u.s. beef trade brett stuart. economic turmoil / credit crisis meat export deliveries lag...
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U.S. Beef TradeBrett Stuart
Economic Turmoil / Credit Crisis• Meat export deliveries lag transactions by weeks
exaggerating credit freeze impact• Global shipping falls to a standstill (container rates
from Asia EU hit ZERO in January 09; Baltic Dry Index down 96%)
• Rapid dollar appreciation shifts global pricing• Economic uncertainty globally drives consumer
belt-tightening• Consumer demand varies by country, but
remember: U.S. beef is the discount beef in key markets (Japan, S.Korea)
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
Daily
Key Global Financial IndicesPercentage Change from Jan 1, 2008
DJIA, -34%SYDI, -40%Nikkei, -41%DAX, -42%Bovespa, -45%Hang Seng -49%BOM, -57%Shanghai, -65%
Source: Pacific Exchange Rate Service
GLOBAL SUPPLY / DEMAND
GlobalizationThe flow of capital and equity in the meat/livestock
industries is increasing
• JBS (22 countries)
• COFCO (China) buying 7 million shares from Smithfield Tyson formed 3rd joint venture in China (poultry)
• Marfrig (Brazil) rapidly expanding overseas investment (Pemmican jerky line - ConAgra, OSI in Europe/BRZ)
• Sadia (Brazil) poultry in Russia and UAE
• Goldman Sachs: 60% of Shanghui group, 13% of Yurun Food Group, 10 hog farms ~ $300 million (all China
• Deutsche Bank: 30% of unnamed Chinese hog farm, other J.V.’s in China
Global Meat Forecasts
Source: FAO/OECD Forecasts
Added 2008-2017:Beef: 11 mmtPork: 21 mmtPoultry: 18 mmt
Global Beef Trends
Source: USDA/FAS, CattleFax Projections
2009 F
76% of US beef exports go to
Mexico, Canada, Japan, and S.
Korea
Global Beef Trends: ‘09 Steady/Lower
Source: USDA/FAS, CattleFax Projections
U.S. TRADE
Source: USDA, CattleFax Projections
U.S. Meat Exports in 2009
U.S. Beef Trade and Forecasts
Exports
Source: U.S. Dept of Commerce, forecasts by CF
Bottom Line: Future of U.S. Beef Exports
• Global demand will outpace supplies • However, ACCESS is a much bigger factor
o Japan, China, EU, Mexicoo Russia, Mexico
• Exports of competing species critical to net meat supply equation
• Disease issues are alive and well (PRRS, AI, FMD)
Key Considerations for 2009• Exports to NAFTA (Canada/Mexico) are critical, worth
$50-60 per head• Trade friction with Mexico is HIGH• 12 months of access to S. Korean market~ 468 mil lbs
Another Key Factor: 2009• Expanded Japan access would be significant to
U.S. cattle industry (~ $3-4/cwt live)o Currently at 24% of pre-BSE levels (19 mil lbs/week)o $373 million in 2008 vs $1.4 billion in 2003o Japan has previously offered access < 30 moao <30 moa would restore 95%+ of pre-BSE volumes
$143/lb