Ontario: Building on Demand

January 2018

Outline

Demand Price

Outlook

Ontario Price

Spreads and Basis

Ontario Corn Fed

Trade

Demand Price Outlook

Ontario Price

Spreads and

Basis

Ontario Corn Fed

Trade

Source: qz.com

Source: munchies.vice.com

Source: munchies.vice.com

U.S. Meat Demand

9091

9293

94

9596

97

98

99

80

82

84

86

88

90

92

94

96

98

100

80 81 82 83 84 85 86 87 88 89 90

De

flat

ed

Me

at C

PI

Beef, Chicken and Pork Consumption

U.S. Meat Demand

9091

929394

959697

9899

00

0102

03

0405

0607080910

1112 13

14

15

16

17

80

85

90

95

100

105

110

115

80 82 84 86 88 90 92 94

Def

late

d M

eat

CP

I

Beef, Chicken and Pork Consumption

Canadian Beef Demand

90

9192

93 9495

9697 98 9900

0102030405

06 0708

0910

11

1213

14

1516

17e

80

90

100

110

120

130

140

150

24 26 28 30 32 34 36

De

flat

ed

CP

I Be

ef

Per Capita Consumption (Kilograms)

Nov. 9, 2015

Summary

Outline

Demand

Price Outlook

U.S. focus

Ontario Price

Spreads and

Basis

Ontario Corn Fed

Trade

U.S. Cattle Slaughter

0

5

10

15

20

25

30

35

40

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17e

He

ad M

illio

n

2018?

U.S. Cow Inventory

30

35

40

45

50

55

60

70 75 80 85 90 95 00 05 10 15

Mill

ion

he

ad

05

06 0708

091011

1213

14

15

16

17e

R² = 0.8214

21,000

22,000

23,000

24,000

25,000

26,000

27,000

28,000

29,000

20,000 20,500 21,000 21,500 22,000 22,500 23,000 23,500

00

0 H

ead

Fe

d S

lau

ghte

r

000 Head July Inventory

July Steer and Heifer Inventory to 1 Year Lagged Slaughter

04

05

06

07

0809

10

11

1213

14

15

16

17

4,500

5,000

5,500

6,000

6,500

7,000

28,500 29,000 29,500 30,000 30,500 31,000 31,500 32,000 32,500 33,000

Slau

ghte

r 0

00

Hea

d

January Cows 000 Head

Cow Inventory versus Cow Slaughter

U.S. Cattle Slaughter

0

5

10

15

20

25

30

35

40

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17e 18F

He

ad M

illio

n

U.S. Beef Supply vs Price

90919293

9495 9697

9899

0001

02

03 0405

06

0708

09

10

11

1213

14

15

16 17e18f

50

70

90

110

130

150

170

23 24 25 26 27 28 29

Live

Pri

ce U

S$/c

wt

Domestic Supply Billion Pounds (production-exports+imports)

Summary

Outline

Demand Price

Outlook

Ontario Price Spreads and

Basis

Ontario Corn Fed

Trade

Transport, Regional Supply

and Demand

Price differential,

spread, basis

Ontario-Alberta Price Spread 2008-2017

-6

-4

-2

0

2

4

6

8

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

$/c

wt

Ontario-Texas Price Spread

-25

-20

-15

-10

-5

0

5

10

JN FE MR AP MA JN JL AU SE OC NV DE

C$

/cw

t Li

ve

11-15 Average 2016 2017

Ontario-Texas Spread 2008-2017

-12

-10

-8

-6

-4

-2

0

2

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

$/c

wt

Alberta-Texas Spread 2008-2017

-15

-13

-11

-9

-7

-5

-3

-1

1

08 09 10 11 12 13 14 15 16 17

C$

/ckg

Eastern Canada Slaughter Steers and Heifers

0

100

200

300

400

500

600

700

800

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

00

0 H

ead

Ontario Fed Cattle Slaughter

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

He

ad

Eastern Canada Fed Cattle Slaughter Exports

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

He

ad

Summary

Outline

Demand Price

Outlook

Ontario Price

Spreads and

Basis

Ontario Corn Fed Trade

Growth and

Stability -

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017H

ead

Ontario Corn Fed Slaughter

0%

10%

20%

30%

40%

50%

60%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

OC

FB S

har

e

OCFB Share of Total Inspected Fed Cattle Slaughter

Eastern Canada-U.S. Beef Trade

0

20

40

60

80

100

120

140

160

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Mill

ion

kgs

Exports

Imports

Corn Fed Slaughter vs Beef Imports

0

20

40

60

80

100

120

140

160

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Mill

ion

Kgs

Im

po

rts

He

ad S

lau

ghte

red

Adding Value to Trading Partners

Japan, China, Saudi Arabia and UAE with

interest coming in from Indonesia,

Singapore and Korea.

Adding value

Added demand

Added seller leverage

Summary

Outline

Demand Price

Outlook

Ontario Price

Spreads and

Basis

Ontario Corn Fed Trade

U.S. Exports

0

1

2

3

4

5

6

7

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Bill

ion

USD

Canadian Beef Export Values

Eastern Canadian-U.S. Beef Export Value

0

100

200

300

400

500

600

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Mill

ion

C$

U.S. Beef Supply vs Price

90919293

9495 9697

9899

0001

02

03 0405

06

0708

09

10

11

1213

14

15

16 17e18f

50

70

90

110

130

150

170

23 24 25 26 27 28 29

Live

Pri

ce U

S$/c

wt

Domestic Supply Billion Pounds (production-exports+imports)

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Yes Justin you already told

me you were a feminist

If this clown starts crying

again, I’m outa here

Summary

Outline

Demand Price

Outlook

Ontario Price

Spreads and

Basis

Ontario Corn Fed

Trade Things I Hate

Social licence is more

important than ever. Governments may be able to issue permits but only communities can grant permission.”

Summary