global pork and dairy market outlook - amap€¦ · 10/10/2018 · global pork and dairy market...

http://amap.missouri.edu

Global Pork and Dairy Market Outlook

October 17, 2018 - International Ingredient Corporation

Dr. Scott Brown

Agricultural Markets and Policy Division of

Applied Social Sciences

[email protected]

http://web.missouri.edu/%7Ebrowndomailto:[email protected]

Hog Outlook: Ample Global Supplies Ahead

We know 2 major problems on supply/demand balance US Production: faster growth than US population 15 of 16 quarters Exports: have helped offset production growth, but at lower prices Cold Storage: pork stocks above year ago 8 of last 9 months

Domestic demand strength has performed well Good meat demand has moderated price pain Demand for pork products has been mixed

Feed prices may moderate cost increases This appears the only bright spot for profitability Large 2018 crop nearly in the bin

http://mycafnr.missouri.edu/templates/logos/jpg/cmyktwolines-test.jpg

African Swine Fever Remains The Wild Card for Global Pork Markets

Swine Health Information Center


Pork Availability per U.S. Resident

45

46

47

48

49

50

51

52

53

54

1986 1990 1994 1998 2002 2006 2010 2014 2018(p)

Poun

ds (r

etai

l wei

ght)

1986-2016 hog prices: AVG MAX MIN8 years with 51 lbs. 42.73 52.50 34.00


Feed Costs Remain LowISU U.S. Farrow-Finish Returns

2030405060708090

100110

2001 2003 2005 2007 2009 2011 2013 2015 2017

Dol

lars

per

Cw

t.

Selling price Costs


World Pork Production

0

20

40

60

80

100

120

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)

Milli

on M

etric

Ton

s

China EU US Brazil Russia ROW


World Pork Consumption

0

20

40

60

80

100

120

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)

Milli

on M

etric

Ton

s

China EU US Russia Brazil ROW


Trade: Why is it Important?

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Inde

x, 1

990-

95 a

vg. =

1.0

0

U.S. Population ROW Population


Trade: Why is it Important?

1.0

1.2

1.4

1.6

1.8

2.0

2.2

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Inde

x, 1

990-

95 a

vg. =

1.0

U.S. Real GDP ROW Real GDP


World Pork Exports

0123456789

10

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)

Milli

on M

etric

Ton

s

EU US Canada Brazil China ROW


Major Pork Importers

0123456789

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)

Milli

on M

etric

Ton

s

China Japan Mexico ROW U.S. exports


China Tariffs for Selected Products

0

10

20

30

40

50

60

70

Soybeans Swineoffal

frozen

Swinecuts

frozen

Hamsbone-infrozen

Bovinemeat

Perc

ent

April 2 increase July 6 increase current applied rate

Value of exports since Jan 2015 (Million U.S. $)

$39,711M

$723M

$46M

$596M $239M


Ham Primal Value

4550556065707580859095

1 5 9 13 17 21 25 29 33 37 41 45 49

Dol

lars

per

Cw

t.

2018 2017 2013-16 avg. 2018 + tariff


U.S. Pork Production Expanding Rapidly

-6-4-202468

1012

2011 2012 2013 2014 2015 2016 2017 2018 2019

Perc

ent G

row

th v

s. P

revi

ous

Year

Production U.S. Population


U.S. Breeding Herd Inventory

5.6

5.7

5.8

5.9

6.0

6.1

6.2

6.3

6.4

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Milli

on H

ead


Sow Number Changes vs. Profitability

-15-10-5051015202530

-5%-4%-3%-2%-1%0%1%2%3%4%

2002 2004 2006 2008 2010 2012 2014 2016 2018

Cha

nge

vs. Y

ear A

go

Sow Inventory Prior 9 month avg. returns (right axis)


Breeding Herd Growth by State

-10 0 10 20 30 40 50 60 70 80 90

IllinoisMissouri

S. DakotaN. Carolina

TexasIowa

NebraskaOklahoma

OhioPennsylvania

Other states combined

Thousand Head, June 2018 vs. June 2014


Pork per Sow Growth

-4

-2

0

2

4

6

8

10

12

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Perc

ent v

s. Y

ear A

go

2.2% avg. growth since 20001.4% avg. growth since 2010


H-S-0510/12/18

17001800190020002100220023002400250026002700

JAN APR JUL OCT

Thou. Head

HOG SLAUGHTERFederally Inspected, Weekly

Avg. 2012-16 2017 2018

Data Source: USDA-AMS & USDA-NASS

Livestock Marketing Information Center


H-S-2410/12/18

202

204

206

208

210

212

214

216

JAN APR JUL OCT

Pounds

BARROW AND GILT DRESSED WEIGHTFederally Inspected, Weekly

Avg. 2012-16 2017 2018

Data Source: USDA-AMS & USDA-NASS



U.S. Pork Production/Exports Changes

-300-200-100

0100200300400500600

2012 2013 2014 2015 2016 2017 2018 2019

Milli

on P

ound

s vs

. Pre

viou

s Ye

ar

Production Exports


30

40

50

60

70

80

90

2012 2013 2014 2015 2016 2017 2018 2019 (p)

Dol

lars

per

Cw

t

-300-200-100

0100200300400500600

2012 2013 2014 2015 2016 2017 2018 2019

Milli

on P

ound

s vs

. Pre

viou

s Ye

ar

Production Exports

Pork Production/Exports Changes

Barrow and Gilt Price


U.S. Pork Exports

0

5

10

15

20

25

30

35

40

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017

Perc

ent

as % of U.S. production as % of world exports


U.S. Pork Markets

0

10

20

30

40

50

60

2001 2003 2005 2007 2009 2011 2013 2015 2017

Perc

ent o

f Tot

al P

ork

Expo

rts

Mexico Japan Canada S. Korea China other


10/10/18

10

15

20

25

30

35

40

45

1/10/15 7/11/15 1/9/16 7/9/16 1/7/17 7/8/17 1/6/18 7/7/18

1000 MT

TOTAL US EXPORTS OF PORK MUSCLE CUTSWeekly

Data Source: USDA-FAS



10/10/18

0

2

4

6

8

10

12

14

16

1/4/14 1/10/15 1/9/16 1/7/17 1/6/18

1000 MT

US EXPORTS OF PORK MUSCLE CUTSWeekly

Canada Japan Mexico Korean Rep.

Data Source: USDA-AMS & USDA-APHIS



U.S. Pork Export Value to China/HK

0

200

400

600

800

1,000

1,200

2010 2011 2012 2013 2014 2015 2016 2017

Milli

on $

Including Variety Meat Not Including Variety Meat


Meat Production and Trade, Oct. WASDE

Projected 2017 2018 2019 Production (billion lbs.) 99.8 102.2 105.5 Beef 26.3 27.1 28.0 Pork Chicken

25.6 41.2

26.4 42.1

27.8 42.9

Other 6.7 6.6 6.8

Exports (billion lbs.) 16.0 16.7 17.2 Beef Pork Chicken Other

2.9 5.6 6.8 0.7

3.2 6.0 6.9 0.6

3.2 6.2 7.0 0.8

Imports (billion lbs.) 4.5 4.5 4.6 Beef Pork Other

3.0 1.1 0.4

3.0 1.1 0.4

3.1 1.1 0.4


Projected

2017

2018

2019

Production (billion lbs.)

99.8

102.2

105.5

Beef

26.3

27.1

28.0

Pork

Chicken

25.6

41.2

26.4

42.1

27.8

42.9

Other

6.7

6.6

6.8

Exports (billion lbs.)

16.0

16.7

17.2

Beef

Pork

Chicken

Other

2.9

5.6

6.8

0.7

3.2

6.0

6.9

0.6

3.2

6.2

7.0

0.8

Imports (billion lbs.)

4.5

4.5

4.6

Beef

Pork

Other

3.0

1.1

0.4

3.0

1.1

0.4

3.1

1.1

0.4

Retail Meat Prices

2.503.003.504.004.505.005.506.006.507.00

2010 2011 2012 2013 2014 2015 2016 2017 2018

Dol

lars

per

Pou

nd

Pork Choice Beef Bacon


Selected Retail Meat Prices

-20 0 20 40 60

Ground beefChuck roastRound roast

Beef for stewRound steakSirloin steak

Bacon, slicedPork chops

Ham, boneless

Chicken legs, bone-inChicken breast, boneless

Percent Change, 2017 vs. 2010

Jan-Sep 2018 vs. 2017:

-4.5%-2.9%

+5.0%-2.6%-4.8%

+4.3%-1.4%N/A

-1.2%+0.6%+2.1%


Pork Bellies in Cold Storage

0

20

40

60

80

100

120

Jan 08 Jan 10 Jan 12 Jan 14 Jan 16 Jan 18

Milli

on P

ound

s


Wholesale Pork Prices

6080

100120140160180200220240

01/09/15 07/09/15 01/09/16 07/09/16 01/09/17 07/09/17 01/09/18 07/09/18

Dol

lars

per

Cw

t.

Belly Primal Pork Cutout


Meat Availability and Prices, Oct. WASDE

Projected 2017 2018 2019 Availability (lbs. / capita) 216.8 219.4 224.3 Beef 56.9 57.2 58.8 Pork Chicken

50.1 90.8

50.8 92.4

53.1 93.4

Other 19.0 19.0 19.0

Prices (cents / lb.) Fed steer Barrow and gilt Chicken Turkey

121.52 50.48 93.5 96.1

116.29 45.23

97.1 81.1

113 - 122 40 - 43 92 - 99 81 - 88


Projected

2017

2018

2019

Availability (lbs. / capita)

216.8

219.4

224.3

Beef

56.9

57.2

58.8

Pork

Chicken

50.1

90.8

50.8

92.4

53.1

93.4

Other

19.0

19.0

19.0

Prices (cents / lb.)

Fed steer

Barrow and gilt

Chicken

Turkey

121.52

50.48

93.5

96.1

116.29

45.23 97.1

81.1

113 - 122

40 - 43

92 - 99

81 - 88

June 2019 Lean Hog Futures


Hog Price (Quarterly)

30

40

50

60

70

80

90

2012 2013 2014 2015 2016 2017 2018 2019 (p)

Dol

lars

per

Cw

t


Farrow-Finish Returns Projection

-15

-10

-5

0

5

10

15

20

25

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019(p)

Dol

lars

per

Cw

t.


Know What to Look For Moving Forward

Average profitability will struggle through 2019 Heavy supplies weigh on prices and limit any rallies The market will struggle to assess tariff impacts Feed prices will move on weather and tariff news

Locking in positive profits will be difficult That does not mean that you can’t limit losses Know what keeps you afloat and lock that in when you can

Domestic demand could offset a lot of other negatives Economic projections still bright The majority of our pork is still consumed in this country


What Are the Key Dairy Issues?

U.S. milk supply growth continues Cow numbers slow to respond to lower returns Productivity growth adding to the supply Modest output growth to continue next few quarters

Good news on the international front Prices moving higher US exports growing

Margin Protection Program Debate of the next farm bill underway Senate ag appropriations makes changes to MPP


What’s Wrong With This Picture?

8.94

9.00

9.06

9.12

9.18

9.24

9.30

9.36

9.42

10

12

14

16

18

20

22

24

26

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

Dol

lars

per

Cw

t. / M

illion

Hea

d

All Milk Price Dairy Cows (right axis)


Global Dairy Product Prices

0.0

0.5

1.0

1.5

2.0

2.5

3.0

7 Jan2014

1 Jul2014

6 Jan2015

1 Jul2015

Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18

Dol

lars

per

Pou

nd

Butter Cheese SMP

Quarterly U.S. All Milk Prices

101214161820222426

1997 2001 2005 2009 2013 2017

$ pe

r cw

t

USDA Oct. Forecast


World SMP Production

0

1

2

3

4

5

6

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)

Milli

on M

etric

Ton

s

EU US India New Zealand Australia ROW


World SMP Consumption

0.00.51.01.52.02.53.03.54.04.5

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)

Milli

on M

etric

Ton

s

EU India US Mexico China ROW


World SMP Exports

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)

Milli

on M

etric

Ton

s

EU US New Zealand Australia Belarus ROW


World WMP Consumption

0.00.51.01.52.02.53.03.54.04.5

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)

Milli

on M

etric

Ton

s

China Brazil EU Algeria Indonesia ROW


World WMP Exports

0.0

0.5

1.0

1.5

2.0

2.5

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018(p)

Milli

on M

etric

Ton

s

New Zealand EU Argentina Australia Mexico ROW


Dairy Markets Continue To Transistion

Larger operations growing fast Small operations being squeezed Increase in dairy operations leaving the business Price outlook remains low for 2019 Inelastic demand markets can move quickly!


Questions

Dr. Scott BrownUniversity of Missouri222 Mumford HallColumbia, MO 65211

(573) 882 – 3861

Twitter @MUScottBrown

Weekly Livestock Update, Brownfield Ag Newshttps://brownfieldagnews.com/brownfield-livestock-market-updates/

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Global Pork and Dairy Market OutlookHog Outlook: Ample Global Supplies AheadAfrican Swine Fever Remains The Wild Card for Global Pork MarketsPork Availability per U.S. ResidentFeed Costs Remain Low�ISU U.S. Farrow-Finish ReturnsWorld Pork ProductionWorld Pork ConsumptionTrade: Why is it Important?Trade: Why is it Important?World Pork ExportsMajor Pork ImportersChina Tariffs for Selected ProductsHam Primal ValueU.S. Pork Production Expanding RapidlyU.S. Breeding Herd InventorySow Number Changes vs. ProfitabilityBreeding Herd Growth by StatePork per Sow GrowthSlide Number 19Slide Number 20U.S. Pork Production/Exports ChangesSlide Number 22U.S. Pork ExportsU.S. Pork MarketsSlide Number 25Slide Number 26U.S. Pork Export Value to China/HKMeat Production and Trade, Oct. WASDERetail Meat PricesSelected Retail Meat PricesPork Bellies in Cold StorageWholesale Pork PricesMeat Availability and Prices, Oct. WASDEJune 2019 Lean Hog FuturesHog Price (Quarterly)Farrow-Finish Returns ProjectionKnow What to Look For Moving ForwardWhat Are the Key Dairy Issues?What’s Wrong With This Picture?Slide Number 40Global Dairy Product PricesQuarterly U.S. All Milk PricesWorld SMP ProductionWorld SMP ConsumptionWorld SMP ExportsWorld WMP ConsumptionWorld WMP ExportsDairy Markets Continue To TransistionQuestions

global pork and dairy market outlook - amap€¦ · 10/10/2018 · global pork and dairy market...

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