International Beef and Cattle Market Outlook August 11, 2016 - - PowerPoint PPT Presentation

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International Beef and Cattle Market Outlook August 11, 2016 - - PowerPoint PPT Presentation

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International Beef and Cattle Market Outlook August 11, 2016 Brett Stuart Perspective As a rancher Weaned calves, sold to feedyards Focus on production efficiencies Market was the market Fast forward Perspective

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International Beef and Cattle Market Outlook

August 11, 2016

Brett Stuart

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Perspective

  • As a rancher…
  • Weaned calves, sold

to feedyards

  • Focus on production

efficiencies

  • Market was the market
  • Fast forward…
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Perspective

  • Tokyo 2004
  • Japanese A-5 Wagyu:

US$20,000/carcass

  • The “exploding

carcass”

  • Maximum calf value is

highly depended on global markets

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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
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  • N. America & Global Beef Markets
  • U.S., Canada, and Mexico are among each
  • ther’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

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Source: GTIS, Agritrends

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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

Seoul, Korea – Riots against U.S. beef, June 2008 60 million peasant farmers raise 40% of China’s pigs (half of the worlds pigs in China) 85% of U.S. chicken “paws” are eaten in China (for higher prices than leg quarters)

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Source: China, Hong Kong Customs

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

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Macro Factors

FX Rates Global Economy Commodity Deflation

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Source: FRED, U.S. Federal Reserve Bank

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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 – 3rd world debt crisis, U.S. dollar pressure

  • Global economic growth fuels meat demand!
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Source: UN/FAO

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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 further- processed and consumer-ready food products

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Source: UN/FAO

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Global Beef Trends

Supplies and Prices Canada Beef Exports

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Source: USDA/FAS, UN/FAO

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Source: USDA/FAS, AgriTrends

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Source: USDA/FAS, UN/FAO

U.S. expansion underway, Aussie expansion 2 years behind

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Source: UN/FAO, Agriculture Outlook to 2025

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Source: USDA/FAS

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Source: GTIS, AgriTrends

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Source: GTIS, AgriTrends

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Outlook Items

U.S. / Aussie Price Spread TPP The PORK Dilemma

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Source: GTIS, AgriTrends

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TPP Is ESSENTIAL to US/CAN Beef!

Source: AgriTrends

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Source: AgriTrends

TPP Is ESSENTIAL to US/CAN Beef!

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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?

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Source: China Customs

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Source: Canada Customs, pork only, no variety meats

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Source: USDA/FAS, WASDE

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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

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Source: GTIS, AgriTrends

The Future Looks GOOD

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Denver, Colorado

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Thank You

Brett Stuart

bstuart@globalagritrends.com 303-803-8716

www.globalagritrends.com

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Oh, and one other thing…

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Enemies at home, and abroad…

“We think it’s better to price meats earlier in the chain, it’s easier,” - Dr. Maarten Hajer

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Global Livestock Industries Must Unite Around a Consistent Message

“It is socially irresponsible to legislate yield- reducing practices” “Nearly a billion of our common population is food insecure; now is NOT the time to legislate costs and regulations that reduce supplies”