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National Renderers Association October 25, 2012
Source: USDA/FAS
Down 500,000
Down 950,000
Down 480,000
2012 -330,000 Head
2013 -550,000 Head
2014 -600,000 Head
2015 -100,000 Head
2013F down 480,000
2014F down 100,000
2015F up 500,000
2013F down 50,000
2014F down 20,000
2012F -960,000 head
2013F -300,000 head
U.S. sltr will decline 900,000 in 2013,
sltr will not increase until 2015 or 2016
Increasing weights have offset 75 percent of the
impact of a declining cow herd during the last 20 years
Four steers produce as much beef today as five did in 25 years ago
U.S. beef production has been mainly 26-26.6 for the last
15 years in spite of a 4 million head reduction in cow numbers
U.S. border closed
due to BSE in Canada
Global Beef PRODUCERS - 2012 -
0
5
10
15
20
25
30
Bil L
bs, cw
e
Source: USDA/FAS
TOP 4= 60%
Numbers have stabilized and started to grow
$129-$130 annual average for 2013,
Projected H to L range $117-$143
U.S. and Global Pork and Poultry Situation
1,7001,7501,8001,8501,9001,9502,0002,0502,1002,1502,2002,2502,3002,3502,4002,450
1/8
1/2
9
2/1
9
3/1
2
4/2
4/2
3
5/1
4
6/4
6/2
5
7/1
6
8/6
8/2
7
9/1
7
10
/8
10
/29
11
/19
12
/10
12
/31
00
0 H
ea
d
WEEK
Hog Slaughter
5-Yr Avg 2011 2012
YTD +2.5%; +2,146 thousand head
Record high corn and meal prices
stopped any ideas of expansion
Weights are up 20 pounds since 1995
Global Pork Production
0
50
100
150
200
250
Bil L
bs, cw
e
Source: USDA/FAS
Averaging 3.6 bil lbs/year growth
Global Pork Producers - 2012 F -
0
10
20
30
40
50
60
Bil L
bs, cw
e
Source: USDA/FAS
TOP 2= 71%
Global Poultry Production
0
20
40
60
80
100
120
140
160
180
200
Bil L
bs, cw
e
Averaging 5.1 bil lbs/year growth
Source: USDA/FAS
Global Poultry Producers - 2012 F -
0
2
4
6
8
10
12
14
16
18
Bil L
bs, cw
e
Source: USDA/FAS
TOP 4= 64%
Global Meat PRODUCERS - 2012 F -
0
20
40
60
80
100
120
140
160
180
Bil L
bs, cw
e Poultry
Pork
Beef
Source: USDA/FAS
TOP 4= 74%
Grains, meat and bone meal, hide & offal, oil and
tallow
• Very few years since
1895 to compare this
drought too..
• 1930, 1933-34, 1936,
1988
• 4th lowest precipitation,
5th highest temperature.
• One of the worst
years in history
Avera
ge T
EM
P
Total Precipitation
Great
conditions
Horrible
conditions
JUNE to JULY Midwest Temperature & Precipitation
Since 1895.
This years crop is nearly 4 billion bushels smaller than expected.
World stocks at the
tightest levels since 1974
10.311.7
13.514.4 14.7 14.9
0
5
10
15
20
25
30
35
40
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
202
1
202
2
Billio
n g
allo
ns
/ye
ar
Years
Renewable Fuels Standard (RFS2)
Conventional and other nonadvanced
Cellulosic
Unspecified Advanced
Biomass based diesel
Annual Ethanol & Biodiesel Consumption
Source: EIA,2012-2013 projected
Gasoline and diesel demand remains soft, ethanol imports are strong
as 25 ethanol plants are either idled or running well below capacity.
The Ethanol industry has had a very difficult year for operating
margins. Losses are currently $.20-$30 per gallon.
-Projected at 9.4 billion for 2012/13
-Long-term trend reaches 12.9 billion by 2020
Smallest stock to use ratio in 50 years
Soybean Prices 2005 - 2012
Prices are expected to trade from a low of about $13.50
to highs of about $16.50 during the next eight months.
Corn prices will stay strong through mid summer of 2013
83 percent correlation between corn and meat and bone meal
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
By-P
rod
uct
Valu
e (
$/c
wt.
- L
ive)
Months
Tallow Value
2012 2011 3-Yr. Avg. 5-Yr. Avg.
Brent crude trades about $20 above West Tx.
Crude is a $90-$115 range for most of 2013.
85% correlation between Oil and Tallow
Long Term View
We are living in extraordinary times!
What does this tell us about agriculture the past
100 years?
What about the next 100 years?
Source: US Department of Commerce, plus other published
estimates
UN/FAO Projections
• Global food production will need to
increase 40% by 2030 and 70% by 2050;
beef and dairy production will need to
DOUBLE by 2050
• Farming in 2050 will occupy only 13% more
land than is used in 2008
Source: USDA/FAS
Source: USDA/FAS
Record high grain prices will slow
growth the balance of 2012 and 2013.
Global Meat EXPORTERS - 2012 F -
0
2
4
6
8
10
12
14
16
Bil L
bs, cw
e
Poultry
Pork
Beef
Source: USDA/FAS
TOP 2= 48%
Nearly 30 percent of all meat traded globally originates
from the U.S., more than any other country on the planet.
Source: FAO, FAOSTAT
Needed:
2030 2050 Poultry +49 +105
Pork +25 +46
Beef +24 +39
Global Summary Tremendous opportunity in the protein sector during the next decade.
Growing incomes will increase the demand for higher quality protein.
Population increases will be staggering, 700 million more in ten years.
Livestock numbers will grow, productivity growth is a must in all species in
order to meet the rapidly growing demand.
A competitive market place is essential if producers are to respond
to the economic signals of a global marketplace.
Utilizing technology that increases productivity and efficiency is essential,
at the same time producing a safe and wholesome product for consumers
around the globe.
The cattle industry will respond to the economic signal to expand if mother
nature will cooperate. Numbers and beef production will be at the tightest
levels during the next 24 months.
The U.S. will continue to be a major protein supplier to the globe.
Global expansion will accelerate as incomes rise around the world.
The U.S. economy is expected to grow only modestly in 2013 but it will
grow faster in 2014 and 2015.
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Summary
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