Outlook for the U.S. Livestock and Poultry

Sectors in 2012

Presented By

Shayle D. Shagam

World Agricultural Outlook Board, USDA

USDA Outlook Forum

Washington, D.C.

February 24, 2012

Situation Facing Livestock and Poultry Producers in 2012

• Higher feed prices for most of year– Corn: $5.80-$6.60/bu in 2011/12

$5.18 in 2010/2011 – Soybean meal: $290-$320/ton in 2011/12

$345 in 2010/2011

• Feed prices should moderate moving into 2012/13 crop year

Early Year Feed Costs Eat into Gains in Livestock and Poultry Prices

0

10

20

30

40

50

60

2002 2004 2006 2008 2010 2012*

Rat

io

Cattle/Corn Hog/Corn Broiler/Feed

* Forecast

Highlights for Livestock & Poultry in 2012

• Offsetting meat production– Beef, lamb, and broilers lower– Pork and turkey higher

Red Meat and Poultry Production Will Decrease 1.8 Percent in 2012

* Forecast

Highlights for Livestock & Poultry in 2012

• Offsetting meat production

• Continued strength in exports but no aggregate growth

Factors Affecting Exports

• Rising incomes fuel increased demand for meat protein. – World GDP, at about 2-3 percent in

2012, slower than 2011.

• Weaker U.S. dollar will support meat exports.– Smaller decline than 2011.

• Production growth in some markets increases competition.

Total Per Capita Retail Basis Meat Disappearance in 2012 at 198 Pounds

40

50

60

70

80

90

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

*

Pou

nds

per

capi

ta

Beef Pork Broilers* Forecast

Pork Will Gain Pricing Advantage at Retail

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1998 2000 2002 2004 2006 2008 2010 2012*

Ret

ail

Pri

ce R

atio

s

Beef/Chicken Beef/Pork Pork/Chicken

* Forecast

Beef Production to Decline to 25.1 Billion Pounds in 2012

22

23

24

25

26

27

28

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*

Bil

lio

n P

ou

nd

s

* Forecast

Cattle Herd at 90.8 Million on Jan 1, 2012; Further Contraction Likely

80

85

90

95

100

105

110

115

120

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

*

Mil

lio

n H

ead

* Forecast

Beef Cows 3 Percent Lower Jan. 1, 2012. Lowest since 1962

05

101520253035404550

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012*

Beef Cows Dairy Cows Calf Crop

Mil

lio

n H

ead

* Calf Crop Forecast

10

15

20

25

30

35

40

45

50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Outside Feedlots On-Feed

Cattle for Feeding Lower on January 1M

illi

on

Hea

d

-4.0%

+0.8%

-2.3%

Cattle Imports Decline to 2.05 Million Head In 2012

Cattle and Calves, Jan.1

0

5

10

15

20

25

2006 2008 2010 2012

Canada Mexico

* Forecast

Mil

lio

n H

ead

U.S. Cattle Imports

0.0

0.5

1.0

1.5

2.0

2.5

2006 2008 2010 2012*

Canada Mexico Total

Carcass Weight Growth Dampened by Light Placement Weights

650

670

690

710

730

750

770

790

2002 2004 2006 2008 2010 2012*

Placement Carcass

* Forecast

Po

un

ds

2011 Beef Exports at Record 2.79 Billion Pounds, 2012 Slightly Lower

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2003 2005 2006 2007 2008 2009 2010 2011 2012*

Bil

lio

n p

ou

nd

s

Mexico Canada Japan South Korea Vietnam Other

* Forecast

Top 4 Markets Equal 94% of exports

Top 4 Markets Equal 62% of exports

2012 Beef Imports Increase 2 Percent to 2.1 Billion Pounds

1.5

2.0

2.5

3.0

3.5

4.0

2002 2004 2006 2008 2010 2012*

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

Imports Cow Slaughter

* Forecast

Bil

lio

n P

ou

nd

s

Mil

lio

n H

ead

Change in U.S. Import Unit Value for Fresh, Chilled, and Frozen Beef

-20

-15

-10

-5

0

5

10

15

20

25

2009 2010 2011

Pe

rce

nt

US$ AU$ CA$ NZ$

US Share of Major Trader Exports

0

10

20

30

40

50

60

70

80

90

2008 2009 2010 2011

Australia Canada NZ

Weak Dollar Mutes Price Signals

Cattle Prices Rise in 2012, to Average$121 to $129 per cwt

5-Area Steer, All Grades

60

70

80

90

100

110

120

130

140

QI QII QIII QIV Annual

2010 2011 2012*

* Forecast

Do

llar

s p

er c

wt

Pork Production Will Increase to 23.2 Billion Pounds in 2012

0

5

10

15

20

25

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*

* Forecast

Bil

lio

n P

ou

nd

s

Hog Inventory Increased to 65.9 Million Head on December 1, 2011

Inventory on December 1, Preceding Year

57

59

61

63

65

67

69

1999 2001 2003 2005 2007 2009 2011 2013*

Mil

lio

n H

ead

* Forecast

Only Modest Growth in Sows Farrowing

2.5

2.6

2.6

2.7

2.7

2.8

2.8

2.9

2.9

3.0

3.0

QI QII QIII QIV

2010 2011 2012*

* Quarters 1-2 NASS Reported , Quarters 3-4 Forecast

Mil

lio

n H

ead

+0.8%-0.9%

+0.9% +0.9%

8.99.09.19.29.39.49.59.69.79.89.9

10.010.110.210.3

2007 III 2008 III 2009 III 2010 III 2011 III 2012* III

Growth in Pigs per Litter Remains About Same

*Forecast

Hea

d

2.2 %

1.7 %

1.5 %

2.1 %

1.9 %

1.8 %

Slow Increase in Canada’s Hog Inventory, Weak Dollar Will Limit U.S. Hog Imports

0

2

4

6

8

10

12

14

16

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*20

21

21

22

22

23

23

Hog inventory U.S. Imports Canadian FI & Prov Slaughter

* Slaughter and Imports Forecast

Mil

lio

n H

ead

Mil

lio

n H

ead

2011 Pork Exports Were Record 5.19 Billion Pounds

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2005 2006 2007 2008 2009 2010 2011 2012*

Bil

lio

n l

bs

.

Japan Mexico Canada South Korea China/H.K. Other

* Forecast

2012 Pork Exports at 5.1 Billion Pounds, Pork Imports Decline

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2002 2004 2006 2008 2010 2012*

Exports Imports

* Forecast

Bil

lio

n P

ou

nd

s

Hog Prices to Average $63 to $67 per cwt

National Base, 51-52% Lean, Live Equivalent

20

30

40

50

60

70

QI QII QIII QIV Annual

2010 2011 2012*

* Forecast

Do

llar

s p

er c

wt

Broiler Meat Production Will Decline to 36.1 Billion Pounds in 2012

15

20

25

30

35

40

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*

Bil

lio

n l

bs.

* Forecast

Broiler Laying FlockMonthly Average

4748

4950

5152

5354

5556

57

Jan Mar May Jul Sep Nov

Mil

lio

n b

ird

s

2009 2010 2011

Chicks Placed For Grow Out19 Selected States

140

145

150

155

160

165

170

175

180

185

JanApr

JulOct

Mil

lio

n b

ird

s

2010 2011 2012

Live Bird Weights Moderating

5.0

5.2

5.4

5.6

5.8

6.0

Jan Mar May Jul Sep Nov

2009 2010 2011

Po

un

ds

2011 Broiler Exports Were Record 6.99 Bilion Pounds

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2005 2006 2007 2008 2009 2010 2011 2012

Bil

lio

n p

ou

nd

s

Russia China/HK Mexico Canada

Cuba Angola Other Forecast

“Other” equals 40% “Other” equals 57%

Broiler Whole Bird Prices to Average 82 to 87 Cents Per Pound

12-City Wholesale

60

65

70

75

80

85

90

QI QII QIII QIV Annual

2010 2011 2012*

* Forecast

Cen

ts p

er P

ou

nd

Turkey Production Forecast at 5.9 Billion Pounds in 2012

5.0

5.2

5.4

5.6

5.8

6.0

6.2

6.4

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*

Bil

lio

n p

ou

nd

s

* Forecast

Turkey Poult Placements AboveYear Earlier

20

21

22

23

24

25

26

27

Jan Mar May July Sept Nov

Mil

lio

n b

ird

s

2010

2011

2012

Turkey Exports Will Decline in 2012

0

100

200

300

400

500

600

700

800

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Mil

lio

n p

ou

nd

s

Mexico Russia China/HK Other Forecast

Turkey Prices to Average $1.00-$1.07 per Pound

National Hen Price

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1.10

2007 2008 2009 2010 2011 2012*

Do

llar

s p

er p

ou

nd

* Forecast

Egg Production Growth Slow

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

2002 2004 2006 2008 2010 2012*

Bil

lio

n d

oze

n

Hatching

Table

* Forecast

Table Egg Laying FlockMonthly Average

272

274

276

278

280

282

284

286

288

Jan Mar May Jul Sep Nov

Mil

lio

n b

ird

s

2009 2010 2011

Egg Prices Will Decline to $1.03-$1.09 per Dozen

N.Y. Wholesale Price - Large Eggs

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

2004 2005 2006 2007 2008 2009 2010 2011 2012*

Do

llar

s p

er d

oze

n

* Forecast

Additional information about the 2012 outlook is available at the following websites:

• World Agricultural Outlook Board (WAOB)World Agricultural Supply and Demand Estimates– www.usda.gov/oce/commodity/wasde/index.htm

• Economic Research Service (ERS)Livestock, Dairy, and Poultry Situation and Outlook– www.ers.usda.gov/publications/ldp/

• Foreign Agricultural Service (FAS)Livestock and Poultry: World Markets and Trade– www.fas.usda.gov/dlp/livestock_poultry.asp