1. Ron Plain D. Howard Doane Professor of Agricultural Economics University of Missouri-Columbia http://web.missouri.edu/~plainr/ Hog & Pork Outlook Midwest Outlook Louisville August 13, 2015

2. The size of the swine herd is driven by last year’s profitability

3. Iowa Farrow to Finish Profits, 1965-2014 Source: Lee Schulz, Iowa State University

4. Cost of Production - Live Source: Lee Schulz, Iowa State University $/cwt

5. Barrow & Gilt 51-52% Lean Live Price Source: USDA ERS $/cwt

6. Source: AMS - USDA 2014 hog slaughter was down 4.6%

7. Source: AMS - USDA 2014 pork production was down 1.5%

8. Cost of Production

9. U.S. Monthly Average Corn Price

10. Cost of Slaughter Hog Production, 2000-2015 Source: Iowa State University & University of Missouri

11. Cost of Slaughter Hog Production, 2000-2015 Source: Iowa State University & University of Missouri $ per Cwt Carcass

12. Meat Supply

13. Source: USDA/OCE, July 2015

14. Forecast Change in Meat Production ---Percent Change--- Type 2014-152015-16 Beef - 1.8% +4.3% Pork +7.6% +0.5% Chicken +5.0% +2.2% Turkey - 3.3% +8.0% All Meats +3.3% +2.6% Source: USDA-OCE WASDE, July 2015

15. Source: USDA/ERS

16. Meat Demand

17. Index of Retail Meat Demand Base Elasticity = - 0.75 Source: Ron Plain, MU

18. Index of Domestic Pork Demand Base Elasticity = - 0.75 Source: Ron Plain, MU

20. Retail Boneless Pork Prices Retail Prices, Monthly, 2001-2015 Source: USDA/ERS

21. International Trade

22. U.S. Meat Exports, 1988-2014 Source: USDA /ERS

23. Source: U.S. Meat Export Federation 2014 exports equaled $62.45/ hog slaughtered

24. U.S. Share of World Pork Trade Source: USDA-NASS

25. Pork Variety Meat Exports Source: U.S. Meat Export Federation

26. Pork Variety Meat Exports Source: U.S. Meat Export Federation

27. D OLLAR E XCHANGE R ATE

28. West Coast Dock Slowdown A labor dispute between the International Longshoreman and Warehouse Union and the Pacific Maritime Association slowed movement of goods through west coast ports. This caused serious problems for U.S. meat exporters during January and February of 2015. Containers of meat destined for export piled up and grew old at west coast docks. Roughly 21% of U.S. pork production, 10% of beef and 19% of chicken are exported each month, with most going out from the west coast. A new contract was agreed to on February 20, 2015.

29. Change in Export Pork Demand Base Elasticity = - 0.5 Source: Ron Plain, MU

30. U.S. Pork Imports & Exports as % of U.S. Pork Production, 2006-2015 Source: USDA ERS

31. U.S. Pork Exports, 2006-2015 Source: USDA ERS

33. Source: USDA - ERS

34. Productivity Growth

35. Pigs Per Sow Per Year, 1930-2014 USDA Hogs & Pigs Reports Source: USDA/NASS

36. Average U.S. Hog Carcass Weight, 1930-2014 Source: USDA/NASS

37. Annual U.S. Pork Production Per Sow, 1930-2014 1930-80 growth rate: 2.03% 1980-10 growth rate 2.70%

38. Porcine Epidemic Diarrhea Virus

39. PED Virus Identified in Europe in 1971 First cases in Asia in 1982 First cases in U.S. in April 2013 First identified in May Found on 8,898* hog farms by 11/2/14 Near 100% death loss in young pigs Not a zoonotic disease (no risk to people) Not a food safety concern *unknown amount of double counting

40. New PED & PDCo Virus Cases by Week NAHLN Reports Source: AASV & NAHLN

41. New PED Virus Cases by Week NAHLN Reports Source: AASV & NAHLN

42. U.S. Pigs Per Litter by Month Source: USDA - NASS

43. U.S. Pigs Per Litter by Quarter Source: USDA - NASS

44. Inventory Surveys

45. June Hog Inventory Source: USDA - NASS

46. U.S. Sows Farrowed by Quarter Source: USDA - NASS

47. Estimated Gilt Retention & Sow Loss, 2012-15 GG Cattle & Hog Fax

48. Actual & Predicted Change in B&G Slaughter U.S. Weekly F.I. Hog Slaughter, 2013-15

49. Production

50. Source: USDA/NASS 2014 slaughter lowest since 2006

51. Annual U.S. Pork Production, 1930-2014 Source: USDA/NASS

52. record Source: USDA - AMS 2014 average 284.4 lbs, up 8.4 from 2013

53. record Source: USDA - AMS

54. Source: AMS - USDA 2014 hog slaughter was down 4.6% YTD 2015 hog slaughter is up 8.4%

55. Source: AMS - USDA 2014 pork production was down 1.5% YTD 2015 pork production is up 7.7%

56. Packers

57. Source:

58. New Pork Packing Plants 1995 Seaboard opened Guyman plant 2006 Triumph opened St Joseph plant 2017 new plants in: Sioux City, IA – Seaboard/Triumph Coldwater, MI – Clemens Foods

59. Cargill & JBS Cargill has agreed to sell its pork operations: two packing plants - Ottumwa, IA & Beardstown, IL five feed mills - Missouri (2), Iowa, Arkansas & Texas four hog farms - Arkansas (2), Oklahoma & Texas to JBS USA Pork for $1.4 billion JBS USA Pork already has three hog slaughter plants - Marshalltown, Iowa; Worthington, MN and Louisville, KY. The sale is contingent on regulatory approval.

60. Prices

61. Source: USDA/ERS R ETAIL M EAT P RICES, M ONTHLY

62. Data Source: USDA-AMS, Compiled & Analysis by LMIC Livestock Marketing Information Center

63. Data Source: USDA-AMS Livestock Marketing Information Center

64. Data Source: USDA-AMS, Compiled & Analysis by LMIC Livestock Marketing Information Center

65. Forecast

66. Commercial Pork Production Forecast Million Pounds * forecast 2014 2015 2016 Qtr 1 5,784 6,161 6,115* Qtr 2 5,504 5,925 5,845* Qtr 3 5,424 5,990* 6,115* Qtr 4 6,131 6,505* 6,630* Year 22,84324,581*24,705* ------Change------ 14-15 15-16. + 6.5% - 0.7% + 7.6% - 1.4% +10.4% +2.1% + 6.1% +1.9% + 7.6% +0.5% Source: USDA – OCE, July 2015

67. Iowa-Minn Hog Price Forecast Negotiated Base Price Per Carcass Hundredweight 2013 2014 2015 2016 Qtr 1$80.17$95.15$64.10 $61-65* Qtr 2$89.33$115.67$72.84 $68-72* Qtr 3$95.37$111.79$68-72* $67-71* Qtr 4$82.36$ 88.84$59-63* Year$86.87$102.83$66-68* $64-68* * forecast price – prior day purchased

68. Net Slaughter Hog Price, Monthly Average 2002-2015

69. Profit

70. Iowa Farrow to Finish Profits, 2006-2015 Forecast Source: Ron Plain, University of Missouri

71. Hog Slaughter & Lagged Profit 1983-2015 Source:

72. Questions?