Where are we in the Cattle Cycle?

Transcription

1 Where are we in the Cattle Cycle? January 2016 Brenna Grant Canfax Research Services Over the next five years will the beef industry be the pot at the end of the rainbow?

2 US $ per cwt Fed prices have peaked AB Fed $189/cwt +24% in 2015 Alberta vs US Fed Steer Prices $180 $160 AB Fed Steer US Fed Steer $140 $120 $100 $80 $60 Source: CanFax, Cattle-fax

3 Million Tonnes Global Beef Prod 15p -2%; 16f +1.3% US +5%, Aus 2%, BZ -3%, IN +2%, NZ +2% p 2016f Global Beef Production Source: USDA, FAS

4 p Global Beef Prod is not all equal Growth in beef production since ,000 2,500 2,000 1,500 1, ,000-1,500-2,000 Brazil India Australia New Zealand US Source: USDA, FAS, PSD

5 Million Head US Expansion!! Implications for U.S. Beef Cow Inventory January p Source: USDA, Cattlefax

6 Australia, continued drought has supported prod & exports in 2015

7 International Consumer: Population & Income growth Food Safety 140 International Beef Index (2000=100) 9 billion by 2050 An additional 3 billion middle class by Source: Cranfield 2012, CanFax Research Services Urban population to increase from 50% to 70% FAO projects a 60% increase in consumption of meat, milk and eggs

8 Demand

9 1000 MT CWE Chinese beef consumption continues to grow, but domestic production is steady p 2016f Official Imports 1,000 MT CWE China Beef Disposition Production Consumption Imports

10 China beef imports down 2015 (antismuggling), to rebound in 2016

11 Domestic Consumer Resilience Strongest demand in 25 years Food Safety Consumer Preferences (convenience, specific attributes) Relative Price of Alternative Proteins & cuts Health Perceptions Quality & Consistency Canadian Retail Beef Demand Index (2000=100) Source: CanFax Research

12 Health perceptions can we reverse the 1980s? Canadian Retail Beef Demand Index (2000=100) Atkins, South Beach BSE Global Financial Crisis Paleo Diet, Big Fat Surprise XL E.coli Recall Finely Textured Lean Beef US Dietary Guidelines Source: CanFax Research

13 Change in the conversation; Health perceptions changing? Previous recommendations that cholesterol intake be limited to 300 mg/day will not be continued because available evidence shows no appreciable relationship between consumption of dietary cholesterol and serum cholesterol levels Dietary Guidelines Advisory Committee

14 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12 May-13 Oct-13 Mar-14 Aug-14 Jan-15 Jun-15 Nov-15 Beef is still more expensive than PK and PY vs. history Relative Price Ratios of Meat at Retail Beef/Pork Beef/Poultry In fact, today s quality driven consumers seem willing to pay more for beef as long as the eating experience justifies the price, according to Daryl Tatum, professor of meat safety and quality at Colorado State University Source: Statistics Canada

15 Canadian Supplies

16 Carcass weight (Mil lbs) Total Production -9% in 2015p Domestic -3%, Export -33% Canadian Beef Production Live Slaughter Exports Domestic Slaughter Source: Canfax Research f

17 Cow marketings down 19% in 2015 Culling rate of 10.6% Canadian Beef Cow Culling Rate 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 20 year average = 11% Source: Canfax Research

18 Heifer slaughter at 0.61 lowest since % 75% 70% 65% 60% 55% 50% 45% 40% 35% 30% Canadian Heifer Slaughter Ratio 20 year average = 69% 20 year average = 60% 15 yr avg 44% Source: AAFC, CBGA, CanFax, Stats Canada

19 Million Head Canadian expansion in 2016? Weather permitting Canadian Beef Cow Numbers January 1 Peak Liquidation Consolidation Expansion 2.5 Source: Statistics Canada

20 $/cow Profitability, equity rebuilt, infrastructure investments made $800 $700 $600 $500 $400 $300 $200 $100 $0 -$100 -$200 Alberta Cow/Calf Returns Source Canfax Research

21 What to expect in ?

22 Deflated Price - $kg/ (1992=100) Inelastic Demand will contribute to market volatility $12 Canadian Beef Demand $11 $10 $9 $ $ Source: Statistics Canada Consumption - kgs/person

23 CDN $/cwt live Market Volatility, seasonal price risk Canadian Fed Price Projections 2016 $185 CDN Proj. Annual Avg Season Proj $180 $175 $170 $165 $160 $155 Source, CME Canfax Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

24 Global Oil Glut: US export tariffs, Iran sanctions. $25-48/barrel avg $37

25 Cdn $ - US Terms 69 = $169/cwt dn 8% 59 = $201/cwt up 10% $1.10 Monthly Canadian Dollar $1.00 $0.90 $0.80 $0.70 $0.60 Source: Bank of Canada

26 p Thousand Head COOL is gone! Feeder Cattle Exports AB SK MB Source: Statistics Canada

27 Thank-you