Update on the Canadian Pork Sector & What Lies Ahead Presented by: Ken McEwan
World Pork Production 2009* Canada 1.8% of World Production USA 10.4% of World Production EU-27 21.9% 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) 2000-09 ('000 Tonnes) 2000-09 China 48,500 22.3% 48,300 22.0% EU-27 22,000 3.3% 20,800 3.9% US 10,446 21.5% 8,925 5.6% Brazil 3,123 55.4% 2,478 35.6% Russia 2,205 47.0% 2,954 65.2% Canada 1,790 18.6% 835-8.9% Japan 1,285 1.3% 2,494 14.5% Mexico 1,150 11.1% 1,664 32.9%
Cost of Production by Country ($C/kg cw) Country 2006 2007 % Change 2006 to 2007 USA 1.44 1.54 6.7% Brazil 1.30 1.62 24.8% Canada 1.42 1.74 22.5% Denmark 1.85 2.01 8.7% Netherlands 1.81 2.16 19.4% France 1.92 2.22 15.4% Belgium 1.82 2.23 22.5% Spain 2.02 2.31 14.1% Germany 2.08 2.34 12.4% Britain 2.28 2.62 15.1% Source: Pig International, March/April 2009 adapted from InterPig reports. University of Guelph-Ridgetown Campus calculations.
1,000 MT Swine Meat, % of Total World Meat Consumption 120,000 100,000 80,000 60,000 40,000 20,000 0 45% 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.
Changes in Canadian Per Capita and Total Consumption, 2004-2008
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 750 14% 3. Canada 1,130 21% 3. Mexico 600 11% 4. Brazil 645 12% 4. Korea 375 7% Top 4 4,912 90% Top 4 2,935 55% Source: USDA, FAS. *Prelim.
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 + + +
Canadian Pig Production 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Hogs Slaughtered in Canada Slaughter Hogs Exported Feeder Pigs Exported Source: CFIA, Provincial Governments, USDA, APHIS
# of Head Total Pig Production by Province 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 AB SK MB ON QC Source: USDA, APHIS; CFIA & provincial governments. Pig production = province of origin hogs slaughtered + weaner exports + market hog exports.
Canadian Production Pig #s 2009 2008 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) 169,740,222 174,271,744 Net Processed Pork Trade (kg) 905,440,600 920,229,121 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.
1200 1000 800 600 400 200 0 Canada Pork Exports (1,000 MT CWE) Source: USDA, FAS. * Forecast
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.
Canada Pork Imports (1,000 MT CWE) 250 200 150 100 50 0 Source: USDA, FAS. * Forecast
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.
2000-03 2000-09 2001-03 2001-09 2002-03 2002-09 2003-03 2003-09 2004-03 2004-09 2005-03 2005-09 2006-03 2006-09 2007-03 2007-09 2008-03 2008-09 2009-03 2009-09 Combined and US Breeding Herd (Head) Canadian Breeding Herd (Head) U.S., Canadian and Combined Breeding Herd, 2000-2009 8,000,000 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
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 20 0.8% 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
2000-03 2001-12 2003-09 2005-06 2007-03 2008-12 2000-06 2002-03 2003-12 2005-09 2007-06 2009-03 2000-09 2002-06 2004-03 2005-12 2007-09 2009-06 2000-12 2002-09 2004-06 2006-03 2007-12 2009-09 2001-03 2002-12 2004-09 2006-06 2008-03 2009-12 # of Sows # of Sows/Gilts Over Time 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 From 2004-03 to 2009-12 AB -24.7% SK -30.0% MB -9.4% ON -21.2% QC -9.2% Alberta Saskatchewan Manitoba Ontario Quebec Source: Statistics Canada
Canadian Feeder Pig Exports to U.S.
# Head Canadian Live Pig Exports by Province 7,000,000 6,000,000 MB % Change 2007-2009 35% decrease 5,000,000 4,000,000 3,000,000 ON % Change 2007-2009 41% decrease 2,000,000 1,000,000 0 Alberta Saskatchewan Manitoba Ontario Quebec Feeder Pigs Slaughter Hogs Source: Statistics Canada; *Preliminary
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
$ / head $190 $180 $170 $160 $150 Ontario Market Hog Revenue and Estimated Cost of Production, 2005-2010 Jan 2005 - Oct 2006 Average Revenue: $141 Average Cost: $133 Average Margin: $8 Nov 2006 - Feb 2010 Average Revenue: $126 Average Cost: $159 Average Margin: -$33 $140 $130 $120 $110 $100 $90 Revenue Cost $80 J F MA M J J A SO ND J F MAM J J A SO ND J F MA M J J A SO ND J F MAM J J A SO ND J F MA M J J A SO ND J F MAM J J A SO ND 2005 2006 2007 2008 2009 2010 Source: Ontario Pork, OMAFRA Swine Budgets
Weekly Estimated Hog Value, Canada 1 and U.S. 2 ($C/kg), 2004-2009 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 + $1 premium / carcass weight; 2 US price is CME 201 price / carcass weight
Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Estimated Margin ($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) ($0.30) Source: USDA; Ronald A. Chisholm Ltd.; Ontario Pork; Bank of Canada; industry sources. Note: Canadian calculation based on University of Guelph-Ridgetown Campus estimates.
Jan-70 Jan-71 Jan-72 Jan-73 Jan-74 Jan-75 Jan-76 Jan-77 Jan-78 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Price (U.S. cents / lb retail equivalent) Monthly US Pork Prices 325 300 275 Farm Wholesale Retail 250 225 200 175 150 125 100 75 50 25 0
Price Outlook Period US (US$/100 lb lean) Ontario Equivalent (C$/100 kg dressed) Ontario Forward Contract Prices (C$/100 kg dressed)* 2010Q1 69 126 NA 2010Q2 71-75 131-138 130-149 2010Q3 73-77 135-142 130-146 2010Q4 66-70 122-129 114-124 2010 (Year) 70-73 129-135 119-146 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).
Source: J. Bancroft, OMAFRA, Weekly Hog Market Facts, March 8, 2010 Ontario Price Outlook
$/cwt Hog Cutout Value $US/cwt $100 $90 $80 $70 $60 $50 Source: USDA $40 JAN APR JUL OCT 2003-2007 Avg 2008 2009 2010
謝謝 Thank you.
Issues Affecting the Industry Feed costs Exchange rate Slaughter capacity COOL Maple Leaf Animal welfare
1993-03 1993-09 1994-03 1994-09 1995-03 1995-09 1996-03 1996-09 1997-03 1997-09 1998-03 1998-09 1999-03 1999-09 2000-03 2000-09 2001-03 2001-09 2002-03 2002-09 2003-03 2003-09 2004-03 2004-09 2005-03 2005-09 2006-03 2006-09 2007-03 2007-09 2008-03 2008-09 2009-03 2009-09 000 head Canada & US Breeding Stock ( 000 head) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Canada US Source: Statistics Canada, USDA
% of Breeding US/Canada Breeding Herd Inventory 100% 90% 80% Canada 14% of US/Can breeding herd Canada 21% of US/Can breeding herd Canada 19% of US/Can breeding herd 70% 60% 50% 40% 30% 20% 10% Breeding Herd (2009-12) Canada 1.33 million head US 5.85 million head 0% US Canada Source: Statistics Canada, USDA
Mar-01 Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Market Pigs (1,000 head) Breeding Stock (1,000 head) Canada/US Inventory 70,000 60,000 50,000 40,000 30,000 20,000 10,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 0 Source: Statistics Canada, USDA US Market Pigs US Breeding Stock Canada Market Pigs Canada Breeding Stock
Ontario Corn and Hog Prices, Margins, 2005-2010
Value of Canadian Pork Exports ($/kg) 2005 2006 2007 2008 2009 Average Japan 3.81 3.45 3.44 3.72 3.81 3.65 US 3.06 2.85 2.60 2.71 2.54 2.75 Australia 3.55 3.15 3.30 3.18 2.83 3.20 S Korea 1.67 1.78 1.94 2.15 1.97 1.90 Hong Kong 1.34 1.39 1.36 1.40 1.49 1.40 Total 2.76 2.44 2.40 2.50 2.42 2.50 Source: Statistics Canada
Canadian Pork & Products Exports, 2009 Value $ 000 Cdn % of Total Quantity Tonnes % of Total 1. Japan 865,243 33.3% 226,866 21.1% 2. US 834,286 32.1% 329,038 30.6% 3. Australia 139,755 5.4% 49,428 4.6% 4. South Korea 5. Hong Kong 125,568 4.8% 63,666 5.9% 117,526 4.5% 78,818 7.3% Total 2,602,136 1,075,181
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 $834,286 Source: Statistics Canada
Canadian Inventory Numbers (July 1) Source: Statistics Canada July 1 2005 2008 2009 % 09 vs 08 Ontario Sows/gilts 430.0 365.0 356.0-2.5% <20 kg 1,229.4 1,033.5 1,058.0 2.4% 20-60 kg 1,233.4 948.2 853.9-9.9% >60kg 1,092.6 883.1 826.1-6.5% Quebec Sows/gilts 414.3 385.0 382.0-0.8% <20 kg 1,245.9 1,325.5 1,224.7-7.6% 20-60 kg 1,405.8 1,201.7 1,159.7-3.5% >60kg 1,311.7 1,157.8 1,099.4-5.0% Manitoba Sows/gilts 365.6 340.0 330.5-2.8% <20 kg 980.6 1,046.4 745.5-28.8% 20-60 kg 837.1 669.0 766.2 14.5% >60kg 751.3 660.7 684.3 3.6% Canada Sows/gilts 1,588.2 1,418.7 1,356.5-4.4% <20 kg 4,661.4 4,214.3 3,740.6-11.2% 20-60 kg 4,620.6 3,651.0 3,550.8-2.7% >60kg 4,289.1 3,668.7 3,433.8-6.4%
Estimated Cost ($C/head) Estimated Farrow-to-Finish Corn/Soymeal Costs for Ontario and Iowa ($C/head), 2008-2010 2-Jan-08 30-Jan-08 27-Feb-08 26-Mar-08 23-Apr-08 21-May-08 18-Jun-08 16-Jul-08 13-Aug-08 10-Sep-08 8-Oct-08 5-Nov-08 3-Dec-08 31-Dec-08 28-Jan-09 25-Feb-09 25-Mar-09 22-Apr-09 20-May-09 17-Jun-09 15-Jul-09 12-Aug-09 9-Sep-09 7-Oct-09 4-Nov-09 2-Dec-09 30-Dec-09 27-Jan-10 24-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
Estimated Canadian Hog Processor Margins $C/kg Wholesale Value Hog Cost Gross Margin Non-Hog Costs Net Margin 2004 2.11 1.88 0.23 0.26-0.02 2005 1.88 1.66 0.23 0.25-0.03 2006 1.68 1.47 0.20 0.25-0.05 2007 1.60 1.41 0.20 0.25-0.05 2008 1.64 1.41 0.22 0.25-0.03 2009 1.47 1.29 0.17 0.25-0.07 Avg 2004-2009 1.73 1.52 0.21 0.25-0.04 Source: AAFA; Ontario Pork; Ronald A. Chisholm Ltd.; industry sources. Note: Numbers may not add due to rounding.
Estimated US Hog Processor Margins $C/kg Wholesale Value Hog Cost Gross Margin Non-Hog Costs Net Margin 2004 2.24 2.05 0.19 0.23-0.05 2005 1.99 1.82 0.16 0.22-0.05 2006 1.80 1.61 0.19 0.20-0.01 2007 1.72 1.53 0.20 0.19 0.00 2008 1.76 1.53 0.23 0.19 0.04 2009 1.60 1.43 0.17 0.20-0.03 Avg 2004-2009 1.85 1.66 0.19 0.21-0.02 Source: USDA; CME Group; industry sources. Note: Numbers may not add due to rounding.
Overview Global situation Canada inventory, trade production vs slaughter vs consumption profitability producer & processor Outlook
Pig Production & Slaughter Capacity, 2009 A B C = A-B Total Production 1 Slaughter Capacity Estimate Difference (Total Production Slaughter Capacity) British Columbia 232,171 520,000-287,829 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 5,473,000 981,165 Quebec 7,851,979 8,777,600-925,621 Atlantic Provinces 260,538 390,000-129,462 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.
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
Movement of Pigs Slaughter, 2009 BC Slaughter 216,637 283,398 4,121 AB Slaughter 2,271,530 25,220 32,425 291,099 34,341 1,668 MB Slaughter 545 4,279,795 120 SK Slaughter 927,959 39,128 147 242,461 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
Pork Per Capita Consumption (kg) 2007 2008 2009 Hong Kong 61.5 65 65.1 EU-27 43.9 42.8 42.3 Taiwan 40.5 41.2 41.7 China 32.3 34.9 36.1 South Korea 31.1 31.4 29.2 United States 29.8 29 29.1 Canada 26.6 25.5 24.9 Russia 19.4 21.7 20.7 Source: USDA, FAS.