Total Protein Slides From Jessica Spreitzer, USMEF Economist USDA - PowerPoint PPT Presentation

Total Protein Slides From Jessica Spreitzer, USMEF Economist

USDA forecasting record production for pork and poultry in 2020 and 2021, with 2020 beef production forecast down slightly from 2019’s record The August WASDE revised the 2020 beef production forecast higher, and private analysts are forecasting slight growth for beef production in U.S. Production 2020 given the fast rebound in slaughter/production Metric Tons 25,000,000 +1.4% +1.3% 20,000,000 15,000,000 +0.7% +2.2% +2.6% -0.5% 10,000,000 5,000,000 0 Pork Beef Poultry 2009 2014 2017 2019 2020F 2021F Source: USDA/NASS & USDA/WASDE, carcass weight, does not include variety meats

Significant growth in U.S. pork production over last 5 years U.S. 2019 Pork Production: U.S. Pork Production Metric Tons ▪ Up 21% or +2.17 mil mt 14,000,000 (+4.79 billion pounds) from 12.9 2014 13,000,000 12.5 ▪ Up 8% or +931,000 mt 12,000,000 11.6 (+2.05 billion pounds) from 2017 11,000,000 10.4 10.4 10,000,000 From 2017 to 2019, the increase in U.S. pork production was 9,000,000 roughly the size of annual UK pork production and larger than 8,000,000 Taiwan’s annual pork production 2009 2014 2017 2019 2020F Source: USDA/NASS, carcass weight, does not include variety meats

Record U.S. production of poultry, pork, and beef expected in 2021 U.S. Production Million Metric Tons 28 23 18 13 8 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F2021F Beef Pork Poultry Source: USDA/NASS & USDA/WASDE, carcass weight, does not include variety meats

Record U.S. production of pork and beef expected in 2021 U.S. Production Million Metric Tons 14 13 12 11 10 9 8 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F2021F Beef Pork Source: USDA/NASS & USDA WASDE, carcass weight, does not include variety meats

USDA expects significant growth of pork production in 2020 with beef to rebound in 2021 Change in U.S. Production Year-over-year Metric Tons 1,000,000 800,000 600,000 400,000 200,000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F -200,000 -400,000 -600,000 -800,000 Beef Pork Poultry Source: USDA/NASS & USDA/WASDE, carcass weight, does not include variety meats

Record large exports underpinning beef and pork production growth in U.S. With double-digit growth for both U.S. production & exports from 2015 – 2019 Production Exports 14 3.5 Million metric tons 3.0 +13%+15% +23% 13 2.5 12 2.0 11 +24% 1.5 1.0 10 0.5 9 0.0 2015 2016 2017 2018 2019 2020F 8 2015 2016 2017 2018 2019 2020F Pork Beef Pork Beef *Production in carcass weight; exports in product weight and include variety meats *Percent change noted is 2019 compared to 2015 Sources: USDA/NASS, USDA/WASDE, USDA/FAS, USMEF estimates

Exports accounting for a larger share of production even as production is record large about 32% of pork/pvm production and >14% beef/bvm to be exported in 2020 Total U.S. Beef/Pork and Variety Meat Exports Metric Tons 26.9% of pork and variety 3,500,000 meat production exported in 2019 3,000,000 2,500,000 14.1% of beef and variety 12.3% of beef and variety 2,000,000 meat production exported in meat production exported in 2019 2000 1,500,000 1,000,000 500,000 3.7% of beef and variety 8.1% of pork and variety meat production exported in 0 meat production exported in … 2004 Beef Pork Sources: USDA/FAS & USMEF

USDA Forecasts Summary BEEF 2018 2019 2020F 2021F PORK 2018 2019 2020F 2021F Production +2.6% +1.0% -0.5% +2.2% Production +2.9% +5.0% +2.6% +0.7% Exports +10.3% -4.4% -4.3% +8.4% Exports +4.2% +7.6% +19.4% +1.4% Imports +0.1% +2.0% +2.6% -2.9% Imports -6.6% -9.3% -8.9% +3.9% Per Cap Per Cap +0.4% +1.4% -0.3% +0.3% +1.4% +2.8% -2.3% -0.8% Cons. Cons. The August WASDE revised the 2020 beef production forecast higher, and private analysts are forecasting slight growth for beef production in 2020 given the fast rebound in slaughter/production Source: USDA August WASDE, does not include variety meats

U.S. Per Capita Disappearance Pounds per capita of meat and poultry +0.9 120 +1.2 +2.4 100 80 +0.8 +0.2 -0.2 60 +1.4 -1.2 -0.4 40 20 0 Poultry Beef Pork 2016 2017 2018 2019 2020F 2021F Source: USDA August WASDE, variety meats not included

Combined per capita consumption for the main proteins will be slightly lower in 2020 (in part due to record pork exports) but is expected to rebound in 2021 U.S. Beef, Pork, and Poultry Per Capita Disappearance Lbs . 250 +9.3 +3.4 +2.5 +2.5+4.7 -0.2 +0.7 200 150 100 50 0 Beef Pork Poultry Source: USDA August WASDE, variety meats not included

U.S. beef per capita disappearance expected to tighten slightly in 2020 before rebounding in 2021 U.S. Beef Per Capita Disappearance Lbs . 70 68 66 64 62 60 +0.2 +1.4 +0.2 +0.8 -0.2 58 +1.6 56 -0.2 54 52 50 Source: USDA August WASDE, variety meats not included

Record U.S. pork exports essential to keep U.S. pork capita pork disappearance below recent highs U.S. Pork Per Capita Disappearance Lbs . 54 +1.4 52 -1.2 -0.4 +0.7 +0.3 +0.1 +4 50 48 46 44 42 Source: USDA August WASDE, variety meats not included

Per capita poultry consumption is expected to continue to reach new records although year-over-year growth is expected to moderate U.S. Poultry Per Capita Disappearance Lbs . 120 +2.4 +1.2 +0.9 115 +5.5 +1.5 +1.1 +1.3 110 105 100 95 90 85 80 Source: USDA August WASDE, variety meats not included

Pork Slides

June Hog Inventory up 5% The U.S. inventory of all hogs and pigs on June 1, 2020 was 79.6 million head, up 5% from June 2019 and up 3% from March 2020. Both the total inventory and the market hog inventory were record large for the June quarter in 2020, and the March – May pig crop and number of pigs saved per litter were also record large. Change from Change from 2020 Hogs and Pigs June Inventory June 2019 last quarter (million head) (%) (%) Total Inventory 79.6 +5% +3% Breeding Inventory 6.33 -1% -1% Market Hog Inventory 73.3 +6% +3% March - May Pig Crop and 2020 2019 Change Sows Farrowed (million head) (million head) (%) Pig Crop 34.9 34.5 +1% Sows Farrowed 3.17 3.13 +1% Pigs Saved Per Litter 11.01 11.0 +<1% Source: USDA/NASS

Record Large Hog Inventory 2018: 72.2 mil head, +1.4% 2019: 75.7 mil head, +4.8% 2020: 79.6 mil head, +5.2% U.S. Total Hog Inventory on June 1 80 Million Head 75 70 65 60 55 50 45 40 Source: USDA/NASS

Record Large Market Hog Inventory 2018: 65.9 mil head, +1.2% 2019: 69.3 mil head, +5.2% 2020: 73.3 mil head, +5.8% U.S. Market Hog Inventory on June 1 75 Million Head 70 65 60 55 50 45 40 Source: USDA/NASS

After increasing since 2015, the June breeding inventory decreased 1%, but apart from last year was still at the highest level since 1999 U.S. Breeding Hog Inventory on June 1 2018: 6.32 mil head, +3.5% 8.0 Million Head 2019: 6.41 mil head, +1.4% 2020: 6.33 mil head, -1.3% 7.5 7.0 6.5 6.0 5.5 5.0 Source: USDA/NASS

Higher Number of Pigs Saved Per Litter = Increasing Productivity 2018: 10.63, +0.8% 2019: 11.00, +3.5% Pigs Saved Per Litter 2020: 11.01, +0.1% March - May 11.5 11 10.5 10 9.5 9 8.5 8 7.5 7 Source: USDA/NASS

Continued record large pig crops 2018: 32.6 mil head, +2.3% 2019: 34.5 mil head, +5.8% U.S. March - May Pig Crop 2020: 34.9 mil head, +1.4% 36.0 Million Head 34.0 32.0 30.0 28.0 26.0 24.0 22.0 20.0 Source: USDA/NASS

U.S. Hog Inventory & Pork Production Total hogs, Dec Pork production, right axis 90 17 Forecast Production Changes: 85 Pork Production, million mt 2019: 4.8% 2025: 1.5% Hog Inventory, million head 15 2020: 4.0% 2026: 0.9% 80 2021: 2.4% 2027: 0.4% 2022: 1.8% 2028: 0.1% 75 13 2023: 2.5% 2029: 0.2% 2024: 1.5% 70 11 2014 65 PEDv 60 9 55 7 50 45 5 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 Source: USDA/FAS, and USDA Baseline Projections Dec 2019

USDA expects U.S. pork production to be up 2.6% to a new record in 2020 Annual U.S. Pork Production 2016: +1.8% 11.31 MMT 2017: +2.6% 11.60 MMT 13,000,000 2018: +2.9% 11.94 MMT Metric tons 2019: +5.0% 12.54 MMT 12,000,000 2020F: +2.6% 12.86 MMT 2021F: +0.7% 12.96 MMT 11,000,000 10,000,000 9,000,000 8,000,000 7,000,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F Source: USDA/NASS & WASDE estimates

2016: +1.8% 11.31 MMT Quarterly U.S. Pork Production Forecast 2017: +2.6% 11.60 MMT 2018: +2.9% 11.94 MMT 2019: +5.0% 12.54 MMT 2020F: +2.6% 12.86 MMT 2021F: +0.7% 12.96 MMT 3.6 +6.4% -0.4% +8.6% 3.4 +6.9% -4.2% +3.5% +10.8% 3.2 +2.9% 2016 +4.6% +6.2% +3.7% 2017 3.0 Million mt +1.2% +3.1% -4.6% 2018 2.8 2019 2.6 2020F 2.4 2021F 2.2 2.0 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Source: USDA/WASDE August 2020, carcass weight equivalent, commercial production