Download - CATTLEMAN’S CONFERENCE March 2010
CATTLEMAN’S CONFERENCEMarch 2010
Ferdi Meyer 1
Overview of Presentation
• Feed and beef market fundamentals– World market– Domestic market
• Profitability indicators of SA beef sector
3
World Market – Fuel
4
0
10
20
30
40
50
60
70
80
90
1002004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014 0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
US $/barrel Persian Gulf: F.O.B. Imported Crude Oil
US$/gallon World ethanol price (BRA anhydrous)
World biodiesel price Central Europe)
US
$ / b
bl
US
$ / g
allo
n
World Ethanol and Oil prices
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World Cereal Price Projections
Source: BFAP projections
0
50
100
150
200
250
300
350
400
2000 2002 2004 2006 2008 2010 2012 2014
US
$ /t
on
Maize Gulf, FOB Wheat HRW, FOB
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World Oilseed Price Projections
Source: BFAP projections
0
100
200
300
400
500
600
700
800
2000 2002 2004 2006 2008 2010 2012 2014
US
$/to
n
Sunflower seed, CIF Rhine Soye bean seed, CIF Rott
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US Production
0.7% decrease from 2009
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…continues to decline
World Production
US Consumption
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0.3% decrease from 2009
Production decreases:• Argentina (13 percent)• China (4 percent)• United States (2 percent).
Production increases (but will not offset decreases):
• Brazil (4 percent)• India (5 percent) ………will continue declining, but at a slower rate of
less than one percent
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World Production
Forecasts (decreases):
Argentina: • production decrease 13 percent (tighter cattle
inventories)
• begin 2010 with a herd 10 percent lower than just two years ago
• drought, persisting = primary driver of herd reduction
– fewer weaned calves, a smaller herd and a reduction of cows for slaughter = limit supplies
United States: • production to decline nearly 2 percent
• cattle herd has been contracting since 2007
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Forecasts (decreases):
China:• continuing contraction of the cattle herd
• beef production will fall to just over 5.5 million tons
• backyard producers discouraged by a marketing system disadvantageous to small producers
• despite high cattle prices, production costs have risen at a faster rate, squeezing profit margins
• uncertainty - outbreaks of foot and mouth disease (FMD)
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Forecasts (increases):
Brazil: • production is forecast to rise 4 percent• herd continues to expand and is forecast to reach 185.2
million head by 2010• increased availability of slaughter cattle will not meet
strong demand for exports, which accounts for the bulk of the increase, but also satisfy solid domestic demand
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Forecasts (increases):
India: • production to rise 5 percent• primarily driven by strong domestic demand• firm demand for exports will also bolster
production
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US Cattle Prices will improve…
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Dol
lars
per
cw
t
NE Direct Fed Steer
OK City Feeder Steer
US Pork Price Trends
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Re
turn
s
SA OUTLOOK
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Real Per Capita GDP Growth
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2000 2002 2004 2006 2008 2010 2012 2014
% C
hang
e
Baseline 2008 Baseline 2009 Update 2010
Exchange Rate
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SA White Maize Record Harvest
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6745
7190
7781
6000
6500
7000
7500
8000
1981 2008 2010
Thou
sand
tons
SA Maize Market
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YMZ SafexWMZ Safex
SA Oilseed Market
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0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2002 2004 2006 2008 2010 2012 2014
R/to
n
Sunfl SAFEX Soya SAFEX
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SA Beef Market
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Ave Auction Price
25
Meat Consumptions Growth
20%8% 7% 1%
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Chicken as a substitute
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Chicken Production
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0
300
600
900
1200
1500
1800
2100
2002 2004 2006 2008 2010 2012 2014
Tho
usan
d to
ns
0
2
4
6
8
10
12
14
16
Rat
io
Chicken production Chicken consumption Chicken:maize ratio
SA Calf and Beef Prices
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Ratio
Industry Profitability
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0
5
10
15
20
25
2002 2004 2006 2008 2010 2012 2014
Rat
io
Beef: maize price ratio Calf: maize price ratio
Real Beef and Maize Prices
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0
200
400
600
800
1000
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Bee
f c/k
g
0
150
300
450
600
750
900
Mai
ze R
/ton
Real Beef price Real maize price
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BASELINE IN AUGUST 2010