2018 Annual General Meeting & Conference Diplomat Beach Resort, Hollywood, FL October 8 - 11, 2018 supporting and promoting imported meat Presented by: Len Steiner 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 Partners • Special Update on: Brazil, Argentina and Ireland #6: Demand in US Domestic Market #7: Demand in Other Markets (Competition) • Special Discussion about China and Impact on World Protein Market: Trade War, African Swine Fever #8: Supplies of Competing Proteins #9: US Lamb Business #10: Price Forecasts 2019 Meat Market Outlook - 1 - Presented by: Steiner Consulting Group | (800) 526-4612
Global Situation – Last Year Canada : robust growth in Q1. Export growth EU remains a weak point Impact of Brexit starting to be felt in UK. North/East Russia : expanding and even Finally out of recession economy South is recovering slowly recovering. GDP +0.3%, inflation down to 4% Japan : USA : job market Modest inflation and recovery continues. weaker Yen is Growth rebounded in supportive Q2 and expansion remains on track China : Growth has recovered. Consumer spending accelerated in last two Mexico : GDP growth quarters, which is key as India : was 2.8% in Q1, up from economy relies less on heavy Growth has slowed but 2.3% in previous quarter industry expansion remains on New Zealand : track Brazil : Two Low consecutive unemployment, quarters of positive higher inflation, growth. more growth Australia : Q2 growth was up 0.8%, a Argentina : much faster pace than the Continued improvement previous quarter. in business conditions and higher commodity prices bolstering growth Source: Moody's Economy.com, Steiner 2019 Meat Market Outlook - 2 - Presented by: Steiner Consulting Group | (800) 526-4612
Global Situation – Current Canada : Q2 growth accelerated to 2.9% from 1.3% in Q1. Negotiations with USA continue over a EU revised NAFTA. That Brexit negotiations remains a key risk are approaching Russia : some key deadlines Japan : The Russian economy has and no deal appears Q2 growth was recovered from the impact of imminent. higher than expected sanctions and expanded 1.3% and surprised the in Q1 compared to 0.9% in late USA : US GDP revised market. Robust 2017. higher in Q2 and low private investment unemployment should supported growth continue to bolster wages/spending. China : Exports remain resilient Mexico : GDP despite trade war with improved to 2.6% in USA but risks are heavily Q2 compared to 1.3% weighted to the in Q1. Unemployment downside. Equity rate increased to 3.5% markets are down 20% India : but remains below year YTD Economy has recovered ago levels as impact from demonetization has Argentina : GDP growth Brazil : Growth New Zealand : Q2 faded. declined a stunning 4.2% in estimates have been growth numbers Australia : Q2 compared to +3.6% in revised lower following have yet to be GDP growth in Q2 was Q1. The economic activity the trucker strike and released by +0.9% compared to +1% in index continues to head election uncertainty. expectations are the previous quarter but still lower and unemployment is Unemployment rate for more robust much faster than in 2016 now 9.1% compared to 7% has been trending growth as export and 2017. at the end of last year lower, however. pace accelerated Source: Moody's Economy.com, Steiner 2019 Meat Market Outlook 3 Presented by: Steiner Consulting Group | (800) 526-4612
#1 Economic Situation in US and World Global Economic Growth Expected to Further Expand in 2019 GLOBAL GROWTH OUTLOOK REAL GDP GROWTH % 6.0 5.0 4.0 3.0 2.0 1.0 0.0 -1.0 -2.0 2015 2016 2017 2018 Fcst 2019 Fcst -3.0 -4.0 World N. Am. S. Am. Euro Asia Oceania World N. Am. S. Am. Euro Asia Oceania 2015 2.7 2.7 -1.9 2.0 4.5 2.5 2016 2.4 1.6 -3.0 1.9 4.7 2.8 2017 3.1 2.3 0.4 2.5 5.0 2.3 2018 Fcst previous 3.1 2.9 1.1 2.2 4.7 2.7 revised 3.2 2.8 0.8 2.1 4.9 3.2 2019 Fcst previous 2.9 2.5 1.9 1.9 4.5 2.7 revised 3.0 2.6 1.7 2.0 4.7 2.7 Last update: September 12, 2018 Source: Moody's Economy.com 2019 Meat Market Outlook - 4 - Presented by: Steiner Consulting Group | (800) 526-4612
#1 Economic Situation in US and World Robust growth but more risks in the horizon Positives Financial system more robust - ANNUAL USA GROWTH RATE OF GDP Full employment % ch. - Annualized Quarterly Growth Rate 8.00 Rising consumer wealth - forecast 6.00 Consumer Confidence - 4.00 Strong corporate balance sheets - 2.00 Banks in good shape - 0.00 Export demand - -2.00 -4.00 Negatives -6.00 Trade war with China - -8.00 Emerging market financial crisis - * Forecast: Moody’s Brexit -10.00 - Geopolitical risks and oil price '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 - volatility 2019 Meat Market Outlook - 5 - Presented by: Steiner Consulting Group | (800) 526-4612
#1 Economic Situation in US and World US economy has added jobs consistently since 2011 USA UNEMPLOYMENT RATE: % NEW JOB CREATION: NON AGRICULTURAL, 000's Data Updated through September 2018 12.00 600 10.00 400 Dec 2019 Forecast 200 3.6% 8.00 THOUSAND JOBS percent 0 6.00 -200 -400 4.00 -600 September 2018 2.00 3.7% -800 0.00 -1000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Payrolls in September were up 134k, lower than in previous months as Hurricane - Florence impacted growth. Job gains for July and August were revised higher, however. Economy has added 1.875 - million jobs since the start of the year. 2019 Meat Market Outlook - 6 - Presented by: Steiner Consulting Group | (800) 526-4612
#1 Economic Situation in US and World Foodservice sales jumped in 2018, a sign of a booming economy GROCERY STORE $ SALES : Y/Y % CH. FOODSERVICE $ SALES : Y/Y % CH. Latest Data is for August 2018 Latest Data is for August 2018 12.0% 12.0% 10.0% 10.0% 8.0% 8.0% 6.0% 6.0% 4.0% 4.0% 2.0% 2.0% 0.0% 0.0% -2.0% -2.0% -4.0% -4.0% '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 Source: Advance Monthly Sales for Retail & Foodservice, US Census Bureau Foodservice dollar sales have increased sharply this year, a sign of the booming economy but also rising price inflation in the segment. Grocery dollar sales were also higher this year 2019 Meat Market Outlook - 7 - Presented by: Steiner Consulting Group | (800) 526-4612
#1 Economic Situation in US and World Fast Food Outperformed Other Sectors In August FOODSERVICE $ SALES : Y/Y % CH. SAME STORE SALES Latest Data is for August 2018 90% 12.0% 80% 10.0% 70% 8.0% 60% 6.0% 50% 40% 4.0% 30% 2.0% 20% 0.0% 10% -2.0% 0% Family Casual Limited Quick Fine Dining Dining Dining Service Casual -4.0% Higher Sales 50% 52% 77% 63% 58% Lower Sales 25% 24% 10% 31% 0% '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 Same Store Sales - August 2018 vs. August 2017, Tracking Survey Responses by Industry Segment Source: National Restaurant Association Source: US Census Source: National Restaurant Association 2019 Meat Market Outlook - 8 - Presented by: Steiner Consulting Group | (800) 526-4612
#1 Economic Situation in US and World Foodservice inflation reflects higher labor/operational costs Food CPI Comparisons. Jan 2008 = 100 Source: BLS. Analysis by Steiner. 135.0 Food at Limited 130.0 Service Restaurants 125.0 Food away from home 120.0 Food at Home 115.0 110.0 105.0 100.0 95.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Data updated through: August 2018 2019 Meat Market Outlook - 9 - Presented by: Steiner Consulting Group | (800) 526-4612
# 2 Currency Markets Performance of US$ vs. Imported Beef Currencies in last 12 months US Dollar vs. Currencies of Top Meat Trading Partners % change in the last 12 months (Oct. 2017 - Sep. 2018) 135% 130% 125% USD/BRL Positive for US imports 120% Negative for US exports 115% USD/Peso USD/AUD 110% USD/NZD 105% USD/CAD USD/EURO Negative for US imports 100% Positive for US exports 95% 90% Oct '17 Nov '17 Dec '17 Jan '18 Feb '18 Mar '18 Apr '18 May '18 Jun '18 Jul '18 Aug '18 Sep '18 Oct '18 2019 Meat Market Outlook - 10 - Presented by: Steiner Consulting Group | (800) 526-4612
# 2 Currency Markets Price of Imported 90CL Beef in US$ Has Been Trending Lower Price of 90CL Imported Beef in US Market (CIF) Pricein Prices in US$/cwt USD 350 300 Oct 2012 250 US $200 cwt US $190/cwt 200 Current USD/cwt 150 100 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Meat Market Outlook - 11 - Presented by: Steiner Consulting Group | (800) 526-4612
# 2 Currency Markets Price of Imported 90CL Beef in US$ Terms & AUD Terms Price of 90CL Imported Beef in US Market (CIF East Coast). Pricein Prices in US$/cwt and AUD/cwt USD and AUD 350 +40% gain from AUD/cwt 300 currency shift 250 $265/cwt 200 $190/cwt USD/cwt 150 100 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Meat Market Outlook - 12 - Presented by: Steiner Consulting Group | (800) 526-4612
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