Town Hall Meeting February 9 th , 2012 Pipestone, MB
CCA Town Hall Meeting initiative sponsored by
1. President’s Report Martin Unrau, Vice President
CCA Priorities 1. Restoring Industry Profitability • Competitiveness • Market Access • Value creation • Innovation 2. Advocacy - Positive Public Attitudes • Positively positioning the importance of cattle producers and the beef cattle industry: and protecting against numerous threats and disparagement 3. Crisis Management Preparedness
CCA Expenses By Activity Ottawa Communication/Issues Advocacy/Domestic Ag /Crisis management Executive Policy 5% 14% 6% Environment Market Services 5% 4% Animal Health Admin - 5% 7% Value Creation 4% Annual Animal Care Meetings 2% 4% Foreign Trade/5 Nation Legal-trade 4% 9% US Trade Advocacy 31%
$1 National Check-off Allocations Canada Administration 2% Provincial 13% BCRC 15% CBI 70%
2010-2011 Successes • Canadian supply/demand • Canada Beef Inc. (CBI) • Beef Cattle Research Science Cluster • Mandatory Country of Origin Labelling (mCOOL) • South Korea • Beef InfoXchange System (BIXS) • Verified Beef Production (VBP) participation • Cattlemen’s Young Leaders (CYL) National Launch
2. Canfax Market Review & Outlook Andrea Brocklebank, Research Manager
‘10 cow marketings ↓ 6.5%, 797,000 head ’11 cow marketings ↓ 18%, 652,000 head Canadian Slaughter Cow Marketings 1200 Exports Slaughter 1000 800 Thousand Head 600 400 200 0 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 Source: CBGA, AAFC, Statistics Canada
Cow prices ↑ $16 to average $70/ cwt – $0.26 over the U.S. Alberta vs US Slaughter Cow Prices (Cdn $) AB D1,2 Cows US Utility Cow $100 $80 Cdn $ per cwt $60 $40 $20 $0 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Source: CanFax, Cattle-fax
‘10 fed marketings ↑ 5% to 3.4 mill head ’11p marketings ↓ 14% to 2.9 mill head Canadian Fed Cattle Marketings Exports Slaughter 4000 3500 3000 Thousand Head 2500 2000 1500 1000 500 0 85 87 89 91 93 95 97 99 01 03 05 07 09 11 Source: CBGA, AAFC, Statistics Canada
‘10 Prod ↑ 3% with larger fed marketings ’11p Prod ↓14% lower fed and non -fed marketings Canadian Beef Production Live Slaughter Exports Domestic Slaughter 4000 Carcass weight (Mil lbs) 3500 3000 2500 2000 1500 1000 500 0 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 Source: Canfax Research
Cattle
July ’11 Beef cow inventories ↓ 2% to 4.2 million Total inventories ↓ 0.8% to 13.8 million Canadian Beef Cow Inventory July 1 6.0 5.5 5.0 Million Head 4.5 4.0 3.5 3.0 2.5 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 Source: Statistics Canada
Heifer retention up 6.7% but still 12% below the historic average of 752,000 head Canadian Beef Heifers (Breeding) July 1 1.10 1.00 0.90 Million Head 0.80 0.70 0.60 0.50 76 79 82 85 88 91 94 97 00 03 06 09 Source: Statistics Canada
2011 culling rates at 9.6%, supporting expectations of herd stabilization and consolidation Canadian Beef Cow Culling Rate 20% 15 yr average = 10% 15% 10% 5% 0% 80 83 86 89 92 95 98 01 04 07 10 Source: CanFax
U.S. cattle herd continues to contract with drought and high feed costs driving reductions U.S. Beef Cow Inventory January 1 50 45 Million Head 40 35 30 25 72 75 78 81 84 87 90 93 96 99 02 05 08 11 Source: USDA, Cattlefax
COF number’s similar to year ago However, placements will change marketings Alberta and Saskatchewan Cattle on Feed 5yr avg 2011 2012 1100 1000 900 Thousand Head 800 700 600 500 Jan 1 Feb 1 Mar 1 Jul 1 Aug 1 Sep 1 Oct 1 Apr 1 May 1 Jun 1 Nov 1 Dec 1 Source: CanFax COF
Reduction in cattle supplies has resulted in reduced fed (↓30%), non -fed (-36%) and feeder (↓56%) cattle exports Canadian Cattle Exports 1800 Feeder 1600 Slaughter 1400 1200 Thousand Head 1000 800 600 400 200 0 84 86 88 90 92 94 96 98 00 02 04 06 08 10 Source: Statistics Canada, AAFC, CanFaz
2011 Avg $106/cwt, up $17 from 2010 Surpassed previous annual peak of $103/cwt Alberta Weekly Fed Steer Price 4 yr avg 2011 2012 2001 $130 $120 $110 Cdn $ per cwt $100 $90 $80 $70 1 6 11 16 21 26 31 36 41 46 51 Source: Canfax
Changing Seasonality 2011 average basis $7.70/cwt Alberta Fed Steer Basis Alberta/Nebraska in Cdn $ (Cash to Cash) 5 yr avg (98-02) 3 yr avg 2011 2012 $5 $0 Cdn $ per cwt ($5) ($10) ($15) ($20) 1 5 9 13 17 21 25 29 33 37 41 45 49 Source : Canfax
The dollar dropped below par in Sept 2011 but is expected to continue to trade within the range of $0.95 - $1.00 Weekly Canadian Dollar 4 yr avg 2011 2012 $1.10 $1.05 Cdn $ - US terms $1.00 $0.95 $0.90 $0.85 1 6 11 16 21 26 31 36 41 46 51 Source: Bank of Canada
Oil prices have stabilized between $100- 115/barrel.
Feed grain price volatility! Competition for acres will see prices rally this spring FEED GRAIN PRICES Lethbridge and Omaha in barley equivalents $350 Lethbridge Barley $300 Omaha Corn $250 Cdn $/tonne $200 $150 $100 $50 Aug-97 Aug-98 Aug-99 Aug-00 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Source: Alberta Ag, Cattle-Fax
Calf prices in 2011 averaged $151.50/cwt up $30 from 2010 and just below ‘00 & ‘01 levels Central Alberta Weekly 550 lb Steer Price 4 yr avg 2011 2012 2001 $190 $175 Cdn $ per cwt $160 $145 $130 $115 $100 1 5 9 13 17 21 25 29 33 37 41 45 49 Source: CanFax
Feeders in 2011 avg $123/cwt up $11 from 2010 Central Alberta Weekly 850 lb Steer Price 4 yr avg 2000 2011 2012 $160 $150 $140 Cdn $ per cwt $130 $120 $110 $100 $90 1 5 9 13 17 21 25 29 33 37 41 45 49 Source: CanFax
Demand
Domestic Consumption & Demand Canadian per Capita Meat Consumption • Per capita beef consumption Beef Pork Chicken declining since 2003 at new low 40 of 20 kgs/capita kgs/person 30 – Poultry consumption has leveled off; pork 20 consumption falling 10 • Beef Demand Index relatively 80 83 86 89 92 95 98 01 04 07 10 Source: Statistics Canada Canadian Beef Consumption steady 1,200 Canada Import • Consumer resilience being Thousand Tonnes 1,000 tested by higher protein prices 800 • Market share at 22% still below 600 historic 27% 400 200 0 90 92 94 96 98 00 02 04 06 08 10 Source: Statistics Canada
Cutouts are recovering slowly with improved demand and tighter supplies Canadian AAA vs. U.S. Choice Cutout Value AAA Choice 210 190 Can $/cwt 170 150 130 Jan-05 Sep-05 Jan-06 Sep-06 Jan-07 Sep-07 Jan-08 Sep-08 Jan-09 Sep-09 Jan-10 Sep-10 Jan-11 Sep-11 Jan-12 May-05 May-06 May-07 May-08 May-09 May-10 May-11 May-12 Source: CMC, USDA
‘10 Imports ↓ 2.5% - 178,000 tonnes ’11 Imports ↑ 16% - non- NAFTA imports ↓13% Canadian Beef Imports Other Uruguay Argentina N.Zealand Aust U.S. 300 250 Thousand Tonnes 200 150 100 50 0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11p Source: Statistics Canada
Export market share reached 50% in 2010 the 4 th highest on record before falling in 2011 to 45% % Total Beef Production Exported (incl slaughter cattle exports) 70% 58% 57% 60% 50% 50% 49% 49% 49% 48% 48% 47% 47% 45% 45% 43% 43% 50% 41% 40% 39% 39% 36% 40% 26% 26% 30% 20% 19% 15% 14% 13% 13% 20% 11% 10% 0% 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11p Source: CanFax, AAFC, Statistics Canada
’10 exports ↑ 8% 407,500 tonnes $1.42 billion ’11p ↓ 22% volume, ↓ 13% in value Canadian Beef Exports Other Russia HK&M Taiwan S. Korea Japan Mexico U.S. 600 500 Thousand Tonnes 400 300 200 100 0 90 92 94 96 98 00 02 04 06 08 10 Source: Statistics Canada, AAFC, CFIA - Product Weight
Global Opportunities • Emerging Countries • Growing disposable incomes - increase consumption of food • Growing populations • Smaller beef supplies are seeing prices respond Beef Import growth by Country/Region Global Beef Consumption 2010-2019 Estimates 2010-2020 9,000 80,000 8,800 229 70,000 8,600 92 27 60,000 99 103 1,000 tonnes, CWE 8,400 Million Tonne 50,000 8,200 8,597 652 -247 40,000 8,000 Non-OECD 30,000 7,800 7,600 20,000 7,642 7,400 OECD 10,000 7,200 - 7,000 10 11 12 13 14 15 16 17 18 19 2010 EU* MENA USA Japan S.Korea Russia Others 2020 Source: GIRA Source: OECD/FAO Agricultural Outlook
The Competition … • Major volume exporters - Brazil, Australia, USA, & Canada • High reliance on trade - New Zealand, Uruguay, Australia & Canada In a global marketplace everyone is responding to the same market signals - Brazil, Australia, Argentina and Canada all entering a growth phase. Global Beef Production 60 58 56 54 Million Tonnes 52 50 48 46 44 42 40 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: USDA, FAS
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