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Ron Plain D. Howard Doane Professor of Agricultural Economics University of Missouri-Columbia Hog & Pork Outlook Louisville,

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Presentation on theme: "Ron Plain D. Howard Doane Professor of Agricultural Economics University of Missouri-Columbia Hog & Pork Outlook Louisville,"— Presentation transcript:

1 Ron Plain D. Howard Doane Professor of Agricultural Economics University of Missouri-Columbia Hog & Pork Outlook Louisville, August Midwest/Great Plains & Western Outlook Conference

2 Annual U.S. Pork Production, U.S. pork production expected to be on trend

3 Cost of Production

4 Corn, Average Price Received, Monthly, Source: USDA/NASS

5 Cost of Slaughter Hog Production Iowa State University Calculations, Source: John Lawrence, Iowa State University

6 Corn Price & Cost of Hog Production Monthly, Source: John Lawrence, Iowa State University

7 Corn Price & Cost of Hog Production Monthly, Source: Shane Ellis, Iowa State University $6.70 corn implies hog cost at $68/cwt live or $89/cwt car.

8 Iowa Farrow to Finish Profits, Source: Shane Ellis, Iowa State University

9 Monthly Profit Per Pig Source: Shane Ellis, Iowa State University

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11 International Trade

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13 U.S. Meat Exports,

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15 U.S. Pork Imports & Exports,

16 U.S. Pork Imports & Exports as % of U.S. Pork Production,

17 U.S. Pork Exports,

18 Frozen Pork & U.S. Pork Exports,

19

20 Meat Demand

21 Source: USDA/ERS

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24 Forecast Change in Meat Production --Percent Change-- Type Beef - 0.7% - 4.3% Pork +1.0% +1.6% Chicken +1.3% +1.0% Turkey +2.4% +0.4% All Meats +0.7% - 0.4% Source: USDA-OCE WASDE, August 2011

25 Change in Retail Meat Demand Base Elasticity = Source: Ron Plain, University of Missouri

26 Change in Pork Demand Base Elasticity = Source: Ron Plain, University of Missouri

27 Change in Pork Export Demand Base Elasticity = Source: Ron Plain, University of Missouri

28 Change in Hog Demand Base Elasticity = Source: Ron Plain, University of Missouri

29 Retail Boneless Pork Prices Retail Prices, Monthly, Source: USDA/ERS

30 Growth in Real GDP Source: U.S. Commerce Department

31 U.S. Unemployment Rate, Seasonally Adjusted, Source: Bureau of Labor Statistics

32 Average Duration of Unemployment

33 Current Situation The government is broke, unemployment is high, the stock market has collapsed, the economy is barely growing, and consumer confidence is the lowest since May Needless to say, this is not good for domestic meat demand.

34 Inventory Surveys

35

36

37 Hog Inventory Reports U.S. June Canada April

38 Which is important? More sows or fewer litters?

39 Daily Hog Slaughter by Quarter

40 Breeding Herd by Quarter

41 Hog Slaughter & Breeding Herd by Quarter Correlation = 0.20

42 Sows Farrowed by Quarter

43 Sows Farrowed & Hog Slaughter by Quarter Correlation = 0.78

44 U.S. Sows Farrowed by Quarter

45 Canada Sows Farrowed by Quarter

46 Sows Farrowed-U.S. & Canada Combined

47 Slaughter

48 2011 sow slaughter is down 0.2% Source: USDA/AMS

49 2011 slaughter of U.S. sows is up 2.8% Source: USDA/AMS

50 Source: USDA/AMS & Ron Plain

51 Estimated Gilt Retention & Sow Loss, GG Cattle & Hog Fax Source: Ron Plain, University of Missouri

52 Source: USDA/AMS

53 Actual & Predicted Change in B&G Slaughter U.S. Weekly F.I. Hog Slaughter, 2011

54 Hog Slaughter Plant Closings February 2000 AVA Pork-Shamokin, PA June 2000 Farmland-Dubuque, IA July 2001 Excel-Marshall, MO December 2001 AMPAC/Iowa Pork-Chicago, IL January 2003 Hormel-Rochelle, IL May 2004 RC Pork-Downs, KS September 2005 Smithfield-Smithfield, VA March 2006 Bryan Foods-West Point, MS January 2009 Meadowbrook-Rantoul, IL April 2010 Morrell-Sioux City, IA Triumph plans to build in East Moline, someday

55 Source: Ron Plain

56 Weekly Gross Pork Packer Margin, 200 Pound Carcass Calculation: Byproduct + Cutout – Negotiated net

57 Productivity Growth

58 U.S. Pigs Per Litter by Quarter

59 Source: USDA/AMS

60

61 Weekly Pork Production Source: USDA AMS

62 Prices

63 U.S. Retail Pork Prices,

64 Retail Pork Prices Source: BLS & USDA/ERS Record high

65 Source: USDA/AMS

66 Barrow & Gilt Negotiated Base Price Source: USDA Prior Day Slaughter reports $/cwt

67 Source: USDA Prior Day Purchased reports

68 Source: USDA/AMS

69 Pork Cutout and Hog Price, Weekly, Source: USDA/AMS

70 Hog Base Price as Percent of Pork Cutout, Weekly, Source: USDA/AMS

71 My Forecast

72 Commercial Hog Slaughter Forecast Million Head * actual Qtr * * Qtr * * Qtr * Qtr * Year * Change % - 0.1% + 0.2% +0.7% + 1.2% - 0.5% - 1.3% +2.5% - 0.1% +0.7% Note: Q1 10 & Q4 11 & Q3 12 have only 63 slaughter days

73 Iowa-Minn Hog Price Forecast Negotiated Base Price Per Carcass Hundredweight Qtr 1$57.23*$66.81*$78.95* $80-84 Qtr 2$57.32*$79.04*$91.80* $87-91 Qtr 3$51.43*$79.44*$95-98 $86-90 Qtr 4$54.98*$65.20*$80-84 $76-80 Year$55.23*$72.67*$86-88 $82-85 * actual price – prior day purchased

74 Iowa-Minn Live Hog Price Forecast Negotiated Live Base Price Equivalent Qtr 1$43.49*$50.78*$60.00* $61-64 Qtr 2$43.56*$60.07*$69.77* $66-69 Qtr 3$39.09*$60.37*$72-75 $65-68 Qtr 4$41.78*$49.56*$61-64 $58-61 Year$41.97*$55.19*$66-68 $62-65 * actual carcass price x 76%

75 U.S. Hog Net Carcass Price, Monthly Average, Thru Feb 2013 all hog futures contracts are above $80 per cwt

76 Major Uncertainties Domestic meat demand Exchange rates & exports Feed costs Governmental policy –Bio fuels –GIPSA –Animal rights

77 Any Questions?

78 Omaha Corn Prices, Weekly, Source: USDA/AMS

79 Frozen Pork, , Start of the Month

80 U.S. Pork Exports,

81 Change in Domestic Beef Demand Base Elasticity = Source: Ron Plain, University of Missouri

82 Sows Farrowed & Breeding Herd by Quarter

83 Sows Farrowed, Breeding Herd & Hog Slaughter by Quarter

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85

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87 Barrow & Gilt Negotiated Live Price Source: USDA Prior Day Purchased reports $/cwt

88 MPR Negotiated Carcass Hog Prices, WCB minus ECB, Weekly, Source: USDA/AMS Prior Day Purchased

89 U.S. Pork Exports, Jan-May 2011 Change From Year Ago Country 000 lbs Percent Japan 80, % Mexico 10, % S. Korea 157, % Canada 18, % China & HongKong 49, % Australia 17, % Russia 39, % TOTAL 315, % Source: USDA/ERS

90 2010 hog imports were down 10%

91 Source: USDA/ERS


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