2007 AAEA Livestock Outlook Symposium

Transcription

1 27 AAEA Livestock Outlook Symposium Ron Plain Professor of Agricultural Economics University of Missouri-Columbia Hog Price Outlook Production Efficiency 1

2 Head 9.5 Pigs Per Litter, 193- USDA Hogs & Pigs Reports Litters Per Sow Per Year, 193- Litters

3 Average U.S. Hog Carcass Weight, 193- Pounds Annual U.S. Pork Production Per Sow, 196- Pounds 4,2 3,7 3,2 2,7 2,2 1,7 1,

4 Annual U.S. Pork Production Per Sow, 196- Pounds 4,2 3,7 3,2 2, growth rate: 1.3% growth rate 2.8% 2,2 1,7 1, Hog Cycle 4

5 % change from year ago U.S. Commercial Hog Slaughter Quarterly Data, % change from year ago Terminal Market Barrow & Gilt Price Quarterly Data

6 Hog Price Flexibility Quarterly Data % ch T Mkt B&G price / % ch com hog slt In 8 of last 15 quarters, price & slaughter moved in the same direction Cost of Production 6

7 $ Per Live Cwt Cost of Slaughter Hog Production Iowa State University Calculations, Marketing Month Source: John Lawrence, Iowa State University $ Per Bu JAN OMAHA CORN PRICES Weekly APR JUL OCT Avg

8 Ethanol Capacity Growth 12 1 billion gal Jan. 1 capacity Under construction Source: Renewable Fuel Association website Corn Milled for Ethanol Billion Bushels % corn for ethanol: -1: 6% -6: 14% -7: 2% 27-8: 26% Forecast 8

9 Hog Weights Pounds 28 Barrow & Gilt Carcass Weights Prior Day Slaughter Weekly Average JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 9

10 International Pork Trade Thousand Metric Tons U.S. Pork Exports was the 15th consecutive record year for U.S. exports 1

11 $/hog slt 3 Value of U.S. Pork Exports Pork ByProduct Iowa Farrow to Finish Profits, $ Per Head 5 Iowa State University Calculations consecutive months of profit, longest of record Source: John Lawrence, Iowa State University 11

12 Billion Pounds U.S. Commercial Pork Production Source: USDA/NASS 3.5 U.S. Pork Exports Carcass Weight Equivalent 3 Billion Pounds Source: USDA/ERS 12

13 1.4 U.S. Pork Imports Carcass Weight Equivalent Billion Pounds Source: USDA/ERS Billion Pounds U.S. Production + Imports - Exports

14 Pounds 55 U.S. Per Capita Pork Consumption Source: USDA/ERS Cents Per Pound 29 U.S. Retail Pork Price Source: USDA/ERS 14

15 Pork Trade Overview The steady decrease in US pork imports and increase in pork exports has caused per capita US pork consumption to decline. Thus, hog producers were able to enjoy three consecutive years with record hog slaughter and profitable prices. : imports down 3.4% & exports up 12.4% Mil. lbs. 35 U.S. Pork Imports & Exports, -27 Monthly Carcass Weight Equivalent 3 25 Imports Exports % of U.S. pork production was exported Jan- Jan-1 Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan 7 15

16 U.S. Pork Exports, Jan-May 27 Change from year ago Country lbs Percent Japan + 48, % Mexico - 79, % Canada + 3, % S. Korea + 4, % Russia - 23, % China & HK + 3, % Taiwan - 13, % TOTAL - 37,29-2.9% Live Hog Trade 16

17 Pigs Born in Canada, Thousands JFM96 JFM97 JFM98 JFM99 JFM JFM1 JFM2 JFM3 JFM4 JFM5 JFM6 JFM7 Thousands 3 U.S. Pig Crop, DJF 96 JJA 96 DJF 97 JJA 97 DJF 98 JJA 98 DJF 99 JJA 99 DJF JJA DJF 1 JJA 1 DJF 2 JJA 2 DJF 3 JJA 3 DJF 4 JJA 4 DJF 5 JJA 5 DJF 6 JJA 6 DJF 7 17

18 Growth in U.S.-Canadian Pig Crop (million head) Canada U.S.A During the past decade, 74% of the increase in U.S.-Canadian pig production took place in Canada. Source: USDA/FAS Exchange Rate: Can $ Per US $ Q1 9 Q1 91 Q1 92 Q1 93 Q1 94 Q1 95 Q1 96 Q1 97 Q1 98 Q1 99 Q1 Q1 1 Q1 2 Q1 3 Q1 4 Q1 5 Q1 6 Q1 7 18

19 imports: slt hogs down 1% & feeder pigs up 11% Head per mo. U.S. Hog Imports from Canada 7, 6, Slaughter Hogs Feeders Pigs 5, 4, 3, 2, 1, Inventory Reports 19

20 Hog Inventory Reports U.S. June Canada April All Hogs & Pigs Kept for Breeding Kept for Marketing Under 6 lbs lbs lbs lbs. and over 13. Sep-Nov Farrowings Dec-Feb Farrowings Mar-May Farrowings Jun-Aug Farrowing Intentions 11.6 Sep-Nov Farrowing Intentions 1.4 Sows Farrowed-U.S. & Canada Combined % change from yr. ago JFM99 JAS99 JFM JAS JFM1 JAS1 JFM2 JAS2 JFM3 JAS3 JFM4 JAS4 JFM5 JAS5 JFM6 JAS6 JFM7 2

21 Estimated Gilt Retention & Sow Loss, -27 GG Cattle & Hog Fax Thousand Head Per Week Gilts Retained Sow Loss '6 Feb Mar Apr Ma Jun Jul Au Sep Oct Nov Dec '7 Feb Mar Apr Ma Jun Slaughter Capacity 21

22 The Bryant Foods plant in West Point, MS, closed in March Head 43 Daily Hog Slaughter Capacity Demand 22

23 % Change Year Ago Change in Export Pork Demand Base Elasticity = -.5 Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jun Nov Apr 1 8 Change in Export Pork Demand Base Elasticity = -.5 % change Yen/$ % Change fromyear Ago May Sep May Sep 21 May Sep 22 May Sep 23 May Sep 24 May Sep May Sep May Sep 27 May Yen Per $

24 Cents/lb Retail Price of Pork Record high % change from year ago > Jun Nov Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Change in Pork Demand Base Elasticity = -.75 Apr Sep Feb Jul Dec May Oct Mar Aug > Jun Nov 27 Apr 24

25 % change from year ago 17 Change in Hog Demand Base Elasticity = > Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug > Jun Nov Apr Hog Prices 25

26 $ per cwt. 85 BARROW AND GILT BASE PRICES Iowa - Minnesota, Carcass Basis, Weekly Avg JAN APR Source: USDA Prior Day Purchased reports JUL OCT $ per cwt. 8 BARROW AND GILT NET PRICES National, Carcass Basis, Weekly Avg JAN APR Source: USDA Prior Day Slaughtered reports JUL OCT 26

27 Barrow & Gilt Negotiated Live Price Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: USDA Prior Day Purchased reports Major Unknowns Circovirus vaccine & death losses China & pork exports Weather 27

28 My Forecast Commercial Hog Slaughter Forecast Million Head Qtr * * Change % +2.4% Qtr * * % +1.2% Qtr * % +1.2% Qtr * % +1.% Year * % +1.4% Note: Q4 7 & Q3 8 have 1 more slaughter day *actual 28

29 Iowa-Minn Hog Price Forecast Negotiated Base Price Per Carcass Hundredweight Qtr 1 $56.37* $6.65* $61-65 Qtr 2 $65.41* $69.6* $64-68 Qtr 3 $68.24* $62-66 $61-65 Qtr 4 $6.76* $57-61 $56-6 Year $62.68* $62-65 $6-64 *actual price prior day purchased Iowa-Minn Live Hog Price Forecast Negotiated Base Price Per Live Hundredweight Qtr 1 $41.71* $44.88* $45-49 Qtr 2 $48.4* $51.5* $47-51 Qtr 3 $5.5* $46-5 $45-49 Qtr 4 $44.96* $42-46 $42-45 Year $46.38* $46-48 $45-48 *actual price 74% of carcass price 29

30 Forecast Summary Farrowings -2% above year-ago Continued 2-3% productivity growth More imports of Canadian hogs/pigs Possible increase in pork exports Stable domestic demand Rising feed cost Any Questions? 3