international beef and cattle market outlook · n. america & global beef markets • u.s.,...
TRANSCRIPT
International Beef and Cattle Market
Outlook
August 11, 2016 Brett Stuart
Perspective • As a rancher… • Weaned calves, sold
to feedyards • Focus on production
efficiencies • Market was the market
• Fast forward…
Perspective • Tokyo 2004 • Japanese A-5 Wagyu:
US$20,000/carcass • The “exploding
carcass” • Maximum calf value is
highly depended on global markets
My Message Today • The North American cattle & beef markets are
global • The global beef markets are complex • Recent commodity deflation was a global
phenomenon • But, market “gravity” is UP • Short term outlook…. • Long term outlook is very good
N. America & Global Beef Markets • U.S., Canada, and Mexico are among each
other’s largest beef and cattle trading partners • And account for 90%+ of the world’s grain-fed
beef • There is little differentiation in U.S./Canadian
beef overseas – Globally, grain-fed beef is
it’s own brand – With large/rising demand
Source: GTIS, Agritrends
Global Meat is Diverse & Complex Global meat trade is a complicated web of politics, culture, and economics (in that order!)
– Perishability – Bio-safety – Fragmented markets – Politically sensitive – Culturally diverse
Seoul, Korea – Riots against U.S. beef, June 2008
60 million peasant farmers raise 40% of China’s pigs (half of the worlds pigs in China)
85% of U.S. chicken “paws” are eaten in China (for higher prices than leg quarters)
Source: China, Hong Kong Customs
Source: China, Hong Kong Customs, India* data includes Indian exports to Vietnam
Macro Factors FX Rates
Global Economy Commodity Deflation
Source: FRED, U.S. Federal Reserve Bank
Global Economy Wobbly… • IMF has reduced 2016 forecasts, again • Negative interest rates?? • Big economy difficulties
– EU: Debt crises remain for Italy, Portugal, others – Japan: edge of recession, 10-year GDP avg +0.6% – China economy slowing
• Developing economy difficulties: – Brazil recession deepens – 3rd world debt crisis, U.S. dollar pressure
• Global economic growth fuels meat demand!
Source: UN/FAO
Global Food Demand
• +78 million people per year (global growth) • Global middle class to rise from 2 billion to
4.9 billion by 2030 – Asia driving global food demand – But also, less-developed nations
globally – New opportunities for further-
processed and consumer-ready food products
Source: UN/FAO
Global Beef Trends Supplies and Prices
Canada Beef Exports
Source: USDA/FAS, UN/FAO
Source: USDA/FAS, AgriTrends
Source: USDA/FAS, UN/FAO
U.S. expansion underway, Aussie
expansion 2 years behind
Source: UN/FAO, Agriculture Outlook to 2025
Source: USDA/FAS
Source: GTIS, AgriTrends
Source: GTIS, AgriTrends
Outlook Items U.S. / Aussie Price Spread
TPP The PORK Dilemma
Source: GTIS, AgriTrends
TPP Is ESSENTIAL to US/CAN Beef!
Source: AgriTrends
Source: AgriTrends
TPP Is ESSENTIAL to US/CAN Beef!
The Pork Dilemma 1. Rising U.S. production
– Soft expansion occurring – New plants are seeking/encouraging more
production
2. Chinese demand will stall – Chinese expansion will occur
• But may be slowed by gov’t reg
Where will the EU, U.S., and Canadian pork go?
Source: China Customs
Source: Canada Customs, pork only, no variety meats
Source: USDA/FAS, WASDE
In Summary • Global commodity deflation likely near a
bottom (but may stay here for a while) • Global pork & poultry supplies are heavy
– But GLOBAL beef supplies are more stable
• Record Aussie beef/cattle, cheaper U.S. and Canadian beef is winning in Asia
• The future looks bright – Rising population and incomes – Rising demand for grain-fed beef globally
Source: GTIS, AgriTrends
The Future Looks GOOD
Oh, and one other thing…
Enemies at home, and abroad…
“We think it’s better to price meats earlier in the chain, it’s easier,” - Dr. Maarten Hajer
Global Livestock Industries Must Unite Around a Consistent
Message
“It is socially irresponsible to legislate yield-reducing practices”
“Nearly a billion of our common population is food insecure; now is NOT the time to legislate
costs and regulations that reduce supplies”