Hog and Pork Situation and Outlook September 3, 2013 Washington, Iowa Lee Schulz Department of Economics Iowa State University lschulz@iastate.edu (515) 294-3356
Feed Supply
U.S. Corn Supply and Use 2009/10 2010/11 2011/12 2012/13 2013/14 Area Planted (mil. acres) 86.4 88.2 91.9 97.2 97.4 Yield (bu./acre) 164.7 152.8 147.2 123.4 154.4 Production (mil. bu.) 13,092 12,447 12,360 10,780 13,763 Beg. Stocks (mil. bu.) 1,673 1,708 1,128 989 719 Imports (mil. bu.) 8 28 29 165 30 Total Supply (mil. bu.) 14,774 14,182 13,516 11,934 14,512 Feed & Residual (mil. bu.) 5,125 4,795 4,545 4,450 5,100 Ethanol (mil. bu.) 4,591 5,019 5,011 4,650 4,900 Food, Seed, & Other (mil. bu.) 1,370 1,407 1,428 1,400 1,450 Exports (mil. bu.) 1,980 1,834 1,543 715 1,225 Total Use (mil. bu.) 13,066 13,055 12,527 11,215 12,675 Ending Stocks (mil. bu.) 1,708 1,128 989 719 1,837 Season-Average Price ($/bu.) 3.55 5.18 6.22 6.95 4.90 Source: USDA-WAOB
Corn Crop Rating Week Ending August 18, 2013 Week Ending August 25, 2013 Source: USDA/NASS
Source: USDANASS
Source: USDANASS
World Corn Production Country or Region 2012/13 estimate 2013/14 forecast Change from previous month Change from 2012/13 Million Tons Percent Percent World 858.8 957.1-0.3 11.5 United States 273.8 349.6-1.3 27.7 Foreign 584.9 607.5 0.3 3.9 Argentina 26.5 27.0 0.0 1.9 Brazil 80.0 72.0 0.0-10.0 Mexico 21.5 22.0-4.3 2.3 Canada 13.1 13.8 0.0 5.7 European Union 58.5 65.0-0.9 11.1 FSU-12 32.4 42.4 6.5 30.8 Ukraine 20.9 29.0 11.5 38.6 South Africa 12.2 13.0 0.0 6.6 China 205.6 211.0 0.0 2.6 India 22.2 22.5 4.7 1.2 Source: USDA-WAOB
U.S. Meat Production and Prices 2013 forecast 2014 forecast Change from last month Change from 2013 Production Billion pounds Percent Percent Beef 25.54 24.13 0.1-5.5 Pork 23.39 24.14 0.0 3.2 Broilers 37.73 38.85 0.0 3.0 Turkey 5.90 6.18 0.0 4.7 Total meat 93.34 94.08 0.0 0.8 Prices Dollars/cwt Steers 124.37 130.75-0.8 5.1 Hogs 63.12 59.75-0.4-5.3 Cents/lb Broilers 101.5 93.0-2.1-8.4 Turkey 99.7 98.5 0.0-1.2 Source: USDA-WAOB
Corn Grind for Ethanol Source: USDA/NASS
Ethanol Stocks Source: USDANASS
Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 $ per bushel 5.40 Current Corn Futures 5.30 5.20 5.10 5.00 4.77 4.68 4.90 4.80 4.56 Source: CME Group, 8/27/2013
Source: CME
U.S. Soybean Supply and Use 2009/10 2010/11 2011/12 2012/13 2013/14 Area Planted (mil. acres) 77.5 77.4 75.0 77.2 77.2 Yield (bu./acre) 44.0 43.5 41.9 39.6 42.6 Production (mil. bu.) 3,359 3,329 3,094 3,015 3,255 Beg. Stocks (mil. bu.) 138 151 215 169 125 Imports (mil. bu.) 15 14 16 35 15 Total Supply (mil. bu.) 3,512 3,495 3,325 3,219 3,396 Crush (mil. bu.) 1,752 1,648 1,703 1,685 1,675 Seed & Residual (mil. bu.) 110 130 90 94 116 Exports (mil. bu.) 1,499 1,501 1,362 1,315 1,385 Total Use (mil. bu.) 3,361 3,280 3,155 3,094 3,176 Ending Stocks (mil. bu.) 151 215 169 125 220 Season-Average Price ($/bu.) 9.59 11.30 12.50 14.40 11.35 Source: USDA-WAOB
Soybean Crop Rating Week Ending August 18, 2013 Week Ending August 25, 2013 Source: USDA/NASS
Source: USDANASS
World Soybean Production Country or Region 2012/13 estimate 2013/14 forecast Change from previous month Change from 2012/13 Million Tons Percent Percent World 267.6 281.7-1.5 5.3 United States 82.1 88.6-4.8 8.0 Foreign 185.5 193.1 0.2 4.1 Argentina 49.5 53.5 0.0 8.1 Brazil 82.0 85.0 0.0 3.7 Paraguay 9.4 8.4 0.0-10.3 Ukraine 2.4 2.8 0.0 16.4 India 11.5 12.3 2.5 7.0 China 12.8 12.5 0.0-2.3 Source: USDA-WAOB
Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 $ per bushel 14.25 14.00 13.75 13.50 13.25 13.00 12.75 12.50 12.25 12.00 11.75 11.50 11.25 11.00 Current Soybean Futures 12.77 11.42 10.82 Source: CME, 08/27/13
$ per bushel 7.00 6.50 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 Corn Prices vs. Costs Season-average Price Cost per Bushel
$ per bushel 15.00 14.00 13.00 12.00 11.00 10.00 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 Soybean Prices vs. Costs Season-average Price Cost per Bushel
3 Month Outlook - Temps Source: NOAA
Thoughts for 2013 and Beyond Supply/demand concerns Can the new crop beat the summer heat? It had been so far, so good Then can it beat the freeze? New crop ratings are decent, Eastern vs. Western Corn Belt Corn demand rebounding? 2012/13 USDA 2013/14 USDA 2013/14 Futures (8/27/13) Corn $6.95 $4.90 $4.56 Soybeans $14.40 $11.35 $12.77
Pork Demand
$ Per Cwt. 114 109 104 99 94 89 84 79 74 69 64 JAN HOG CUTOUT VALUE (Voluntary data prior to 2013), Weekly APR JUL OCT Avg. 2007-11 2012 2013 Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC H-P-10 08/26/13
Source: USDA/ERS
Source: USDA-ERS
Pounds 54 52 50 48 46 44 42 40 U S PORK CONSUMPTION Per Capita, Retail Weight, Annual 1989 1992 1995 1998 2001 2004 2007 2010 2013 Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC M-C-14 08/08/13 Consumption Per Capita, Retail Weight Pork 2011 45.7 2012 45.9 0.47% 2013 47.1 2.52% 2014 47.6 1.14% Beef 2011 57.3 2012 57.4 0.13% 2013 56.3-2.00% 2014 53.5-4.98% Total Chicken 2011 84.3 2012 81.8-3.02% 2013 82.5 0.92% 2014 84.3 2.11%
PORK PRICE-QUANTITY RELATIONSHIP Annual, Retail Weight, Deflated Retail Price $ Per Pound 3.40 3.30 11 12 3.20 3.10 3.00 2.90 2.80 2.70 97 10 96 87 90 91 01 05 06 08 07 09 00 0402 98 03 89 95 93 88 99 92 45 46 47 48 49 50 51 52 53 Pounds Per Capita 94 Livestock Marketing Information Center Data Source: Bureau of Economic Analysis & USDA-ERS, Compiled & Analysis by LMIC H-P-12 08/11/13
Year-Over-Year increases in 7 of last 13 quarters (since Q4 of 2010): 2012 = -0.53% Actual Quantity & Price Changes: 2012: 45.9 lbs (per capita consumption); $3.47 (nominal price) $1.51 (real price) 2012: Per Capita Consumption = +0.47% (Year-over-Year) Real Prices = -1.08% IF Real Prices -0.50% = 0% Demand Change
Year-Over-Year increases in 7 of last 13 quarters (since Q4 of 2010): Q2:2013 = +4.60% Actual Quantity & Price Changes: Q2:2013: 11.27 lbs (per capita consumption); $3.50 (nominal price) $1.50 (real price) Q2:2013: Per Capita Consumption = +2.99% (Year-over-Year) Real Prices = +0.88%
Source: DLR
Source: DLR
Pork Supply
Mar 1 +1.5% Jun 1-0.02% % Change from a Year Ago Source: USDA/NASS
Source: USDA/NASS, tabulations by Lee Schulz.
Source: USDA/NASS, tabulations by Lee Schulz.
Source: USDA/NASS, tabulations by Lee Schulz
Thou. Head 70 SOW SLAUGHTER Federally Inspected, Weekly 65 60 55 50 45 40 35 Avg. 2007-11 2012 2013 30 JAN APR JUL OCT Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS H-S-15 08/23/13
Thou. Head 2,500 2,400 2,300 2,200 2,100 2,000 1,900 HOG SLAUGHTER Federally Inspected, Weekly Hog Slaughter Records Weekday 442,676 Saturday 362,495 October 10,856,300 November 10,107,800 December 10,144,900 4th Quarter 30,443,200 Avg. 2007-11 2012 1,800 1,700 2013 JAN APR JUL OCT Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS H-S-05 08/23/13
Thou. Head 400 350 300 250 200 150 100 50 SATURDAY HOG SLAUGHTER Weekly Hog Slaughter Records Weekday 442,676 Saturday 362,495 October 10,856,300 November 10,107,800 December 10,144,900 4th Quarter 30,443,200 Avg. 2007-11 2012 2013 0 JAN APR JUL OCT Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS H-S-11 08/23/13
Hog Slaughter Records Weekday 442,676 Saturday 362,495 October 10,856,300 November 10,107,800 December 10,144,900 4th Quarter 30,443,200 440,000 on weekdays plus 340,000 on Saturdays equals 32,580,000 in the 4 th quarter of 2014 which is 7% more than the 2012 record
Source: USDA/AMS
Quarterly Forecasts (LMIC:09/02/2013) Chg. Average Chg. Comm'l Chg. Chg. Year Comm'l from Carcass from Pork from Per Capita from Quarter Slaughter Year Ago Weight Year Ago Production Year Ago Consumption Year Ago (1,000 Head) (%) (Lbs.) (%) (Mil. Lbs.) (%) (Retail lbs.) (%) 2012 I 28,105 2.3 209 0.2 5,858 2.4 11.1-2.7 II 26,661 2.1 207 0.6 5,519 2.8 10.9-1.2 III 27,965 2.1 201 0.3 5,631 2.7 11.2 1.8 IV 30,433 1.8 206-0.8 6,244 0.9 12.7 3.6 Year 113,163 2.1 206 0.1 23,253 2.2 45.9 0.4 2013 I 27,874-0.8 208-0.5 5,777-1.4 11.5 3.1 II 26,778 0.4 206-0.5 5,519-0.0 11.3 3.3 III 28,541 2.1 202 0.1 5,754 2.2 11.7 4.4 IV 30,634 0.7 207 0.4 6,327 1.3 12.7-0.1 Year 113,826 0.6 206-0.1 23,377 0.5 47.1 2.6 2014 I 28,257 1.4 209 0.6 5,906 2.2 11.6 1.6 II 27,342 2.1 208 0.7 5,682 3.0 11.3 0.2 III 29,233 2.4 203 0.6 5,930 3.1 11.9 1.7 IV 31,317 2.2 208 0.6 6,506 2.8 12.8 1.0 Year 116,149 2.0 207 0.6 24,024 2.8 47.6 1.1
Source: USDA/ERS
Cost of Production
Source: FAPRI-Food and Agricultural Policy Research Institute
International Trade
Mil. Head 10 8 6 4 HOG IMPORTS FROM CANADA Annual Canadian Hog Inventory (as of July 1, 2013) Total = 12.913 mil, +0.6% Breeding = 1.216 mil, -25% than 2005 peak Pig crop = 15.2 mil, -2.6% Farrowing intentions = -2.1% Smaller total pig crop for the back end of 2013 and fewer hogs coming to market in 2014 under 110 lbs 2 over 110 lbs 0 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Livestock Marketing Information Center Data Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC 08/07/13
Source: USDA/ERS
Source: USDA/ERS & USDA/FAS, tabulations by Lee Schulz
U.S. Pork Exports, Jan-Jun 2013 Change from a Year Ago Country 1,000 lbs Percent Japan -27,565-3.9 Mexico -6,328-1.1 China & Hong Kong -140,853-31.8 Canada +9,750 +3.6 S. Korea -69,157-29.2 Russia -129,181-88.0 Australia -17,880-16.8 TOTAL -298,680-10.9
Source: InterPIG
USDA s Pork Long-Term Trade Projections (as of Feb. 2013) http://www.ers.usda.gov/media/1013562/oce131.pdf Importers: thousand metric tons, carcass weight 2011 2012 2013 2022 2012 to 2022 Total Growth Japan 1,254 1,260 1,260 1,364 8% 104 China 758 775 815 1,220 57% 445 Hong Kong 432 440 445 528 20% 88 South Korea 640 500 505 552 10% 52 Russia 971 975 1,000 812-17% -163 Mexico 594 675 690 913 35% 238 Central America/Caribbean 100 94 96 149 59% 55 Canada 204 240 237 297 24% 57 United States 364 367 363 426 16% 59 Major Importers 5,317 5,326 5,411 6,260 18% 934 1/ Covers EU-27. Excludes intra-eu trade. The projections were completed in November 2012. Source: FAPRI, http://www.ers.usda.gov/media/1013562/oce131.pdf
USDA s Pork Long-Term Trade Projections (as of Feb. 2013) http://www.ers.usda.gov/media/1013562/oce131.pdf Exporters: thousand metric tons, carcass weight 2011 2012 2013 2022 2012 to 2022 Total Growth Brazil 584 605 645 778 29% 173 Canada 1,197 1,250 1,215 1,316 5% 66 Mexico 86 90 110 139 54% 49 European Union 1/ 2,204 2,280 2,308 2,591 14% 311 China 244 215 200 213-1% -2 United States 2,354 2,471 2,470 2,828 14% 357 Major Emporters 6,669 6,911 6,948 7,864 14% 953 1/ Covers EU-27. Excludes intra-eu trade. The projections were completed in November 2012. Source: FAPRI, http://www.ers.usda.gov/media/1013562/oce131.pdf
Prices and Margins
Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC
Futures Adjusted for IA Basis 3 Yr Avg Most Neg Most Pos Basis Basis Basis Jul-Sep 13 88.71 85.03 92.43 Oct-Dec 13 82.05 79.43 83.80 Jan-Mar 14 82.15 78.93 84.40 Apr-Jun 14 87.40 85.51 89.15 Jul-Sep 14 83.03 80.47 85.77 Oct-Dec 14 71.42 68.80 73.17
$ Per Cwt. 110 100 90 80 70 60 BARROW AND GILT PRICES Iowa - So. Minnesota, Carcass Base Price, Weekly Avg. 2007-11 2012 2013 50 JAN APR JUL OCT Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC H-P-09 08/26/13
Source: CME
Wean to Finish Crush Margin The Crush Margin is the return after the weaned pig, corn, and SBM costs. Carcass weight: 200 lbs Pig price: 50% 5-month-out LHF Corn: 10 bu/pig SBM: 150 lbs/pig Source: http://www.econ.iastate.edu/margins/
More information available at: Iowa Farm Outlook & News http://www.econ.iastate.edu/ifo/ Ag Decision Maker http://www.extension.iastate.edu/agdm/ Iowa Pork Industry Center http://www.ipic.iastate.edu/ Lee Schulz Assistant Professor / Extension Livestock Economist lschulz@iastate.edu (515) 294-3356
http://www.extension.iastate.edu/agdm/info/agcycles.html