03-04 04-05 05-06 P Beginning Stocks 192.49 172.72 149.11 123.60 100.13 127.81 Production 589.99 599.06 601.76 623.71 708.63 663.49 Imports 75.63 74.28 76.66 76.70 74.69 74.01 Use Domestic Feed 426.85 435.51 432.99 444.57 467.59 461.40 Exports 77.17 76.22 78.17 77.28 76.32 75.37 Ending Stocks 172.72 149.11 123.60 100.14 127.81 111.77 Stocks to Use 28.4% 24.0% 19.8% 15.5% 18.8% 16.4% Source: USDA, September 12, 2005 Marketing Sep 2005 7
U.S. Corn Supply and Demand September 12, 2005 00/01 01/02 02/03 03/04 04/05 05/06 P Planted Acres 79.6 75.8 78.9 78.6 80.9 81.6 Harvested Acres 72.4 68.8 69.3 70.9 73.6 74.3 Yield (bpa) 136.9 138.2 129.3 142.2 160.4 143.2 Beginning Stocks Production Imports Total Supply 1,718 9,915 7 11,639 1,899 9,507 10 11,416 1,596 8,967 14 10,578 1,087 10,089 14 11,190 958 11,807 10 12,775 2,125 10,639 10 12,774 Exports 1,941 1,905 1,588 1,897 1,810 2,000 Feed Use 5,842 5,868 5,563 5,798 6,150 5,825 Food/Ind/Seed 1,957 2,046 2,340 2,537 2,690 2,870 Ethanol for Fuel 996 1,168 1,325 1,500 Total Usage 9,740 9,820 9,491 10,232 10,650 10,695 Ending Stocks 1,899 1,596 1,087 958 2,125 2,079 Stocks to Use 19.5% 16.3% 11.5% 9.4% 20.0% 19.4% Farm Price $1.85 $1.97 $2.32 $2.42 $2.07 $1.70-2.10 Marketing Sep 2005 8
U.S. Ethanol Production 8,000 7,000 6,000 Actual Projected with RFS million gallon 5,000 4,000 3,000 2,000 1,000 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 The 7.5 billion gallon Renewable Fuel Standard (RFS) would increase ethanol from a 3.4 to a 7.5 billion gallon market within 7 years. Marketing Sep 2005 9
Mid-Atlantic Production Acres (000) Harvested Yield BPA 2005 P Total (000) Bushels 2004 Maryland 400 135 54,000 65,025 Delaware 150 137 20,550 23,256 Virginia 360 124 44,640 52,200 Subtotal 910 131 119,190 140,481 Corn Regional Production Estimates USDA September 12, 2005 Report New Jersey 61 113 6,893 10,296 New York 455 117 53,235 61,000 Pennsylvania 880 120 105,600 137,200 Subtotal 1,396 119 165,728 208,496 North Carolina 700 115 80,500 86,580 South Carolina 280 105 29,400 29,500 Subtotal 980 112 109,900 116,080 Mid-Atl Total 3,286 120.2 394,818 465,057 Indiana 5,650 149 841,850 929,040 Kentucky 1,160 122 141,520 173,280 Subtotal 6,810 144 983,370 1,102,320 U.S. Total 74,318 143.2 10,638,661 11,807,217 600,000 bushels of corn at Washington, IN Marketing Sep 2005 10
Spot Corn Futures 1986-present Marketing Sep 2005 11
December, March and July Corn Futures Marketing Sep 2005 12
World Soybean Supply and Demand ( in million tonnes) 02/03 03/04 04/05 05/06 P Beginning Stocks Production Imports 33.26 197.03 62.91 40.40 186.26 54.09 35.01 214.43 63.85 44.46 216.72 66.60 Crush 165.76 163.70 174.82 184.60 Exports 61.18 55.86 64.27 67.68 End Stocks Stocks/ 40.40 35.00 44.46 44.92 Use 21.1% 18.4% 21.7% 20.9% Source: USDA, September 12, 2005 Marketing Sep 2005 13
U.S. Soybean Supply and Demand September 12, 2005 00/01 01/02 02/03 03/04 04/05 05/06 P Planted Acres 74.3 74.1 74.0 73.4 75.2 Harvested Acres 72.4 73.0 72.5 72.5 Yield (bpa) 38.1 39.6 38.0 33.9 74.0 42.5 73.1 72.2 39.6 Beginning Stocks Production Imports Total Supply Crush Exports Seed and Feed Residual Total Usage 290 2,758 4 3,052 1,640 996 91 78 2,804 248 2,891 2 3,141 1,700 1,064 90 79 2,933 208 2,756 5 2,969 1,615 1,044 89 42 2,791 178 2,454 6 2,638 1,530 885 92 18 2,525 112 3,141 5 3,258 1,700 1,095 90 79 2,963 295 2,856 4 3,155 1,685 1,115 90 60 2,950 Ending Stocks 248 208 178 112 295 205 Stocks to Use 8.8% 7.1% 6.4% 4.4% 10.1% 6.2% Farm Price $4.54 $4.38 $5.53 $7.34 $5.80 $5.15-6.05 Marketing Sep 2005 14
Mid-Atlantic Production Acres (000) Harvested Yield BPA 2005 P Total (000) Bushels 2004 Maryland 455 39 17,745 21,285 Delaware 178 38 6,764 8,736 Virginia 530 34 18,020 20,670 North Carolina 1,510 31 46,810 51,000 Subtotal 2,673 33 89,339 101,691 Soybean Regional Production Estimates USDA September 12, 2005 Report South Carolina 420 28 11,760 14,840 Pennsylvania 450 42 18,900 19,550 New Jersey 101 35 3,535 4,326 New York 197 34 6,698 6,708 Subtotal 1,168 35 40,893 45,424 Mid-Atl Total 3,841 33.9 130,232 147,115 Indiana 5,470 45 246,150 287,040 Kentucky 1,250 39 48,750 57,200 Subtotal 6,720 44 294,900 344,240 U.S. Total 72,184 39.6 2,856,449 3,140,996 bean pile at Salisbury, MD Marketing Sep 2005 15
Spot Soybean Futures 1986-present Marketing Sep 2005 16
November, March and July Soybean Futures Marketing Sep 2005 17
What we are watching: Domestic Issues Corn, soybean, wheat - yield, total crop size, harvest/planting progress Asian Soybean Rust in U.S. Advanced Soybean Rust Damage Source: USDA, ARS Marketing Sep 2005 18
What we are watching: Domestic Issues Corn, soybean, wheat - yield, total crop size, harvest/planting progress 120 100 U.S. Annual per Capita Consumption (lbs) Asian Soybean Rust in U.S. Animal placements/demand 80 60 40 20 2002 2003 2004 2005 P 2006 E 0 Beef Pork Broilers Turkey Marketing Sep 2005 19
What we are watching: Domestic Issues 12,000 Land Area in Farms (000 acres) 11,400 Corn, soybean, wheat - yield, total crop size, harvest/planting progress 10,000 9,800 Virginia Asian Soybean Rust in U.S. Animal placements/demand Land in agriculture 8,000 6,000 8,900 8,800 8,700 4,000 2,000 3,080 2,750 Maryland 2,250 2,200 2,100 Delaware 0 715 650 600 589 540 1970 1980 1990 1997 2002 Marketing Sep 2005 20
What we are watching: Domestic Issues Corn, soybean, wheat - yield, total crop size, harvest/planting progress Asian Soybean Rust in U.S. Animal placements/demand Land in agriculture 30,000 25,000 20,000 15,000 10,000 Acres to be Release from CRP Virginia Maryland Delaware 5,000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Marketing Sep 2005 21
What we are watching: Domestic Issues Corn, soybean, wheat - yield, total crop size, harvest/planting progress Asian Soybean Rust in U.S. Animal placements/demand Land in agriculture Ethanol expansion/marketing of the DDGS (dried distillers grains with solubles) Marketing Sep 2005 22
What we are watching: Domestic Issues Corn, soybean, wheat - yield, total crop size, harvest/planting progress 25 U.S. Crude Oil Supply - Domestic vs. Imported Asian Soybean Rust in U.S. 20 Animal placements/demand Land in agriculture Ethanol expansion/marketing of the DDGS (dried distillers grains with solubles) million barrels per day 15 10 5 2.2 9.5 6.1 11.0 5.5 10.7 8.2 9.5 10.8 9.0 11.9 9.0 12.7 9.6 13.8 9.6 Cost of energy 0 1960s 1970s 1980s 1990s 2000s 2005 2010 P 2015 P Domestic Imported Marketing Sep 2005 23
Global Supply: 83.0 mln barrels/day Global Demand = 82.4 mln barrels/day 24.1 16.4 42.5 Rest of World U.S., China, Japan, W. Europe OPEC & Russia 25.9 47.3 9.2 Source: EIA, PIRA, CERA Marketing Sep 2005 24
Spot Crude Oil Futures 1986-present Marketing Sep 2005 25
What we are watching: International Issues China: Will China export corn? import wheat? China s Port of Dalian (with 980,000 tons of storage), built in the 1990s to move China s grains along the coast of China and elsewhere in Asia. Marketing Sep 2005 26
International Issues China: Will China export corn? import wheat? South 4.5 America: Planting conditions and acreage 20054.0 crops: Corn - 2.4 billion bushels 3.5 Soybeans - 3.9 billion bushels 3.0 2.5 2.5 2.7 2.8 2.9 3.4 2.9 3.2 2.5 3.5 3.1 3.9 2.8 billion bushels 2.0 1.5 1.0 0.5 0.0 1.9 2.0 1.8 1.0 U.S. vs. South American Soybean Production 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05F Source: Informa September 2005 U.S. South America Marketing Sep 2005 27
What we are watching: International Issues China: Will China export corn? import wheat? South America: Planting conditions and acreage 2005 crops: Corn - 2.4 billion bushels Soybeans - 3.9 billion bushels Europe: Crop size and harvest progress Perdue-Chesapeake, VA Marketing Sep 2005 28
What we are watching: International Issues China: Will China export corn? import wheat? 0. 84 Euros to U.S. $1.00 2005 Average Rate South America: Planting conditions and acreage 2005 crops: Corn - 2.4 billion bushels Soybeans - 3.9 billion bushels 0. 82 0. 80 0. 78 0. 76 Europe: Crop size and harvest progress 0. 74 0. 72 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Currencies: World currencies stronger against the U.S. dollar make our goods cheaper. Marketing Sep 2005 29
Marketing Sep 2005 30