Westin Gaslamp Hotel, San Diego, CA · 2017-10-19 · Presented by: Len Steiner Steiner Consulting Group, 800.526.4612 MICA 2017 Annual General Meeting & Conference Westin Gaslamp

Presented by: Len Steiner

Steiner Consulting Group, 800.526.4612

MICA 2017 Annual General Meeting & Conference

Westin Gaslamp Hotel, San Diego, CA

October 24 to 27, 2017supporting and promoting imported meat

2018 Meat Market Outlook Presented by: Steiner Consulting Group | (800) 526-4612

Main Discussion Points Today

#1: Economic Situation in US and World

#2: Currency Markets

#3: Feed Input Costs

#4: Cattle Supplies in USA, Canada and Mexico

#5: Product Availability from Importing Partnerso Special Discussion on Argentina

#6: Demand in US Domestic Market

#7: Demand in Other Markets (Competition)

#8: Supplies of Competing Proteins

#9: US Lamb Business

#10: Price Forecasts

- 1 -


Global Situation – Last Year

2

Source: Moody's Economy.com, Steiner

Canada: Q2 GDP

declined 1.7%, higher

recession risk at this time

USA: robust job

growth continues to

point to a more

rapid expansion

pace for remainder

of the year

Mexico: GDP

accelerated to 2.8% in

Q1. Growth on track

EU

Brexit delayed

effects remain

a negative for

2017

Brazil: Economy

contracted 6% in

Q1. Political

issues persist and

unemployment at

11.6% in July

Argentina:

Economy continues to

struggle and weak

commodity markets

have added to the

negative outlook

Australia:

Q2 growth +3.3% vs.

year ago despite

slower export growth

India:

Economy is growing

and inflation remains

low

New Zealand:

Q2 growth

+3.6%, helps

bolster NZD

Japan:

Monetary policy fails

to fight deflation

China:

Growth in Q2 was 6.7% in

line with estimates.

Overcapacity problems will

continue to weigh down

Russia:

Low energy prices and

weak commodities are

big negative for growth


Global Situation – Current

- 3 -

Canada: robust growth

in Q1. Export growth

remains a weak point

USA: job market

recovery continues.

Growth rebounded in

Q2 and expansion

remains on track

EU

Impact of Brexit

starting to be felt in

UK. North/East

expanding and even

South is recovering

Brazil: Two

consecutive

quarters of positive

growth.

Argentina:

Continued improvement

in business conditions

and higher commodity

prices bolstering growth

India:

Growth has slowed but

expansion remains on

track New Zealand:

Low

unemployment,

higher inflation,

more growth

Japan:

Modest inflation and

weaker Yen is

supportive

China:

Growth has recovered.

Consumer spending

accelerated in last two

quarters, which is key as

economy relies less on heavy

industry

Russia:

Finally out of recession economy

slowly recovering. GDP +0.3%,

inflation down to 4%

Source: Moody's Economy.com, Steiner

Mexico: GDP growth

was 2.8% in Q1, up from

2.3% in previous quarter

Australia:

Q2 growth was up 0.8%, a

much faster pace than the

previous quarter.


#1 Economic Situation in US and WorldGlobal Economic Growth Expected to Further Expand in 2018

Source: Moody's Economy.com

- 4 -

World N. Am. S. Am. Euro Asia Oceania

2014 2.5 2.4 0.0 1.1 4.3 2.7

2015 2.6 2.5 -1.9 1.9 4.5 2.5

2016 2.3 1.6 -2.9 1.7 4.5 2.6

2017 Fcst 2.9 2.2 0.3 2.2 4.7 2.2

2018 Fcst 3.0 2.9 2.2 1.7 4.5 2.5

Last update: September 18, 2017

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

World N. Am. S. Am. Euro Asia Oceania

REAL GDPGROWTH % GLOBAL GROWTH OUTLOOK

2015 2016 2017 Fcst 2018 Fcst


#1 Economic Situation in US and WorldExpansion to Be Sustained in 2018 But Risks Mount

Positives

- Near full employment

- Low rates

- Weaker US$

- Income growth

- Low household debt

- Strong corporate balance sheets

- Banks in good shape

- Export demand

Negatives

- Rising inflation pressures

- Qualified labor shortages

- China debt

- Political risk in US and Europe

- Geopolitical risk (war)

- 5 -

* Forecast: Moody’s

-10.00

-8.00

-6.00

-4.00

-2.00

0.00

2.00

4.00

6.00

8.00

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

% ch.ANNUAL USA GROWTH RATE OF GDP

Annualized Quarterly Growth Rate

forecast


#1 Economic Situation in US and WorldUS economy has added jobs consistently since 2011

- 6 -

- Economy has added 1.8MM jobs in the last 12 months. Job creation contracted in

September due to short term storm effects. Leisure and hospitality was down 111,000 jobs.

- Foodservice has been one of the main job creators

-1000

-800

-600

-400

-200

0

200

400

600

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

TH

OU

SA

ND

JO

BS

NEW JOB CREATION: NON AGRICULTURAL, 000's

0.00

2.00

4.00

6.00

8.00

10.00

12.00

perc

ent

USA UNEMPLOYMENT RATE: %

September 20174.2%

Dec 2018 Forecast

4.1%


#1 Economic Situation in US and WorldOverall foodservice dollar sales continue to grow but…

Dollar sales growth has slowed down, in part due to lower food inflation.

Deflation has impacted retail sales more than foodservice.

- 7 -

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17

GROCERY STORE $ SALES : Y/Y % CH.Latest Data is for August 2017

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17

FOODSERVICE $ SALES : Y/Y % CH.Latest Data is for August 2017

Source: Advance Monthly Sales for Retail & Foodservice, US Census Bureau


#1 Economic Situation in US and WorldFast Food Outperformed Other Sectors In August

- 8 -

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17

FOODSERVICE $ SALES : Y/Y % CH.Latest Data is for August 2017

Same Store Sales - August 2017 vs. August 2016, Tracking Survey Responses by Industry

Segment Source: National Restaurant Association

FamilyDining

CasualDining

FineDining

LimitedService

QuickCasual

Higher Sales 36% 31% 36% 62% 45%

Lower Sales 34% 43% 64% 17% 55%

0%

10%

20%

30%

40%

50%

60%

70%

SAME STORE SALES

Source: US Census Source: National Restaurant Association


#1 Economic Situation in US and WorldOne possibility for low traffic is that food at home now much cheaper

- 9 -

Source: Bureau of Labor Statistics

Food CPI Comparisons. Jan 2008 = 100Source: BLS. Analysis by Steiner.

95.0

100.0

105.0

110.0

115.0

120.0

125.0

130.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Food atLimited

ServiceRestaurants

Food awayfrom home

Food atHome


A More Chaotic/Diverse Food Delivery System

Before

- RETAIL/GROCERY

- FOODSERVICE

Now

- RETAIL/GROCERY

- Cooked Meals

- Meal Kits

- In-store restaurants

- FOODSERVICE

- Restaurant meals

- Carryout Meals

- Meal delivery/UberEATS

- Food trucks

- Online/Meal Kits/Amazon Fresh

- Blue Apron, Prepared Meal Programs

- 10 -


# 2 Currency MarketsPerformance of US$ vs. Imported Beef Currencies in last 12 months

- 11 -

US Dollar vs. Currencies of Top Meat Trading Partners % change in the last 12 months (Nov 2016 - Oct 2016)

90%

95%

100%

105%

110%

Nov '16 Dec '16 Jan '17 Feb '17 Mar '17 Apr '17 May '17 Jun '17 Jul '17 Aug '17 Sep '17 Oct '17

USD/NZD

USD/AUD

USD/CAD

USD/Peso Positive for US importsNegative for US exports

Negative for US importsPositive for US exports


# 2 Currency MarketsPrice of Imported 90CL Beef in US$ Remains Near Levels from 2012

- 12 -

307

240

-22%

US $200 cwtUS $210/cwt

100

150

200

250

300

350

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Price of 90CL Imported Beef in US Market (CIF) Prices in US$/cwt

USD/cwt

Price inUSD

Oct 2012

Current


# 2 Currency MarketsPrice of Imported 90CL Beef in US$ Terms & AUD Terms

- 13 -

Oct-12

Oct-17

$270/cwt

$210/cwt

100

150

200

250

300

350

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Price of 90CL Imported Beef in US Market (CIF East Coast). Prices in US$/cwt and AUD/cwt

USD/cwt

Price inUSD and AUD

AUD/cwt+33% gain from

currency shift


#3 Feed Input CostsThree Consecutive Years of Above Trend Yields = A lot of Corn

- 14 -

Corn yields:

2012 – 123.1 bu.

2017 – 171.8 bu.

=

+40%

increase

TREND CORN YIELDS AND 2017-18 ESTIMATED YIELDSCorn Yields Since 1990. More Stable and Higher Yields in the Last Decade Point to Effect of Technological Improvements. Data from USDA.

90

100

110

120

130

140

150

160

170

180

2013 2014

2015

2016

2012not included in trend

1990 - 2016 Linear Trend

2017USDA Est.


#3 Feed Input CostsCorn Acres Lower in 2017 But Large Carryover Offsets the Decline

Since 2007 planted acres have averaged 91 million.

+

Above average yields =

Corn production

outpacing

consumption

- 15 -

93.5

88.0

94.0

90.4

50

55

60

65

70

75

80

85

90

95

100

19

80/8

1

19

81/8

2

19

82/8

3

19

83/8

4

19

84/8

5

19

85/8

6

19

86/8

7

19

87/8

8

19

88/8

9

19

89/9

0

19

90/9

1

19

91/9

2

19

92/9

3

19

93/9

4

19

94/9

5

19

95/9

6

19

96/9

7

19

97/9

8

19

98/9

9

19

99/0

0

20

00/0

1

20

01/0

2

20

02/0

3

20

03/0

4

20

04/0

5

20

05/0

6

20

06/0

7

20

07/0

8

20

08/0

9

20

09/1

0

20

10/1

1

20

11/1

2

20

12/1

3

20

13/1

4

20

14/1

5

20

15/1

6

20

16/1

7

20

17/1

8

million acresUS CORN PLANTED ACRES


#3 Feed Input CostsCorn supplies will be plentiful for another 12 months

- 16 -

2013/14 2014/15 2015/16 2016/17

USDA

Actual

USDA

Actual

USDA

Actual

USDA

Estimate

USDA

Sep Est

USDA

Oct Est

vs.

2015/16

vs.

2016/17

.

Planted 95.4 90.6 88.0 94.0 90.9 90.4 2.7% -3.8%

Harvested 87.5 83.1 80.8 86.7 83.5 83.1 2.8% -4.2%

Yield per harvested acre 158.1 171.0 168.4 174.6 169.9 171.8 2.0% -1.6%

Beginning stocks 821 1,232 1,731 1,737 2,350 2,295 32.6% 32.1%

Production 13,829 14,216 13,602 15,148 14,184 14,280 5.0% -5.7%

Imports 36 32 67 55 50 50 -25.4% -9.1%

Supply, total 14,686 15,479 15,401 16,940 16,585 16,625 7.9% -1.9%

Feed and residual 5,040 5,280 5,123 5,500 5,475 5,500 7.4% 0.0%

Ethanol for fuel 5,124 5,200 5,224 5,450 5,475 5,475 4.8% 0.5%

Food, seed and residual 1,369 1,401 1,424 1,440 1,450 1,460 2.5% 1.4%

Domestic use, total 11,534 11,881 11,771 12,390 12,400 12,435 5.6% 0.4%

Exports 1,920 1,867 1,898 2,225 1,850 1,850 -2.5% -16.9%

Use, total 13,454 13,748 13,669 14,615 14,250 14,285 4.5% -2.3%

Ending stocks 1,232 1,731 1,732 2,325 2,335 2,340 35.1% 0.6%

Avg. farm price ($/bu) 4.46 3.70 3.61 3.25-3.55 2.80-3.60 2.80-3.60 -11.4% -5.9%

Ending Stocks/Use 9.2% 12.6% 12.7% 15.9% 16.4% 16.4%

Source: USDA

** Corn crop marketing year starts September 1.

% Change2017/18

U.S. Corn Supply and Use

Build up in stocks

More going into feed

Stalled exports

Lower prices required to keep the flow moving


#3 Feed Input CostsEthanol Demand Is Flat, Limiting Demand for Corn in Domestic Market

- 17 -

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

MIL BU. CORN USED FOR ETHANOL PRODUCTION IN USA

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

% OF TOAL USE CORN USED FOR ETHANOL AS % OF TOTAL USE


#3 Feed Input CostsFilling the gap - feed use highest in a decade

- 18 -

Amount of corn

going into

livestock/poultry

consumption is at

highest point in 10

years

5,858

4,315

5,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

million bu. US CORN GOING INTO LIVESTOCK & POULTRY FEED (+ residual)

2017-18

2007-08


All time record meat protein production in 2017

and expected to continue in 2018 and 2019

Combined Beef, Pork, Broiler and Turkey ProductionMillion Pounds. Carcass Wt. Basis. Steiner Forecasts

90,929

103,357

40,000

50,000

60,000

70,000

80,000

90,000

100,000

110,000

+14%2007 – 14 Avg.

91.2 MM


Growth Expected for All Major Proteins

2015 2016 % CH. 2017 % CH. 2018 % CH. 2019 % CH.

BEEF 23,698 25,221 6.4% 26,253 4.1% 27,255 3.8% 28,066 3.0%

PORK 24,501 24,941 1.8% 25,604 2.7% 26,353 2.9% 26,859 1.9%

BROILERS 39,636 40,260 1.6% 40,965 1.8% 41,660 1.7% 42,316 1.6%

TURKEYS 5,551 5,905 6.4% 5,927 0.4% 5,963 0.6% 6,116 2.6%

LAMB 150 150 -0.1% 142 -5.4% 144 1.0% 155 8.0%

VEAL 83 76 -8.3% 79 4.6% 87 9.7% 90 3.7%

TOTAL 93,620 96,553 3.1% 98,970 2.5% 101,461 2.5% 103,602 2.1%

20


#4 USA Cattle/Beef Supplies

Jan 1, 2018 Inventory + 6.3 MILLION higher than in 2014

- 21 -

INVENTORY (000 OMITTED) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

% Ch. vs.

2016

2018

Estimate

% Ch. vs.

2016

ALL CATTLE AND CALVES 94,403 95,018 96,342 96,573 96,035 94,721 94,081 92,887 91,160 90,095 88,526 89,143 91,918 93,585 1.8% 94,816 1.3%

COW AND HEIFERS THAT HAVE CALVED 41,519 41,678 41,806 41,789 41,692 41,127 40,526 40,068 39,517 38,853 38,293 38,609 39,476 40,559 2.7% 40,865 0.8%

BEEF COWS 32,531 32,674 32,703 32,644 32,435 31,794 31,440 30,913 30,282 29,631 29,085 29,302 30,166 31,210 3.5% 31,500 0.9%

DAIRY COWS 8,988 9,004 9,104 9,145 9,257 9,333 9,087 9,156 9,236 9,221 9,208 9,307 9,310 9,349 0.4% 9,365 0.2%

HEIFERS 500LBS. AND OVER 19,282 19,445 19,950 20,074 19,855 19,604 19,778 19,650 19,445 19,256 18,969 19,261 19,907 20,052 0.7% 20,242 0.9%

BEEF COW REPLACEMENT 5,508 5,638 5,864 5,835 5,647 5,550 5,443 5,135 5,281 5,429 5,551 6,086 6,340 6,419 1.2% 6,392 -0.4%

DAIRY COW REPALCEMENT 4,018 4,117 4,298 4,325 4,415 4,410 4,551 4,577 4,618 4,546 4,549 4,710 4,814 4,754 -1.2% 4,775 0.4%

OTHER HEIFERS 9,756 9,690 9,788 9,914 9,793 9,644 9,784 9,938 9,546 9,281 8,869 8,464 8,753 8,879 1.4% 9,075 2.2%

STEERS 500 LBS. AND OVER 16,201 16,466 16,988 17,185 17,163 16,809 16,568 16,394 15,957 15,931 15,668 15,630 16,315 16,354 0.2% 16,698 2.1%

BULLS 500 LBS. AND OVER 2,201 2,214 2,258 2,214 2,207 2,188 2,190 2,165 2,100 2,074 2,038 2,109 2,142 2,234 4.3% 2,237 0.1%

HFRS, STRS AND BULLS UNDER 500 LBS. 15,200 15,215 15,339 15,311 15,118 14,994 15,019 14,610 14,141 13,983 13,558 13,534 14,077 14,386 2.2% 14,774 2.7%

ANNUAL CALF CROP 37,260 37,106 37,016 36,759 36,158 35,939 35,740 35,357 34,469 33,730 33,522 34,087 35,083 36,300 3.5%

JANUARY 1st U. S. CATTLE INVENTORY


#4 USA Cattle/Beef SuppliesFour Years into the Current Cycle

- 22 -

Comparing US Cattle Cycles of the Last +50 YearsY/Y Change in Cattle Inventories.

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

0 +1 +2 +3 +4 +5 +6 +7 +8 +9 +10 +11 +12 +13 +14

1958 - 1967

1967 - 1979

1979 - 1990

1990 - 2004

2014 - Current

# of years from the start of the cycle


#4 Cattle/Beef SuppliesUS Cattle Inventories were +1.8% in 2017 and Forecast +1.3% in 2018

- 23 -

1958 = 91,176

1975 = 132,028

1990 = 95,816

1996 = 103,548

2004 = 94,403

2007 = 96,573

40,000

50,000

60,000

70,000

80,000

90,000

100,000

110,000

120,000

130,000

140,000

TOTA

L IN

VEN

TORIE

S,

00

0 O

MIT

TED

CATTLE INVENTORIES, 000 HEAD, 1920 - 2017 + 2018 Forecast

Jan 1, 201894.8 mil head


#4 Cattle/Beef SuppliesHigher Calf Crop + Heavy Weights = +5% Beef Production in 2016

- 24 -

1985

1986

1987

1988

1989

1990

1991

1992

1993

34300

34952

1.9%

652

50000

30000

0.6

2010

16,800

17,900

19,000

20,100

21,200

22,300

23,400

24,500

25,600

26,700

27,800

30,000

32,000

34,000

36,000

38,000

40,000

42,000

44,000

46,000

48,000

50,000

Calf Crop'000 head

CALF CROP (1-Yr Lag) AND US BEEF PRODUCTION: 1980 - 2016

Calf Crop(left axis)

Beef Prodmil lb.

Beef Prod.(right axis)

BeefProduction


#4 Cattle/Beef SuppliesWeights Expected to Return to Trend, Outperform 2017 Next Year

- 25 -

650

680

710

740

770

800

830

860

DR

ESSE

D W

EIG

HTS

, PO

UN

DS

FI CATTLE AVERAGE DRESSED WEIGHTS: 1990 - 2017Dressed Carcass Weights. Weekly. USDA

spring 2017


#4 Cattle/Beef SuppliesUS Productivity (feedlot based) vs. Other Key Producers/Exporters

- 26 -

BEEF KILOGRAM PRODUCED (DRESSED WT.) PER ANIMAL IN THE HERD. ANNUALSOURCE: USDA

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

USA

Australia

Brazil

N. Zealand

UruguayArgentina


#4 Cattle/Beef SuppliesUS Cattle Prices Back to 2010 Levels…But Volatility Persists

- 27 -


#4 Cattle/Beef SuppliesProfitability Indicators. Cattle/Corn Ratio Remains Above Long Run Trend

Long run ratio of 30 (cattle price $/cwt divided by corn price in $/bushel)

Assume corn price in 2018 of $3.75 (current futures)

30 * 3.5 = $112/cwt fed cattle

However, strong demand could support fed cattle prices above these levels, which then induces producers to continue to expand as long as weather/profitability permits.

- 28 -

4.5

3.41

-0.24222

3.5

28

98

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

RA

TIO

5 AREA DIRECT AVERAGE LIVE STEER PRICES/OMAHA CORN PRICES, #2 YELLOW 1990 - 2017


#4 Cattle/Beef SuppliesCow Calf Profits No Longer Support Rapid Expansion

-200

-100

0

100

200

300

400

500

600

ESTIMATED AVERAGE COW-CALF RETURNSReturns over cash costs (includes pasture rent), Annual, US$/cow

forecast

Source: LMIC

- 29 -


#4 Cattle/Beef SuppliesFemale Slaughter Ratio Indicates Expansion is Slowing Down But Not Over Yet

MAKE SURE TO ADJUST DATA RANGE IN THE CHART

0.38

0.40

0.42

0.44

0.46

0.48

0.50

0.52

0.54

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Ratio of Female Slaughter (Heifers + Cows) To Total US Cattle SlaughterWeekly Data and 52wk Moving Average. Last Reported Week is September 30, 2017

52-wk MA

weeklyratio

- 30 -


#4 Cattle/Beef SuppliesCow Slaughter Outlook for rest of 2017 & in 2018

Total cow slaughter for Jan – Sep = 4.3MM head, +7.2% higher than a year ago.

Forecast for cow slaughter in 2017 = +6.8%

Forecast for cow slaughter in 2018 =

+5.0%

Ratio of Cow Slaughter vs. January 1 All Cow InventoryAnnual Data. Source: USDA

10.0%

11.0%

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%

18.0%

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17F

20

18F

Est.

1990 - 2016 Avg.

- 31 -


#5 Imported BeefKey Metrics for Major Global Beef Importers

Cattle

Population

Human

Population

Cattle/

Person

Cattle

Slaughter

Cattle Sltr./

Cattle Inv.

Beef

Production

Prod. KG /

Cattle Sltr.

Beef

Exports

Beef Exports /

Beef Prod.

000 head mil. People 000 head MT, CWE KG, CWE

USA 89,143 322 0.28 34,302 0.38 10,815 315 1,028 10%

CANADA 11,920 36 0.33 4,262 0.36 1,050 246 391 37%

MEXICO 17,120 127 0.13 6,850 0.40 1,850 270 228 12%

AUSTRALIA 29,102 24 1.21 9,664 0.33 2,547 264 1,854 73%

N. ZEALAND 10,368 5 2.23 4,839 0.47 690 143 639 93%

BRAZIL 213,035 204 1.04 48,220 0.23 9,425 195 1,705 18%

URUGUAY 12,053 3 3.53 2,750 0.23 570 207 373 65%

ARGENTINA 51,545 43 1.20 13,700 0.27 2,740 200 186 7%

INDIA 301,100 1293 0.23 67,000 0.22 4,100 61 1,806 44%

Data source: USDA

- 32 -


#5 Imported Beef AvailabilityJanuary Inventory trends in Australia, New Zealand, Uruguay & Brazil

- 33 -

0

10,183

10,368

10,033

10,152

10,255

10,381

9,600

9,700

9,800

9,900

10,000

10,100

10,200

10,300

10,400

10,500

2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F

NEW ZEALAND CATTLE INVENTORIES: JANUARY 1 STOCKSSource: USDA Foreign Agricultural Service000 head

1.8%

-3.2%

1.2%

1.0%

1.2%

0

29,29129,102

27,413

26,142

26,550

27,050

24,500

25,000

25,500

26,000

26,500

27,000

27,500

28,000

28,500

29,000

29,500

30,000

2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F

AUSTRALIA CATTLE INVENTORIES: JANUARY 1 STOCKSSource: USDA Foreign Agricultural Service000 head

-0.6%

-5.8%

-4.6%

1.6%

1.9%

0

11,903

12,053

11,950

11,86411,804

11,934

10,800

11,000

11,200

11,400

11,600

11,800

12,000

12,200

2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F

URUGUAY CATTLE INVENTORIES: JANUARY 1 STOCKSSource: USDA Foreign Agricultural Service000 head

1.3%

-0.9%

-0.7%

-0.5%

1.1%

0

207,959

213,035

219,180

226,045

232,350

238,407

150,000

160,000

170,000

180,000

190,000

200,000

210,000

220,000

230,000

240,000

250,000

2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F

BRAZIL CATTLE INVENTORIES: JANUARY 1 STOCKSSource: USDA Foreign Agricultural Service000 head

2.4%

2.9%

3.1%

2.8%

0

51,545 51,545

52,565

53,515

54,215

55,215

44,000

46,000

48,000

50,000

52,000

54,000

56,000

2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F

ARGENTINA CATTLE INVENTORIES: JANUARY 1 STOCKSSource: USDA Foreign Agricultural Service000 head

2.0%

1.8%

1.3%

1.8%

0

17,760

17,120

16,615 16,490 16,583 16,658

15,000

16,000

17,000

18,000

19,000

20,000

21,000

22,000

23,000

2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F

MEXICO CATTLE INVENTORIES: JANUARY 1 STOCKSSource: USDA Foreign Agricultural Service000 head

-3.6%

-2.9%-0.8% 0.6% 0.5%


#5 Imported Beef AvailabilityAustralian Slaughter – Will We Stop Getting a Weekly Update?

- 34 -


#5 Imported Beef AvailabilityAustralia Beef Exports to the US & US Market Share

- 35 -

AUSTRALIAN MONTHLY BEEF SHIPMENTS TO THE US % OF AUSTRALIAN MONTHLY BEEF EXPORTS GOING TO USA 1998 - 2017, metric ton, shipped wt. Source: Australian Department of Water and Agricultural Resources 1998 - 2017, metric ton, shipped wt. Source: Australian Department of Water and Agricultural Resources

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

metric ton, shipped wt.

0%

10%

20%

30%

40%

50%

60%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

% of all shipments


#6 Demand in US Domestic MarketWealth Effect: Post Recession Recovery

All-Transactions House Price IndexIndex 1980: Q1 = 100. Quarterly. Not Seasonally Adjusted

270

290

310

330

350

370

390

410

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

S&P 500 Index

0

500

1,000

1,500

2,000

2,500

3,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

- 36 -


#6 Demand in US Domestic MarketWillingness to Spend: Depends if you have a job

0.00

2.00

4.00

6.00

8.00

10.00

12.00

perc

ent

USA UNEMPLOYMENT RATE: %

August 20174.4%

Dec 2018 Forecast

4.1%

95.0

96.0

97.0

98.0

99.0

100.0

101.0

102.0

103.0

104.0

-900

-720

-540

-360

-180

0

180

360

540

720

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

NRA Restaurant Performance Index vs. Monthly Job Gains/Losses Rest.index

JobGains

monthly job gains/losses (L)

restaurant index (R)

37


#6 Demand in US Domestic Market

Demand Drivers: Income

- 38 -

30,000

31,000

32,000

33,000

34,000

35,000

36,000

37,000

38,000

39,000

40,000

2000 '01 '02 '03 '04 2005 '06 '07 '08 '09 2010 '11 '12 '13 '14 2015 '16 '17

Real Per Capita Disposable Income, US$Latest data is for: August 2017

recession


#6 Demand in US Domestic MarketChange in Perceptions Impacts Demand

- 39 -


#6 Demand in US Domestic MarketUSA Per Capita Meat Protein Consumption

- 40 -

200

210

220

230

240

250

260

270

280

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

20

15

PO

UN

DS P

ER P

ERSO

N P

ER Y

EA

R

TOTAL BEEF, PORK, POULTRY PER CAPITA DISAPPERANCE(Carcass Wt. Basis)

20

17

20

18

20

19

Forecast

265.3262.9

259.9


#6 Demand in US Domestic MarketUSA Per Capita Beef Consumption

- 41 -

60

70

80

90

100

110

120

130

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

20

15

PO

UN

DS P

ER P

ERSO

N P

ER Y

EA

R

BEEF PER CAPITA DISAPPERANCE (Carcass wt. Basis)

20

17

20

18

20

19

Forecast

79.1 81.1

79.1


#6 Demand in US Domestic MarketUSA Per Capita Lamb Consumption

- 42 -

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

20

15

PO

UN

DS P

ER P

ERSO

N P

ER Y

EA

R

LAMB, PER CAPITA CONSUMPTION (Carcass wt. Basis)

1.18 1.18 1.18

2017

2018

2019

Forecast


#7 Demand in Other MarketsChina/Hong Kong Are Now the Top Beef Markets in the World

2017 China Imports:

+6.2%+79k MT

2018 China

Imports

+6.3%

+85k MT

- 43 -

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

TOP GLOBAL BEEF BUYERS. USDA. 000 METRIC TON. CWE000 mt

China/Hong Kong

USA

RUSSIA

JAPAN


#7 Demand in Other MarketsChina Purchases So far in 2017 (product wt. basis)

- 44 -

China Imports of Fresh and Frozen Beef, YTD

Australia Uruguay BrazilNew

ZealandArgentina Other Total

2016 YTD Jan - Aug 77,725 99,801 121,515 54,237 33,829 13,101 400,208

2017 YTD Jan - Aug 75,565 133,593 125,446 61,101 48,532 11,495 455,732

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

me

tric

to

n

-3%

34%

13%43%

-12%

14%

Australia19%

Uruguay27%

Brazil30%

New Zealand

12%

Argentina9%

Other3.2%

3%

Brazil has now become largest supplier to China


#7 Demand in Other MarketsHong Kong Purchases So far in 2017 (product wt. basis)

- 45 -

Fresh and Frozen, YTD

BrazilUnitedStates

Canada Australia Other Total

2016 YTD Jan - Aug 140,888 59,547 12,869 3,403 23,433 240,140

2017 YTD Jan - Aug 121,164 55,440 9,490 3,545 33,212 222,851

-

50,000

100,000

150,000

200,000

250,000

300,000

me

tric

to

n

-14%

-7%

-26% 4%

42%

-7%

Brazil54%

United States25%

Canada4%

Australia2%

Other15%


Supplies ( Y/Y % change)

Production: +2.9% in 2017

+2.9% in 2018

+1.9% in 2019

Exports: +9.1% in 2017

+3.7% in 2018

+2.7% in 2019

Per Capita: -0.1% in 2017

+1.1% in 2018

+0.7% in 2019

#8 Competing ProteinsPork Situation and Outlook

- 46 -

ESNR9EP

23,34723,000

22,43622,785

23,253 23,187 22,843

24,501 24,941

25,656

26,398 26,905

15,000

17,000

19,000

21,000

23,000

25,000

27,000

29,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

PORK PRODUCTION: MILLION POUNDS


#8 Competing ProteinsRatio of Beef Cutout vs. Pork Cutout

- 47 -

Wholesale Beef Prices Have Returned to More "Normal" Levels Relative to PorkRatio of Weekly Choice Beef Cutout vs. Pork Cutout Value

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

2010 2011 2012 2013 2014 2015 2016 2017


#8 Competing ProteinsPrice Ratio of Ground Beef vs. Pork Chops

- 48 -

0.40

1.88

-

0.50

1.00

1.50

2.00

2.50

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

Ratio

Ratio: 78CL Meat Block /1/4" Pork Loins, USDA Wt Avg

52wk Mo. Avg.

2009-10 Avg = 1.22


#8 Competing ProteinsBroiler Situation and Outlook

1.88

4.719

6.831

0.669

14.099

36,511

35,131

36,52336,803 36,641

37,425

38,154

39,636

40,260

40,991

41,754

42,458

30,000

32,000

34,000

36,000

38,000

40,000

42,000

44,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

MILLIO

N P

OU

ND

S

BROILER PRODUCTION: MILLION POUNDS

- 49 -

Forecast Source: Steiner Consulting Group

Supplies ( Y/Y % change)

Production: +1.8% in 2017

+1.9% in 2018

+1.7% in 2019

Exports: +4.8% in 2017

+5.3% in 2018

+2.3% in 2019

Per Capita: +0.2% in 2017

+0.2% in 2018

+0.6% in 2019


#8 Competing ProteinsGround Beef vs. Chicken Breasts

- 50 -

Forecast Source: Steiner Consulting Group78CL Meat Block = 70% 90CL Boneless Beef, Central, Fresh, USDA, Wt. Avg. + 30% 50CL Beef Trim, Fresh, National, USDA, Wt. Avg.

Chicken Breast = USDA N.E. Broiler Breast Boneless, Skinless, Wt. Avg.

0.30

1.47

-

0.50

1.00

1.50

2.00

2.501

990

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

Ratio

Ratio: 78CL Meat Block /Bnls Skinless Chicken Breast

52wk Mo. Avg.


#9 USA Lamb Market SituationUS Lamb Inventories Remain Flat

- 51 -

0

2,000

4,000

6,000

8,000

10,000

12,000

US LAMB INVENTORYmil head


#9 US Lamb Market SituationSlaughter Has Been Trending Lower For Much of 2017

- 52 -


#9 US Lamb Market SituationLamb prices have settled back after spiking this past spring

- 53 -

SLAUGHTER LAMB PRICES, (CHOICE & PRIME 2-3)Source : USDA/AMS, Sioux Falls, SD

100.00

120.00

140.00

160.00

180.00

200.00

220.00

Jan Feb Mar Apr May Jun Jun Aug Sep Oct Nov Dec

2017 2016 2015


#9 USA Lamb Market SituationImports Have Captured Almost All of the Increase in US Lamb

Consumption in 2017

- 54 -

0

50

100

150

200

250

300

350

400

450

Domestic Lamb Production + Importsmil lb.

US domestic production

Imports


#9 USA Lamb Market Situation

Lamb Trade Flows so Far in 2017

- 55 -

YTD Imports =

72,206 MT Jan-Aug, +19%

-

10,000

20,000

30,000

40,000

50,000

60,000

Australia NewZealand

Canada Chile Uruguay UnitedKingdom

Ireland Brazil Other

USA LAMB IMPORTS, USDA, MT, PRODUCT WEIGHT BASIS

311%102% -100% 5.2

9%

40%

-

100

200

300

400

500

600

700

2018 Meat Market Outlook Presented by: Steiner Consulting Group | (800) 526-4612- 56 -

CURRENT FORECAST


Price Forecasts: 2017 and 2018

- 57 -

20-Oct Q1 Q2 Q3 Q4 Annual

LIVE STEERS

FIVE AREA DIRECT AVERAGE LIVE STEER

5-YR AVERAGE 2012 - 2016 138.38 136.41 131.62 130.64 134.26

2016 HISTORY 134.56 127.87 114.12 106.22 120.69

2017 HISTORY 110.01 121.88 131.32 112.62

2017 FORECAST 113.33 119.79

% CHANGE FROM 2013 -9.4% 2.7% -1.3% 6.7% -0.7%

% CHANGE FROM 5-Yr Avg. -11.9% -3.7% -14.4% -13.2% -10.8%

2018 FORECAST 120.00 117.00 113.67 115.33 116.50

% CHANGE FROM 2014 -1.5% -10.9% 0.9% 1.8% -2.7%


90% BONELESS BEEF, CENTRAL, FRESH, WT. AVG., USDA

5-YR AVERAGE 2012 - 2016 234.18 237.74 240.22 220.39 233.13

2016 HISTORY 209.59 217.86 211.68 192.46 207.89

2017 HISTORY 214.17 208.98 223.54 229.77

2017 FORECAST 214.33 219.16

% CHANGE FROM 2015 -0.3% 2.6% 8.5% 11.4% 5.4%


2018 FORECAST 224.67 225.33 225.33 216.00 222.83

% CHANGE FROM 2017 7.5% 0.8% -1.9% 0.8% 1.7%




Q1 Q2 Q3 Q4 Annual

50CL BEEF TRIM, FRESH, OMAHA BASIS, WT.AVE, USDA

5-YR AVERAGE 2012 - 2016 92.10 88.70 81.25 73.14 83.80

2016 HISTORY 70.03 69.34 61.48 40.04 60.22

2017 HISTORY 60.24 78.14 138.04 68.86

2017 FORECAST 57.00 85.51

% CHANGE FROM 2015 11.6% 99.1% 12.0% 42.4% 42.0%

% CHANGE FROM 5-Yr Avg. -15.2% 55.6% -15.3% -22.1% 2.0%

2018 FORECAST 80.33 78.67 76.00 69.00 76.00

% CHANGE FROM 2017 2.8% -43.0% 10.4% 21.1% -11.1%


7:45, E. COAST 90CL AUSTRALIAN BLENDED COW, TOP, YELLOW SHEET

5-YR AVERAGE 2012 - 2016 217.26 213.54 226.37 222.93 220.02

2016 HISTORY 200.70 206.03 210.82 207.86 206.35

2017 HISTORY 214.00 213.44 226.38 220.99

2017 FORECAST 218.00 219.70

% CHANGE FROM 2015 6.3% 9.9% 4.8% 4.9% 6.5%

% CHANGE FROM 5-Yr Avg. -1.8% 6.0% -2.4% -2.2% -0.1%

2018 FORECAST 225.00 222.33 226.33 221.33 223.75

% CHANGE FROM 2017 5.4% -1.8% 2.4% 1.5% 1.8%

% CHANGE FROM 5-Yr Avg. 3.6% 4.1% 0.0% -0.7% 1.7%

- 58 -

Spread vs. domestic

-13.11

-1.54

-0.55

+0.9



- 59 -

Q1 Q2 Q3 Q4 Annual

NATIONAL WHOLE BIRD PRICE, USDA, WTD AVG

5-YR AVERAGE 2012 - 2016 94.09 101.11 89.31 88.63 93.28

2016 HISTORY 84.64 93.07 81.61 78.05 84.34

2017 HISTORY 84.21 88.41 104.66 95.09

2017 FORECAST 87.00 93.79

% CHANGE FROM 2015 4.5% 12.4% 16.5% 11.5% 11.2%

% CHANGE FROM 5-Yr Avg. -6.0% 3.5% 6.5% -1.8% 0.5%

2018 FORECAST 91.67 102.33 93.67 88.00 93.92

% CHANGE FROM 2017 3.7% -2.2% -1.5% 1.1% 0.1%

% CHANGE FROM 5-Yr Avg. -2.6% 1.2% 4.9% -0.7% 0.7%

N.E. BROILER BREAST BONELESS-SKINLESS, WT.AVG., USDA

5-YR AVERAGE 2012 - 2016 130.66 156.63 154.44 123.39 141.28

2016 HISTORY 108.61 119.69 134.46 104.14 116.73

2017 HISTORY 114.22 107.10 148.96 145.36

2017 FORECAST 110.67 128.02

% CHANGE FROM 2015 -1.4% 24.5% 8.1% 6.3% 9.7%


2018 FORECAST 120.33 149.33 152.33 115.33 134.33

% CHANGE FROM 2017 12.4% 0.2% 4.8% 4.2% 4.9%




- 60 -

Q1 Q2 Q3 Q4 Annual

USDA, Pork Carcass Cutout, FOB Plant

5-YR AVERAGE 2012 - 2016 83.69 91.76 94.02 85.34 88.70

2016 HISTORY 75.29 83.49 81.21 74.86 78.71

2017 HISTORY 75.50 81.49 85.15 91.02

2017 FORECAST 72.00 82.42

% CHANGE FROM 2015 8.2% 2.0% 12.1% -3.8% 4.7%


2018 FORECAST 75.33 81.67 84.00 76.67 79.42

% CHANGE FROM 2017 -7.6% -4.1% -7.7% 6.5% -3.6%


IA/MN, Base Market Hog 185 lb Carcass Basis, Plant Dlv., WT. AVG,

5-YR AVERAGE 2012 - 2016 76.92 87.38 85.46 70.88 80.16

2016 HISTORY 60.19 72.96 63.76 46.85 60.94

2017 HISTORY 65.21 66.23 69.41 71.22

2017 FORECAST 53.33 65.05

% CHANGE FROM 2013 10.0% -4.9% 11.7% 13.8% 6.7%


2018 FORECAST 64.00 75.67 72.67 60.33 68.17

% CHANGE FROM 2014 -3.4% 9.0% 2.0% 13.1% 4.8%




- 61 -

Q1 Q2 Q3 Q4 Annual

TOM TURKEYS, EAST, FROZEN 16-22LBS, TOP,

5-YR AVERAGE 2012 - 2016 106.95 111.62 117.45 119.50 113.88

2016 HISTORY 119.20 122.92 126.48 123.03 122.91

2017 HISTORY 107.00 106.33 107.00 107.00

2017 FORECAST 108.33 107.17

% CHANGE FROM 2015 -10.8% -12.9% -15.4% -11.9% -12.8%


2018 FORECAST 104.67 110.67 116.33 118.33 112.50

% CHANGE FROM 2017 -1.6% 3.4% 8.7% 9.2% 5.0%


UB BONELESS-SKINLESS TURKEY BREAST, TOM, FRESH, TOP,

5-YR AVERAGE 2012 - 2016 268.61 261.07 313.33 319.54 290.64

2016 HISTORY 410.92 230.42 215.00 194.73 262.77

2017 HISTORY 155.00 160.08 153.17 153.00

2017 FORECAST 157.67 155.98

% CHANGE FROM 2015 -61.0% -33.5% -28.8% -19.0% -40.6%


2018 FORECAST 155.33 180.00 227.00 231.33 198.42

% CHANGE FROM 2017 -3.0% 17.5% 48.4% 46.7% 27.2%



Live Cattle Prices

70.00

80.00

90.00

100.00

110.00

120.00

130.00

140.00

150.00

160.00

170.00

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

FIVE AREA DIRECT AVERAGE LIVE STEER

5-YR AVERAGE 2011 - 2015 2015 HISTORY 2016 HISTORY 2016 FORECAST 2017 FORECAST

US$/CWT

- 62 -


US Domestic 90CL Boneless Beef Prices

70.00

120.00

170.00

220.00

270.00

320.00


90% BONELESS BEEF, CENTRAL, FRESH, WT. AVG., USDA


US$/CWT

- 63 -


US Domestic 50CL Beef Trim

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00


50CL BEEF TRIM, FRESH, OMAHA BASIS, WT.AVE, USDA


US$/CWT

- 64 -


Imported 90CL Australian Beef

150.00

170.00

190.00

210.00

230.00

250.00

270.00


7:45, E. COAST 90CL AUSTRALIAN BLENDED COW, TOP, YELLOW SHEET


US$/CWT

- 65 -


Spread, Domestic - Imported

-30.00

-20.00

-10.00

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00


DOMESTIC 90CL FRESH, FOB CENTRAL US MINUS 90CL IMPORTED, FROZEN, FOB US EAST COAST


US$/CWT

- 66 -


Whole Broiler Prices

70.00

80.00

90.00

100.00

110.00

120.00

130.00

140.00

150.00

160.00

170.00


N.E. BROILER BREAST BONELESS-SKINLESS, WT.AVG., USDA


US$/CWT

- 67 -

Documents

Westin Gaslamp Hotel, San Diego, CA · 2017-10-19 · Presented by: Len Steiner Steiner Consulting Group, 800.526.4612 MICA 2017 Annual General Meeting & Conference Westin Gaslamp