1. U.S. Beef Export Update & Beef Market Situation in U.S. Erin Daley Economist, USMEF Seoul, Korea June 23, 2009

2. Topics for Discussion Global Beef Overview U.S. Beef Exports U.S. Beef Production & Prices Brief U.S. Pork Update

3. Global Beef Overview

4. Where was the beef import growth during 2008? Source: GTA, thousand M, includes variety meats Thous MT -16% +1% +14% +30% -29% -5% -7% -3% +10% Demand growth in Russia and Greater China. Decline in U.S. and EU imports. +2%

5. Who were the beef suppliers in 2008? Source: GTA, thousand MT, includes variety meats Thous MT -17% +28% +8% -20% -6% +21% +1% Largest export growth from U.S. *Overall, tight global beef supplies & high prices

6. What has changed compared to last year? Economic crisis: credit, currencies, demand, deflation Trade flows return to more historic pattern: drop in exports to Russia but continued growth to China Australia and Uruguay shipping beef to the U.S. again What hasn’t changed?? –Market access, tight global beef supplies

7. Falling Beef Production Source: USDA/USMEF; thousand MT, Carcass Weight Equivalent World Total 2009 F: 57.65 MMT, down 2% from 2008 Consumer demand not supporting high prices again in 2009

8. Brazil’s Falling Beef Exports Q1 2009: -18% 247,760 MT but some recovery in April Source: GTA/USMEF, metric tons

9. Australia’s Beef Exports: Jan-May Source: DAFF, metric tons Total: 382,016 MT, up 2.6 percent U.S.: +50%; Korea -29%

10. Falling Beef Prices, Modest Recovery Source: World Beef Report; Estimated carcass price (US$/lb) Decline in all prices but U.S. is again the highest-priced of the major exporters

11. U.S. Beef Exports

12. Source: USDA/USMEF Thousand MT2008: 984,712 MT, +28% $3.62 Billion, +38% 2009F: 962,680 MT, -2%

13. USDA Quarterly U.S. Beef Export Forecast Source: USDA/FAS; million pounds carcass weight equivalent 2008: +31% 2009F: -8%

14. U.S. Beef Exports to Top Markets Source: USDA/USMEF Forecast, thousand MT, includes variety meats +21%

15. Weekly Beef Exports through June 4 Top 6 Markets 1. Mexico -31% (68,995 MT) 2. Canada -16% (27,103 MT) 3. Greater China (Vietnam & Hong Kong) +28% (25,233 MT) 4. Japan +12% (22,219 MT) 5. Korea ~ (20,649 MT) 6. Taiwan -6% (9,950 MT) Total: -8% (181,191 MT)

16. Weekly U.S. Beef Exports to Korea Source: USDA/FAS, USMEF, Metric tons Fifth largest destination for U.S. beef through 6/4/09: 20,649 MT

17. Stronger U.S. Dollar has Made U.S. Beef Relatively More Expensive Source: Pacific Exchange Rate Service

18. U.S. Beef Production & Prices

19. Cattle Herd Expectations for 2009 Total cattle numbers down 1.6 percent or 1.54 million head, totaling 94.5 million head on Jan 1 2009. –Smaller than the recent low in 2004 and the smallest herd since 1959. Input costs have increased faster than prices; squeezing margins: crude +156%, pasture land +135%, corn +132%, nitrogen +128%, hay +90%, 550# steer +12% comparing prices in 2000 to those in 2008 In 2000, the annual cash cost/cow was $294/hd but in 2008 costs were estimated at $436/cow!! Source: Cattle-Fax Annual Outlook, Dec 2, 2008 and USDA

20. U.S. Beef Cow Inventory & Beef Production Source: USDA, January 1 Inventory Million headMillion MT

22. U.S. Cattle on Feed Source: USDA, thousand head May 2009: 10.8 million head, down 2.8% or 313,000 head from Feb 2008

23. U.S. Cash Corn Prices Source: USDA/ERS, Central Illinois, $/bushel, marketing year

24. USDA Quarterly U.S. Beef Production Forecast Source: USDA/FAS; million pounds carcass weight equivalent

25. Weekly U.S. Beef Production Source: USDA, million pounds 2009 YTD: -2.5%

26. Weekly U.S. Cow Slaughter Source: USDA, thousand head 2008: +8% (beef cows +12%) 2009 YTD: +2% (beef cows -6%)

27. Weekly U.S. Steer & Heifer Slaughter Source: USDA, thousand head 2009: -5% 2009YTD: Beef production -2.5%

28. Weekly U.S. Steer Carcass Weights Source: USDA, thousand head 2009: +2.2% or +18 pounds

29. Monthly Live Cattle Prices Source: USDA/NASS, dollars per 100 pounds

30. Annual U.S. Cattle Prices Source: USDA 2009F: $0.84-$0.87/pound $/pound

31. Cattle By-Product Value Source: ERS; cents per pound Falling global demand for hides & tallow

32. Quarterly U.S. Per Capita Beef Disappearance Source: USDA/FAS; retail pounds 2008: -4% to 62.8 lb/capita 2009F: +1% to 63.3 lb/capita

33. U.S. Meat Disappearance (Retail pounds per capita) Source: USDA, May 2009 estimate 2008 Per Capita consumption of all meats: decrease by 5.5 pounds and total 216.1 retail pounds 2009F: decline by another 4 #s

35. Weekly Choice Beef Cutout Source: USDA/AMS $/pound $1.41, down 10%

36. Weekly Choice Rib Primal Values Source: USDA/AMS $/pound $2.12, down 9%

37. Weekly Choice Loin Primal Values Source: USDA/AMS $/pound $2.27, down 4.5%

38. Weekly Choice Chuck Primal Values Source: USDA/AMS $/pound $1.04, down 11%

39. Weekly Choice Round Primal Values Source: USDA/AMS $/pound $1.11, down 16%

40. Weekly Short Rib Prices Source: USDA/AMS $/pound $1.80, down 10%

41. Weekly Chuck Roll Prices Source: USDA/AMS $/pound $1.49, down 12%

42. Weekly Striploin Prices Source: USDA/AMS $/pound $5.95, down 7.5%

43. Weekly Ribeye Prices Source: USDA/AMS $/pound $4.98, down 9%

44. Weekly Top Butt Prices Source: USDA/AMS $/pound $2.46

45. Weekly Tri-Tip Prices Source: USDA/AMS $/pound $2.47, up 3%

46. Weekly Shoulder Clod Prices Source: USDA/AMS $/pound $1.34, down 11%

47. Weekly Inside Round Prices Source: USDA/AMS $/pound $1.36, down 27.5%

48. Brief U.S. Pork Update

49. Weekly U.S. Pork Production Source: USDA/NASS Thousand Head2009 pork production down 2% from 2008 but still 8% larger than 2007

50. Weekly U.S. Sow Slaughter Source: USDA/NASS Thousand Head Sow slaughter down 12% from 2008

51. U.S. Pork and Pork Variety Meat Exports- Monthly Source: USDA/USMEF, metric tons May 2008 record: ~200,000 MT; will see H1N1 impact in May 2009 Jan-April 2009: 648,063 MT, +3% $1.495 billion, +6%

52. Weekly U.S. Lean Hog Cutout Values Source: USDA/AMS $/lb Aug 2008: Cut-out exceeds $90/cwt for first time June 2009: Cut-out value is ~25% lower than 2008

53. Daily U.S. Pork Cutout Values Source: USDA/AMS $/lb Low prices before H1N1, no seasonal spring price rally

54. Daily U.S. Pork Butt Primal Values Source: USDA/AMS $/lb 2008 values were around $0.90/lb compared to <$0.65/lb early June 2009 H1N1

55. Thank You! For More Information: Erin Daley edaley@usmef.org www.usmef.org

56. Extras

57. Korea’s Beef & Variety Meat Imports Source: World Trade Atlas, Metric tons U.S. market share 2008: 14% compared to 68% in 2003

58. U.S. Beef & Variety Meat Exports to Korea Source: USDA/USMEF, metric tons

59. U.S. Monthly Meat Exports to Mexico Source: USDA/USMEF, GTA, Metric Tons Jan ‘09: Record pork exports!

60. Beef Exports, Percent of Production Source: USDA/USMEF, includes variety meats 2003: 13% 2008: 11.6% Jan-March 2009: 9.5%

61. U.S. Beef & Variety Meat Exports to Greater China Source: USDA/USMEF, Metric tons Weekly exports +38 percent through 5/14/09, as 3 rd largest destination for U.S. beef

62. Beef Exports to Greater China* +76% +25% U.S. share total: 18-20% of grain-fed: >80% Source: GTA and USMEF estimates, metric tons, excludes variety meats *China, Hong Kong, Vietnam, Macau

63. China’s Beef Prices Source: PRC Ministry of Commerce and USMEF $/lb

64. Declining Cattle Inventory in Canada All cattle and calves in Canada as of January 1, 2009, totaled 13.2 million head, down 5 percent from the 13.9 million on January 1, 2008 All cows and heifers that have calved, at 5.63 million, was down 6 percent from the 5.97 million on January 1, 2008– fourth year of liquidation! Combined North America decline of 1.02 million head of beef cows All cattle and calves in the U.S. and Canada combined totaled 107.7 million head on January 1, 2009, down 2 percent from a year ago. All cows and heifers that have calved, at 46.6 million head, was down 2 percent from a year ago. Source: USDA/NASS

65. U.S. Beef Production Source: USDA 2008 and 2009 steady 2010: -2% Thousand MT

66. Monthly All Fresh Beef Retail Prices Source: ERS; dollars per pound Retail: $3.94/pound in April 2009 Up 2.6 percent from April 2008 Live steer prices down 2.8 percent Wholesale cutout down 1.6 percent

67. May Agricultural Prices Compared with a year ago, prices are higher for broilers. Prices are down from last year for milk, cattle, hogs, eggs, turkeys, and calves. Meat Animals: The May index, at 109, is down 0.9 percent from last month and 11 percent lower than last year. –The May hog price, at $44.20 per cwt, is up 10 cents from April but $11.10 lower than a year ago. –The May beef cattle price of $82.80 per cwt is down 70 cents from last month and $8.50 lower than May 2008.

68. May Agricultural Prices Dairy Products: The May index, at 90, is down 1.1 percent from a month ago and 36 percent lower than May last year. –The May all milk price of $11.70 per cwt is down 20 cents from last month and $6.60 from May 2008. Poultry & Eggs: The May index, at 142, is up 0.7 percent from April but 4.7 percent below a year ago. –The May broiler price, at 49.0 cents per pound, is up 4.0 cents from April and 1.0 cent above a year ago.

69. May Agricultural Prices Feed Grains & Hay: The May index is 177, up 5.4 percent from last month but 22 percent below a year ago. –The corn price, at $4.08 per bushel, is up 23 cents from last month but $1.19 below May 2008. –The all hay price, at $131 per ton, is up $2.00 from April but down $37.00 from last May.