International Beef and Cattle Market Outlook. August 11, 2016 Brett Stuart

Transcription

1 International Beef and Cattle Market Outlook August 11, 2016 Brett Stuart

2 As a rancher Weaned calves, sold to feedyards Perspective Focus on production efficiencies Market was the market Fast forward

3 Tokyo 2004 Japanese A-5 Wagyu: US$20,000/carcass The exploding carcass Maximum calf value is highly depended on global markets Perspective

4 My Message Today The North American cattle & beef markets are global The global beef markets are complex Recent commodity deflation was a global phenomenon But, market gravity is UP Short term outlook. Long term outlook is very good

5 N. America & Global Beef Markets U.S., Canada, and Mexico are among each other s largest beef and cattle trading partners And account for 90%+ of the world s grain-fed beef There is little differentiation in U.S./Canadian beef overseas Globally, grain-fed beef is it s own brand With large/rising demand

6 Source: GTIS, Agritrends

7 Global Meat is Diverse & Complex Global meat trade is a complicated web of politics, culture, and economics (in that order!) Perishability Bio-safety Fragmented markets Politically sensitive Culturally diverse 85% of U.S. chicken paws are eaten in China (for higher prices than leg quarters) 60 million peasant farmers raise 40% of China s pigs (half of the worlds pigs in China) Seoul, Korea Riots against U.S. beef, June 2008

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9 Source: China, Hong Kong Customs

10 Source: China, Hong Kong Customs, India* data includes Indian exports to Vietnam

11 Macro Factors FX Rates Global Economy Commodity Deflation

12 Source: FRED, U.S. Federal Reserve Bank

13 Global Economy Wobbly IMF has reduced 2016 forecasts, again Negative interest rates?? Big economy difficulties EU: Debt crises remain for Italy, Portugal, others Japan: edge of recession, 10-year GDP avg +0.6% China economy slowing Developing economy difficulties: Brazil recession deepens 3 rd world debt crisis, U.S. dollar pressure Global economic growth fuels meat demand!

14 Source: UN/FAO

15 Global Food Demand +78 million people per year (global growth) Global middle class to rise from 2 billion to 4.9 billion by 2030 Asia driving global food demand But also, less-developed nations globally New opportunities for furtherprocessed and consumer-ready food products

16 Source: UN/FAO

17 Global Beef Trends Supplies and Prices Canada Beef Exports

18 Source: USDA/FAS, UN/FAO

19 Source: USDA/FAS, AgriTrends

20 Source: USDA/FAS, UN/FAO U.S. expansion underway, Aussie expansion 2 years behind

21 Source: UN/FAO, Agriculture Outlook to 2025

22 Source: USDA/FAS

23 Source: GTIS, AgriTrends

24 Source: GTIS, AgriTrends

25 Outlook Items U.S. / Aussie Price Spread TPP The PORK Dilemma

26 Source: GTIS, AgriTrends

27 TPP Is ESSENTIAL to US/CAN Beef! Source: AgriTrends

28 TPP Is ESSENTIAL to US/CAN Beef! Source: AgriTrends

29 The Pork Dilemma 1. Rising U.S. production Soft expansion occurring New plants are seeking/encouraging more production 2. Chinese demand will stall Chinese expansion will occur But may be slowed by gov t reg Where will the EU, U.S., and Canadian pork go?

30 Source: China Customs

31 Source: Canada Customs, pork only, no variety meats

32 Source: USDA/FAS, WASDE

33 In Summary Global commodity deflation likely near a bottom (but may stay here for a while) Global pork & poultry supplies are heavy But GLOBAL beef supplies are more stable Record Aussie beef/cattle, cheaper U.S. and Canadian beef is winning in Asia The future looks bright Rising population and incomes Rising demand for grain-fed beef globally

34 Source: GTIS, AgriTrends The Future Looks GOOD

35 35 Denver, Colorado Thank You Brett Stuart

36 Oh, and one other thing

37 Enemies at home, and abroad We think it s better to price meats earlier in the chain, it s easier, - Dr. Maarten Hajer

38 Global Livestock Industries Must Unite Around a Consistent Message It is socially irresponsible to legislate yieldreducing practices Nearly a billion of our common population is food insecure; now is NOT the time to legislate costs and regulations that reduce supplies