Transcript Swine Industry Outlook Worse than 1998?

Swine
Industry
Outlook
Worse than
1998?
Ron Plain
Professor of Agricultural Economics
University of Missouri-Columbia
http://web.missouri.edu/~plainr/
$ Per Head
Iowa Farrow to Finish Profits,
1965-2008
40
30
20
10
0
-10
-20
-30
1965-74:
1975-84:
1985-94:
1995-04:
$10.04/head profit
$14.22/head profit
$10.51/head profit
$ 0.52/head loss
65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07
Source: John Lawrence, Iowa State University
Iowa Farrow to Finish Profits, 1997-2009
Iowa State University Calculations
$ Per Head
50
30
10
-10
-30
Source: John Lawrence, Iowa State University
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
-70
1997
-50
Pig/Month Accumulated Profits, 1990-2009
Iowa State University Calculations
Dollars
1400
1200
1000
800
600
400
200
Source: John Lawrence, Iowa State University
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
Forecast
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
% corn for ethanol:
2000-01:
6%
2005-06: 14%
2007-08: 23%
2008-09: 31%
08-09
06-07
04-05
02-03
00-01
98-99
96-97
94-95
92-93
2009-10: 34%
90-91
Billion Bushels
Corn Milled for Ethanol
Omaha Corn Prices
$ Per Bu.
Weekly Average, 2007-09
8
7
6
5
4
3
Source: LMIC
r0
9
Ap
Ja
n0
9
ct
08
O
Ju
l0
8
r0
8
Ap
Ja
n0
8
O
ct
07
2
Weekly Corn & Ethanol Prices, 2007-09
3.00
7
2.80
2.60
5
2.00
1.80
4
Corn
1.60
Ethanol
1.40
3
1.20
Source: LMIC
Ap
ril
Ja
n09
O
ct
Ju
ly
Ap
ril
1.00
Ja
n08
2
$/gallon
2.40
2.20
O
ct
$/bushel
6
Weekly Gasoline & Corn Prices, 2007- 09
5.0
8
4.5
7
3.0
5
2.5
2.0
4
Gasoline
Corn
3
1.5
Source: U.S. Energy Information Administration
Ap
r
09
Ja
n
O
ct
Ju
l
2
Ap
r
1.0
$/bushel
6
3.5
Ja
n08
$/gallon
4.0
Soybean Meal Prices
$ Per Bu.
Weekly Average, Illinois, 2007-09
500
450
400
350
300
250
200
Source: LMIC
pr
09
A
Ja
n0
9
ct
08
O
Ju
l0
8
pr
08
A
Ja
n0
8
O
ct
07
150
Corn ethanol
Cellulosic
2008
2012
Bio-diesel
More non-grain
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2011
2010
40
35
30
25
20
15
10
5
0
2009
Billion Gallons
2007 Renewable Fuels Mandate
20
18
16
14
12
10
8
6
4
2
0
mandated
use
2016
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
actual production
1990
Billion Gallons
Ethanol Production, 1990-2016
Beginning in 2015, the U.S. will annually use more corn to
make ethanol than the U.S. produced in any year before 1971
Recent EPA Decisions
U.S. corn ethanol has a worse impact on
the environment than gasoline due to land
use impact, i.e. more acres being cropped
Brazilian sugarcane ethanol reduces GHG
emissions by 64% compared to gasoline
U.S. Average Corn Price, 1908-2008
Source: USDA/NASS
2008
2004
2000
1996
1992
1988
1984
1980
1976
1972
1968
1964
1960
1956
1952
1948
1944
1940
1936
1932
1928
1924
1920
1916
1912
5.00
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
1908
$ Per Bushel
U.S. Average Corn Price, 1908-2008
$ Per Bushel
1942-1972
1908-1942
30 years
35 years
Avg $1.26
Avg $0.78
Source: USDA/NASS
2008
2004
2000
1996
1992
1988
1984
1980
1976
1972
1968
1964
1960
1956
1952
1948
1944
1940
1936
1932
1928
1924
1920
1916
1912
1973-2006
34 years
Avg $2.37
1908
5.00
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
U.S. Average Corn Price, 1908-2008
What’s the next level?
$ Per Bushel
1973-2006
34 years
Avg $2.37
1942-1972
1908-1942
30 years
35 years
Avg $1.26
2008
2004
2000
1996
1992
1988
1984
1980
1976
1972
1968
1964
1960
1956
1952
1948
1944
1940
1936
1932
1928
1924
1920
1916
1912
Avg $0.78
1908
5.00
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
The 1940s step raised corn price 62%; the 70s step 88%.
A 75% step will take corn to $4.15/bu
0
10/6/2006
11/3/2006
12/1/2006
12/29/2006
1/26/2007
2/23/2007
3/23/2007
4/20/2007
5/18/2007
6/15/2007
7/13/2007
8/10/2007
9/7/2007
10/5/2007
11/2/2007
11/30/2007
12/28/2007
1/25/2008
2/22/2008
3/21/2008
4/18/2008
5/16/2008
6/13/2008
7/11/2008
8/8/2008
9/5/2008
10/3/2008
10/31/2008
11/28/2008
12/26/2008
1/23/2009
2/20/2009
3/20/2009
4/17/2009
5/15/2009
Northwest Iowa Prices, 2006-09
$ Per Ton
300
250
Corn
Source: LMIC
DDGS
WDGS
200
150
100
50
115
110
105
100
95
90
85
80
75
70
65
10/6/2006
11/3/2006
12/1/2006
12/29/2006
1/26/2007
2/23/2007
3/23/2007
4/20/2007
5/18/2007
6/15/2007
7/13/2007
8/10/2007
9/7/2007
10/5/2007
11/2/2007
11/30/2007
12/28/2007
1/25/2008
2/22/2008
3/21/2008
4/18/2008
5/16/2008
6/13/2008
7/11/2008
8/8/2008
9/5/2008
10/3/2008
10/31/2008
11/28/2008
12/26/2008
1/23/2009
2/20/2009
3/20/2009
4/17/2009
5/15/2009
DDGS Price as % of Corn Price,
Northwest Iowa, 2006-09
Percent
Source: LMIC
10/6/2006
11/3/2006
12/1/2006
12/29/2006
1/26/2007
2/23/2007
3/23/2007
4/20/2007
5/18/2007
6/15/2007
7/13/2007
8/10/2007
9/7/2007
10/5/2007
11/2/2007
11/30/2007
12/28/2007
1/25/2008
2/22/2008
3/21/2008
4/18/2008
5/16/2008
6/13/2008
7/11/2008
8/8/2008
9/5/2008
10/3/2008
10/31/2008
11/28/2008
12/26/2008
1/23/2009
2/20/2009
3/20/2009
4/17/2009
5/15/2009
WDGS Price as % of DDGS
Price, Northwest Iowa, 2006-08
Percent
45
40
35
30
25
20
Source: LMIC
Impact on hogs
Cost of Slaughter Hog Production
Iowa State University Calculations, 1987-2009
$ Per Live Cwt
65
60
55
50
45
Marketing Month
Source: John Lawrence, Iowa State University
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
35
1987
40
Hog Price & Cost, 1996-2008
60
hog $
$/cwt live
55
cost
50
45
40
35
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
30
2008 hog prices were $2.60 above the 13 year average
2008 production cost was $13.85 above the 13 year average
Breakeven Hog Price & U.S. Corn Price
Iowa State University Calculations, 1990-2008
$ Per Live Cwt
57
52
47
42
Corn Price
5
4.5
4
3.5
3
2.5
2
1.5
37
Production Efficiency
Since 1930, the U.S. has reduced sow
inventory by 42% and increased annual
pork production by 245%
Pigs Per Litter, 1930-2008
USDA Hogs & Pigs Reports
Head
9.5
9.0
8.5
8.0
7.5
7.0
6.5
6.0
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
1950
1945
1940
1935
1930
5.5
Litters Per Sow Per Year, 1930-2008
Litters
2.4
2.2
2.0
1.8
1.6
1.4
1.2
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
1950
1945
1940
1935
1930
1.0
Pigs Per Sow Per Year, 1930-2008
USDA Hogs & Pigs Reports
Head
25
20
15
10
5
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
1950
1945
1940
1935
1930
0
Average U.S. Hog Carcass Weight, 1930-2008
Pounds
210
200
190
180
170
160
150
140
130
120
05
00
95
90
85
80
75
70
65
60
55
50
45
40
35
30
110
Annual U.S. Pork Production Per Sow, 1930-2008
Pounds
4,500
4,000
3,500
1930-80 growth rate: 2.027%
3,000
1980-07 growth rate: 2.793%
2,500
2,000
1,500
1,000
500
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
1950
1945
1940
1935
1930
0
Hog Cycle
Annual U.S. Pork Production, 1930-2008
Billion Pounds
25
actual
1.5% trend
20
15
10
In 2008, U.S. pork production
was 8.2% above trend
5
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
1950
1945
1940
1935
1930
0
U.S. Commercial Hog Slaughter
Quarterly Data, 1970-2009
% change from
year ago
30
20
10
0
-10
-20
08
06
04
02
00
98
96
94
92
90
88
86
84
82
80
78
76
74
72
70
-30
Terminal Market Barrow & Gilt Price
Quarterly Data 1970-2009
% change from
year ago
80
60
40
20
0
-20
-40
08
06
04
02
00
98
96
94
92
90
88
86
84
82
80
78
76
74
72
70
-60
Hog Price Flexibility
Quarterly Data 1970-2009
15
10
5
0
-5
-10
-15
-20
-25
% ch T Mkt B&G price / % ch com hog slt
08
06
04
02
00
98
96
94
92
90
88
86
84
82
80
78
76
74
72
70
-30
In 9 of last 19 quarters, price & slaughter moved in the same direction
International Trade
Top Pork Producing Countries-2008
Thousand
Metric Tons
50000
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
in
co
pp
a
re
Ko
ili
n
m
na
i
ex
S.
M
Ph
et
pa
Ja
Vi
a
ad
il
a
si
n
Ca
s
Ru
az
Br
.
.A
S
U.
7
na
-2
EU
i
Ch
es
Source: USDA/FAS
Forecast Change in Pork Production
Country
China
E.U.-27
USA
Brazil
Russia
Canada
Vietnam
Japan
WORLD
Source: USDA/FAS, April 2009
-----Percent Change----2007-08
2008-09
+7.6%
+5.5%
- 1.4%
- 1.9%
+6.4%
- 2.5%
+0.8%
- 0.2%
+7.9%
+4.1%
+1.4%
+2.1%
+1.0%
+0.0%
- 0.1%
- 0.7%
+4.0%
+1.9%
Top Pork Importing Countries-2008
Thousand
Metric Tons
1400
1200
1000
800
600
400
200
0
e
or
ap
ng
Si
lia
ra
st
Au
da
na
Ca
ng
Ko
H.
A.
S.
U.
a
in
Ch
a
re
Ko
co
n
a
si
i
ex
S.
M
s
Ru
pa
Ja
Source: USDA/FAS
Forecast Change in Pork Imports
Country
Japan
Russia
Mexico
S. Korea
U.S.A.
Hong Kong
China
Canada
Australia
WORLD
Source: USDA/FAS, April 2009
-----Percent Change----2007-08
2008-09
+ 4.7%
- 2.1%
+ 17.8%
-28.8%
+ 18.6%
-11.2%
- 3.8%
- 7.0%
- 14.1%
+ 1.1%
+ 14.6%
- 0.3%
+117.2%
-30.2%
+ 14.0%
+ 5.1%
+ 7.8%
- 7.9%
+ 16.3%
-13.3%
Top Pork Exporting Countries-2008
Thousand
Metric Tons
2500
2000
1500
1000
500
0
S
Vi
a
re
Ko
m
na
et
lia
co
tra
i
ex
le
il
na
s
Au
M
i
Ch
i
Ch
az
Br
a
ad
27
U.
.
.A
n
Ca
E.
S
U.
Source: USDA/FAS
Forecast Change in Pork Exports
Country
U.S.A.
E.U.-27
Canada
Brazil
China
Chile
Mexico
Australia
Vietnam
WORLD
Source: USDA/FAS, April 2009
-----Percent Change----2007-08
2008-09
+48.6%
-13.2%
+33.4%
-27.1%
+ 9.3%
+ 1.9%
- 14.4%
- 2.4%
- 36.3%
- 5.8%
- 4.1%
- 8.5%
+13.8%
+ 4.4%
- 11.1%
+ 4.2%
- 42.1%
+ 0.0%
+18.9%
-12.4%
U.S. Pork Imports & Exports
5,000
4,500
Imports
Exports
3,500
2008 was the 17th
consecutive record year
for U.S. pork exports
3,000
2,500
2,000
1,500
1,000
500
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
0
1980
Million Pounds
4,000
Value of U.S. Pork Exports
$/hog slt
45
40
Pork
ByProduct
35
30
25
20
15
10
Source: U.S. Meat Export Federation
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
0
1986
5
U.S. Pork Imports & Exports, 2000-2009
Mil. lbs.
600
Monthly Carcass Weight Equivalent
Imports
500
Exports
400
300
200
100
Jan 09
Jan 08
Jan 07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-01
Jan-00
0
U.S. Pork Production, Exports & Imports,
million pounds, 2007 & 2008
Jan-Dec
2007
21,942.6
U.S. pork
production
U.S. pork
3,141.2
exports
U.S. pork
968.4
imports
Production- 19,769.8
exports +
imports
Jan-Dec
2008
23,347.8
Percent
Change
+ 6.4%
4,668.3
+ 48.6%
831.9
- 14.1%
19,511.4
-
1.3%
U.S. Pork Exports, 2008
Country
Japan
Mexico
Canada
China & HK
S. Korea
Russia
Australia
TOTAL
Change From Year Ago
000 lbs
Percent
250,972
+ 23.39%
222,617
+ 49.32%
54,712
+ 14.88%
496,336
+139.79%
32,113
+ 12.12%
185,757
+ 76.03%
31,125
+ 40.33%
1,527,132
+ 48.62%
U.S. Pork Exports, Jan-April 09
Country
Japan
Mexico
China & HK
Canada
S. Korea
Russia
Australia
TOTAL
Change From Year Ago
000 lbs
Percent
36,048
+ 8.45%
95,933
+ 53.95%
-221,626
- 64.18%
- 8,998
- 6.81%
- 4,730
- 3.92%
- 70,222
- 47.22%
12,338
+ 39.95%
-166,768
- 10.79%
U.S. Pork Exports, 2005-2009
Mil. lbs.
600
Monthly Carcass Weight Equivalent
Total
500
Less China-HK
400
300
200
100
Jan 09
Jan 08
Jan 07
Jan-06
Jan-05
0
Pork Exports & Frozen Pork, 2006-09
500000
700
650
Frozen Pork
Apr
Jan 09
350
Oct
150000
Jul
400
Apr
200000
Jan 08
450
Oct
250000
Jul
500
Apr
300000
Jan 07
550
Oct
350000
Jul
600
Apr
400000
Frozen Pork
Exports
Jan-06
Exports
450000
U.S. Hog Imports & Exports
Mil. head
12
Imports
10
Exports
2008 hog imports were dn
6.6% compared to 2007
8
6
4
2
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
0
U.S. Hog Imports from Canada
Head per mo.
800,000
Slaughter Hogs
700,000
Feeders Pigs
600,000
500,000
400,000
300,000
200,000
100,000
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
0
Weekly Hog Imports, 2007- 09
Head
200000
180000
160000
140000
120000
100000
80000
60000
40000
20000
Fdr Pigs
Slt Hogs
2007
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2008
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2009
Feb
Mar
Apr
May
0
Source: USDA/APHIS
Weekly Hog Imports, 2008-09
% Ch Yr Ago
80
60
Fdr Pigs
40
Slt Hogs
20
-40
-60
-80
Source: USDA/APHIS
May
Apr
Mar
Feb
2009
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
Mar
Feb
-20
2008
0
Change in Hog Slaughter: US & Canada
Weekly F.I. Hog Slaughter, 2006-09
% change from
yr. ago 20
15
USA
Canada
10
5
0
-5
-10
-15
2007
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2008
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2009
Feb
Mar
Apr
May
-20
U.S. Dollar Exchange Rate Index
Trade Weighted Exchange Rate, 2005-2009
Major Currencies
90
1973=100
85
80
75
70
Source: Federal Reserve Bank of St Louis
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
65
U.S. Pork Exports, 2006-2009
Mil. lbs.
160
Monthly Carcass Weight Equivalent
Japan
Russia
140
120
Canada
S Korea
Mexico
China HK
100
80
60
40
20
Jan-09
Jan-08
Jan-07
Jan-06
0
25
Jan 06
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
Jan 07
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
Jan 08
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
Jan 09
Feb
Mar
Apr
% of Production
U.S. Pork Imports & Exports as % of U.S.
Pork Production, 2006-2009
Monthly Carcass Weight Equivalent
30
Imports
Exports
20
15
10
5
0
Jan 06
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
Jan 07
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
Jan 08
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
Jan 09
Feb
Mar
Apr
% of Production
U.S. Net Pork Exports as % of U.S. Pork
Production, 2006-2009
Monthly Carcass Weight Equivalent
25
20
15
10
5
0
Million
Pounds
Pork in Cold Storage End of Month
700
2006
2007
2008
2009
650
600
550
500
450
400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Q1 09
Q1 08
Q1 07
Q1 06
Q1 05
Q1 04
Q1 03
Q1 02
Q1 01
Q1 00
Q1 99
Q1 98
Q1 97
Q1 96
Q1 95
Q1 94
Q1 93
Q1 92
Q1 91
Q1 90
Exchange Rate: Can $ Per US $
1.70
1.60
1.50
1.40
1.30
1.20
1.10
1.00
0.90
U.S. Daily Hog Slaughter
Capacity
Head
450,000
440,000
430,000
420,000
410,000
400,000
390,000
380,000
370,000
360,000
Steve Meyer’s survey indicates 2009 capacity of 444,925
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
350,000
U.S. Daily Slaughter Capacity
•
•
•
•
•
•
•
•
•
•
•
Packer
Smithfield
Tyson
Swift
Excel
Hormel
Seaboard
Triumph
Indiana Pack
Hatfield
Others
Total
Fall 07
121,900
74,300
47,000
36,000
36,800
16,800
17,500
15,000
10,600
52,435
428,335
Source: Steve Meyer, Paragon Economics
Spring 09
126,300
74,550
47,000
38,500
37,000
19,200
19,000
16,500
10,600
56,275
444,925
change
4,400
250
0
2,500
200
2,400
1,500
1,500
0
3,840
16,590
17 Largest Hog Slaughter Weeks
Rank
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
Date
12/22/07
01/12/08
01/19/08
01/10/09
12/01/07
11/01/08
12/08/07
10/11/08
11/17/07
12/20/08
12/06/08
11/22/08
12/15/07
11/10/07
10/18/08
09/27/08
10/13/07
Head .
2,469,770
2,434,492
2,419,483
2,387,946
2,381,022
2,278,877
2,377,351
2,374,375
2,372,466
2,370,785
2,367,889
2,367,556
2,362,972
2,360,450
2,357,496
2,346,069
2,339,945
The 35 weeks
with the largest
slaughter have
all been since
September
2007
HOG VALUE AS A PERCENT OF
RETAIL PORK VALUE
Percent
Monthly
45
40
35
30
25
20
15
10
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Demand
U.S. Per Capita Pork Consumption, 1930-2008
Pounds
60
50
40
30
Boneless Weight
20
10
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
1950
1945
1940
1935
1930
0
-30
2001
May
Sep
2002
May
Sep
2003
May
Sep
2004
May
Sep
2005
May
Sep
2006
May
Sep
2007
May
Sep
2008
May
Sep
2009
% Change Year Ago
Change in Export Pork Demand
Base Elasticity = - 0.5
110
90
70
50
30
10
-10
Change in Export Pork Demand
Base Elasticity = - 0.5
150
100
% change
Yen/$
140
60
40
120
20
0
2009
Aug
Mar
Oct
May
Dec
Jul
Feb
Sep
Apr
Nov
Jun
2004
Aug
Mar
Oct
May
Dec
Jul
Feb
Sep
Apr
Nov
Jun
-20
110
100
-40
90
-60
6/5/09 Exchange rate: 98.18 Yen per US $
Yen Per $
130
1999
% Change fromYear Ago
80
-12
2001 >
May
Sep
2002 >
May
Sep
2003 >
May
Sep
2004 >
May
Sep
2005 >
May
Sep
2006 >
May
Sep
2007>
May
Sep
2008>
May
Sep
2009
Change in Domestic Pork Demand
Base Elasticity = - 0.75
% change from
year ago
8
3
-2
-7
-6
2001 >
May
Sep
2002 >
May
Sep
2003 >
May
Sep
2004 >
May
Sep
2005 >
May
Sep
2006 >
May
Sep
2007>
May
Sep
2008>
May
Sep
2009
Change in Hog Demand
Base Elasticity = - 0.2
% change from
year ago
12
10
8
6
4
2
0
-2
-4
Cheap vs Expensive
Cuts
CHOICE MINUS SELECT BEEF PRICES
Carcass Cutout Value 600-900 Lbs., Weekly
$ Per Cwt.
18
16
Avg.
2002-06
14
12
2007
10
8
2008
6
4
2
2009
0
-2
JAN
APR
Livestock Marketing Information Center
JUL
OCT
180
2000>
May
Sep
2001
May
Sep
2002>
May
Sep
2003
May
Sep
2004
May
Sep
2005>
May
Sep
2006>
May
Sep
2007>
May
Sep
2008>
May
Sep
2009>
Ground Chuck, Retail Price, Monthly, 20002009
Cents/lb
320
300
280
260
240
220
200
Source: USDA/ERS
Choice Boneless Sirloin Steak as % of Ground
Chuck, Retail Prices, Monthly, 2000-2009
Percent
320
300
280
260
240
220
180
2000>
May
Sep
2001
May
Sep
2002>
May
Sep
2003
May
Sep
2004
May
Sep
2005>
May
Sep
2006>
May
Sep
2007>
May
Sep
2008>
May
Sep
2009>
200
Source: USDA/ERS
Boneless Pork Chops as % of Ground
Chuck Retail Prices, Monthly, 2000-2009
Percent
220
200
180
160
140
100
2000>
May
Sep
2001
May
Sep
2002>
May
Sep
2003
May
Sep
2004
May
Sep
2005>
May
Sep
2006>
May
Sep
2007>
May
Sep
2008>
May
Sep
2009>
120
Source: USDA/ERS
Boneless Chicken Breast as % of Ground
Chuck Retail Prices, Monthly, 2001-2009
Percent
135
130
125
120
115
110
100
2001>
May
Sep
2002>
May
Sep
2003>
May
Sep
2004>
May
Sep
2005>
May
Sep
2006>
May
Sep
2007>
May
Sep
2008>
May
Sep
2009>
105
Source: USDA/ERS
Whole Frozen Turkey as % of Ground
Chuck Retail Prices, Monthly, 2000-2009
Percent
60
55
50
45
35
2000>
May
Sep
2001
May
Sep
2002>
May
Sep
2003
May
Sep
2004
May
Sep
2005>
May
Sep
2006>
May
Sep
2007>
May
Sep
2008>
May
Sep
2009>
40
Source: USDA/ERS
Bologna as % of Ground Chuck
Retail Prices, Monthly, 2000-2009
Percent
140
130
120
110
100
80
2000>
May
Sep
2001
May
Sep
2002>
May
Sep
2003
May
Sep
2004
May
Sep
2005>
May
Sep
2006>
May
Sep
2007>
May
Sep
2008>
May
Sep
2009>
90
Source: USDA/ERS
Retail Boneless Pork Prices
Retail Prices, Monthly, 2001-2009
Cents/lb
Bacon
Chops
Ham
2001 >
May
Sep
2002 >
May
Sep
2003 >
May
Sep
2004 >
May
Sep
2005 >
May
Sep
2006 >
May
Sep
2007 >
May
Sep
2008 >
May
Sep
2009 >
430
410
390
370
350
330
310
290
270
250
Source: USDA/ERS
Inventory Reports
U.S. Swine Breeding Herd, 1999-2009
6300
6250
6150
6100
6050
6000
5950
5900
We are in the down phase of the hog cycle
08
D
ec
07
D
ec
06
D
ec
05
D
ec
04
D
ec
03
D
ec
02
D
ec
01
D
ec
00
ec
D
ec
99
5850
D
Thousand Head
6200
Hog Inventory Reports
U.S. Mar
Canada Apr
All Hogs & Pigs
Kept for Breeding
Kept for Marketing
97.3
97.0
97.3
91.4
93.8
91.1
Under 60 lbs
60-119 lbs.
120-179 lbs.
180 lbs. and over
96.9
97.5
97.5
97.6
87.9
94.9
91.1
Jun-Aug Farrowings
100.5
Sep-Nov Farrowings
96.3
Dec-Feb Farrowings
97.0
Mar-May Farrowing Intentions 97.1
Jun-Aug Farrowing Intentions
96.0
97.5
95.3
93.1
93.4
94.4
U.S. Sows Farrowed by Quarter
% change
from yr. ago
10
8
6
4
2
0
-2
-4
-6
DJF09
DJF08
DJF07
DJF06
DJF05
DJF04
DJF03
DJF02
DJF01
DJF00
DJF99
-8
U.S. Pigs Per Litter by Quarter
% change
from yr. ago
3
2.5
2
1.5
1
0.5
0
-0.5
DJF09
DJF08
DJF07
DJF06
DJF05
DJF04
DJF03
DJF02
DJF01
DJF00
DJF99
-1
Canada Sows Farrowed by Quarter
% change
from yr. ago
15
10
5
0
-5
JFM09
JFM08
JFM07
JFM06
JFM05
JFM04
JFM03
JFM02
JFM01
JFM00
JFM99
-10
Sows Farrowed-U.S. & Canada Combined
% change
from yr. ago
6
4
2
0
-2
-4
DJF09
DJF08
DJF07
DJF06
DJF05
DJF04
DJF03
DJF02
DJF01
DJF00
DJF99
-6
Thousand
Head
Weekly F.I. Sow Slaughter
85
2007
2008
2009
80
75
70
65
60
55
50
2008 sow slaughter was up 5.0%
Last 13 weeks were down 13.2%
45
DE
C
V
NO
T
O
C
SE
P
G
AU
L
JU
N
JU
AY
M
AP
R
AR
M
FE
B
JA
N
40
Sow Slaughter, 2008-09
4 week moving average
% Ch Yr Ago
20
15
10
5
0
-5
-10
-15
Source: USDA/AMS
May
Apr
Mar
Feb
2009
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
Mar
Feb
2008
-20
120
'07
Feb
Mar
Apr
Ma
Jun
Jul
Aug
Sep
Oct
Nov
Dec
'08
Feb
Mar
Apr
Ma
Jun
Jul
Aug
Sep
Oct
Nov
Dec
'09
Feb
Mar
Apr
Ma
Thousand Head Per Week
Estimated Gilt Retention & Sow Loss, 2007-2009
GG Cattle & Hog Fax
Gilts Retained
Sow Loss
100
80
60
40
20
0
Estimated Gilt Retention & Sow Loss, 2008-2009
GG Cattle & Hog Fax
Gilts Retained
50.5
50
49.5
49
48.5
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
Mar
Feb
48
2008
Thousand Head Per Week
51
Estimated Gilt Retention & Sow Loss, 2008-2009
GG Cattle & Hog Fax
Gilts Retained
Sow Loss
100
80
60
40
20
May
Apr
Mar
Feb
2009
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
Mar
Feb
0
2008
Thousand Head Per Week
120
Thousand
Head
Weekly F.I. Hog Slaughter
2700
2007
2008
2009
2500
2300
2100
1900
1700
Prior to 2007, packers had never killed 2.3 million hogs in a week
DE
C
V
NO
T
O
C
SE
P
G
AU
L
JU
N
JU
AY
M
AP
R
AR
M
B
FE
JA
N
1500
Actual & Predicted Change in Hog Slaughter
U.S. Weekly F.I. Hog Slaughter, 2008-09
% change from
yr. ago
15
10
5
0
Actual
USDA Mar
Forecast
-5
May
Apr
Mar
Feb
Jan
Dec
Nov
Oct
Sep
Au
Jul
Jun
May
Apr
Mar
Feb
Jan
-10
Barrow & Gilt Live Weights
Iowa-Minnesota Weekly Average
Pounds
273
271
2007
269
2008
267
265
2009
263
261
259
DE
C
V
NO
T
O
C
SE
P
G
AU
L
JU
N
JU
AY
M
AP
R
AR
M
B
FE
JA
N
257
Barrow & Gilt Dressed Weights
Pounds
Federally Inspected Weekly Average
204
2007
202
2008
2009
200
198
196
194
192
DE
C
V
NO
T
O
C
SE
P
G
AU
L
JU
N
JU
AY
M
AP
R
AR
M
B
FE
JA
N
190
Prices
Retail Price of Pork
Cents/lb.
305
300
2005
295
2006
2007
290
2008
2009
285
280
O
ct
N
ov
D
ec
ep
S
A
ug
l
Ju
Ja
n
Fe
b
M
ar
A
pr
M
ay
Ju
n
275
FEEDER PIG PRICES
40-50 Pounds, Weekly
$ Per Head
70
60
Avg.
2003-07
50
40
2008
30
2009
20
T
C
O
JU
L
AP
R
JA
N
10
Hog Cutout Value
$ Per Cwt.
100
95
Avg. 2003-07
2008
2009
90
85
80
75
70
65
60
T
O
C
L
JU
AP
R
JA
N
55
HOG BY-PRODUCT VALUE
FOB Central U.S., Weekly
$ Per Head
25
23
Avg.
2003-07
21
19
2008
17
15
13
2009
Livestock Marketing Information Center
T
O
C
L
JU
AP
R
JA
N
11
BARROW AND GILT BASE PRICES
Iowa - Minnesota, Carcass Basis, Weekly
$ per cwt.
90
85
80
75
Avg.
2003-07
70
2008
65
2009
60
55
50
Source: USDA Prior Day Purchased reports
T
O
C
JU
L
PR
A
JA
N
45
Sow Prices, 450-499 Pounds
National Live Basis, Weekly
$ per cwt.
60
55
50
2006
45
40
2007
35
2008
30
2009
25
20
Source: USDA Prior Day Purchased reports
T
O
C
JU
L
PR
A
JA
N
15
Barrow-Gilt & Sow Prices
National Live Basis, Weekly, 2008-09
Source: USDA Prior Day Purchased reports
Ja
pr
A
n
09
Barrows & Gilts
O
ct
Ju
pr
A
08
Ja
n
ly
450-499# Sows
$ per cwt.
70
65
60
55
50
45
40
35
30
25
20
15
Barrow-Gilt & Sow Prices
National Live Basis, Weekly, 2005-09
$ per cwt.
70
450-499# Sows
Barrows & Gilts
65
60
55
50
45
40
35
30
25
20
Source: USDA Prior Day Purchased reports
pr
A
09
20
08
20
07
20
06
20
20
05
15
Barrow & Gilt Negotiated Live Price
65
60
55
50
45
40
2004-07
2008
2009
35
Jan
Feb
Mar
Apr May Jun
Source: USDA Prior Day Purchased reports
Jul
Aug Sep
Oct Nov
Dec
U.S. Weekly Base Hog Prices, 2007-09
$/cwt
95
90
Negotiated
Cutout
85
80
75
70
65
60
55
50
Source: USDA’s Prior Day Slaughtered
r
Ap
09
20
O
ct
l
Ju
r
Ap
08
20
T
O
C
L
JU
AP
R
20
07
45
30
2000>
May
Sep
2001
May
Sep
2002>
May
Sep
2003
May
Sep
2004
May
Sep
2005>
May
Sep
2006>
May
Sep
2007>
May
Sep
2008>
May
Sep
2009>
Pork Packer Gross Margin Per Retail
Pound, Monthly, 2000-2009
Cents/lb
55
50
45
40
35
Source: USDA/ERS
My Forecast
Commercial Hog Slaughter Forecast
Million Head
2007
2008
2009
------Change-----07-08
08-09.
Qtr 1
26.684*
29.601*
28.488* +10.9% - 3.8%
Qtr 2
25.526*
27.941*
26.700
Qtr 3
26.566*
28.696*
27.250
+ 8.0% - 5.0%
Qtr 4
30.396*
30.214*
29.300
- 0.6% - 3.0%
109.172* 116.452* 111.738
+ 6.7% - 4.0%
Year
Note: Q3 07 & Q1 09 have only 63 slaughter days
.
+ 9.5% - 4.4%
*actual
Iowa-Minn Hog Price Forecast
Negotiated Base Price Per Carcass Hundredweight
2006
2007
2008
2009
Qtr 1
$56.38* $59.90* $52.49*
57.23*
Qtr 2
$65.27* $69.45* $70.43*
57-58
Qtr 3
$68.04* $66.14* $75.67*
60-63
Qtr 4
$60.53* $52.08* $55.60*
54-58
Year
$62.54* $61.91* $63.58* $57-60
*actual price – prior day purchased
Iowa-Minn Live Hog Price Forecast
Negotiated Live Base Price Equivalent
2006
2007
2008
2009
Qtr 1 $42.85* $45.52* $39.89*
43.49*
Qtr 2 $49.61* $52.78* $53.53*
43-44
Qtr 3 $51.71* $50.27* $57.51*
46-49
Qtr 4 $46.00* $39.58* $42.26*
41-44
Year
$47.53* $47.05* $48.32* $43-46
*actual carcass price x 76%
U.S. Pork Production, Exports & Imports,
million pounds, USDA forecast, 2008 & 2009
Jan-Dec
2008
23,347
Jan-Dec
2009
22,746
Percent
Change
- 2.6%
U.S. pork
production
U.S. pork
4,668
4,183
- 10.4%
exports
U.S. pork
831
800
- 3.7%
imports
Production- 19,510
19,363
- 0.8%
exports +
Source: USDA/OCE WASDE June 2009
imports
$/cwt
U.S. Weekly Base Hog Prices, 2007-09
90
Negotiated
85
OMF
80
75
70
65
60
55
50
Source: USDA’s Prior Day Slaughtered
AP
R
09
20
O
ct
l
Ju
r
Ap
08
20
T
O
C
L
JU
AP
R
20
07
45
The Non-Swine Flu
$/cwt
2008-10 Hog Carcass Price Forecasts
85
80
Actual
CME
75
70
65
60
55
45
Jan 08
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan 09
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan10
Feb
Mar
Apr
May
Jun
Jul
Aug
50
National PDP Base and 04/24/09 CME futures minus $2
$/cwt
2008-10 Hog Carcass Price Forecasts
85
80
Actual
CME
75
70
65
60
55
45
Jan 08
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan 09
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan10
Feb
Mar
Apr
May
Jun
Jul
Aug
50
National PDP Base and 05/29/09 CME futures minus $2
$/cwt
2008-10 Hog Carcass Price Forecasts
85
80
Actual
24-Apr
29-May
Plain
75
70
65
60
55
45
Jan 08
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan 09
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan10
Feb
Mar
Apr
May
Jun
Jul
Aug
50
National PDP Base and CME futures minus $2
70
68
66
64
62
60
58
56
54
52
50
Apr 24
Apr 27
Apr 28
Apr 29
Apr 30
May 01
May 04
May 05
May 06
May 07
May 08
May 11
May 12
May 13
May 14
May 15
May 18
May 19
May 20
May 21
May 22
May 26
May 27
May 28
May 29
$/cwt
Hog Prices: Expected vs Actual
Expected
Actual
National PDP Base and 04/24/09 CME futures minus $2
Impact of Non-Swine Flu
CME Futures Contracts $/cwt
4/24
5/29
Change Impact
May
$69.00
$62.12
-$ 6.88 -$113M
June
$71.65
$63.92
-$ 8.73 -$141M
July
$72.60
$65.62
-$ 6.98 -$126M
Aug
$72.05
$65.97
-$ 6.08 -$107M
Total
$
$
$
-$487M
Forecast Change in Meat Production
Type
Pork
Beef
Chicken
Turkey
All Meats
--Percent Change-2007-08
2008-09
+6.40%
-2.57%
+0.53%
-0.37%
+2.07%
-4.03%
+4.94%
-7.30%
+2.90%
-2.84%
Source: USDA/OCE WASDE, June 2009
Forecast Change in Meat Production
Type
Pork
Beef
Chicken
Turkey
All Meats
--Percent Change-2008-09
2009-10
-2.57%
- 1.76%
-0.37%
- 1.79%
-4.03%
+1.43%
-7.30%
+1.99%
-2.84%
- 0.28%
Source: USDA/OCE WASDE, June 2009
Forecast Summary
• Farrowings trending down
• Continued productivity growth
• Fewer imports of Canadian hogs/pigs
• Decrease in pork exports
• Weak domestic demand
• High feed cost
• Red ink for producers
Any Questions?