2018 Outlook for the U.S. Livestock and Poultry Sectors

Presented By

Seanicaa E. Herron

World Agricultural Outlook Board, USDA

USDA Agricultural Outlook Forum

Arlington, VA

February 23, 2018

2018 Livestock and Poultry Highlights

• Record Production• Record per capita disappearance • Favorable feed costs • Continued Export Growth• Lower Prices

Total Red Meat And Poultry Production Record Large In 2018

0

20

40

60

80

100

120

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

Billi

on P

ound

s

Beef Pork Poultry Other

• Total red meat and poultry production up 3.8 percent in 2018.

• Beef, pork, broiler sectors are positioned for further expansion.

*Forecast

Per Capita Disappearance, Retail Basis

• Per capita disappearance projected to be record high in 2018 at 222.6 pounds.

0

50

100

150

200

25020

08

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

*

Poun

ds, R

etai

l Wei

ght

Beef Pork Broiler Turkey Other

Feed Cost Outlook

• Corn: $3.36 per bushel in 2016/17*$3.30 per bushel in 2017/18*$3.40 per bushel in 2018/19

• SBM: $316.88 per ton in 2016/17*$320 per ton in 2017/18*$320 per ton in 2018/19

*average price at the midpoint

Meat Exports Projected To Rise In 2018

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.020

08

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

*

BILL

ION

PO

UN

DS

Beef Pork PoultryPoultry = Broilers & Turkey

Livestock & Poultry Prices Forecast Lower

-40

-30

-20

-10

0

10

20

30

2014 2015 2016 2017 2018*

Yr/Y

rPer

cent

Cha

nge

Cattle Hogs Broilers Turkeys

• Livestock and broiler prices pressured lower by increasing production in 2018.

• Turkeys prices forecast lower as production adjusts to changes in demand.

January 1 Cattle Inventory

80

85

90

95

100

10519

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

1520

1620

1720

1820

19*

Mill

ion

Head

• In 2017, cattle herd expanded for fourth consecutive year.

• 94.4 million head as of Jan. 1, 2018, up 0.7 percent year-over.

Beef Cow Herd Expands, Calf-crop Increases

25

27

29

31

33

35

37

39

41

4319

90

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

Mill

ion

Head

Beef Cows Calf-crop (2017)

• Beef cow herd up 1.6 percent at 31.7 million head.

• 2017 calf-crop estimated at 35.8 million head, 2 percent larger than 2016 calf-crop.

• Rate of expansion slowing. Producers retaining fewer replacement heifers.

Cattle On Feed Higher January 1, Supplies Outside Feedlots Down

5

10

15

20

25

3020

08

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Mill

ion

Head

Outside Feedlots On-Feed

• 14.0 million cattle on feed as of January 1, up 7.2 percent year-over.

• Cattle outside feedlots down 2.3 percent.

Beef Production Forecast Record High In 2018

21

22

23

24

25

26

27

28

2920

08

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

*

Billi

on P

ound

s

+5.9%

• 2018 beef production is forecast to reach 27.7 billion pounds.

Beef Exports Forecast to Increase In 2018

0.0

1.0

2.0

3.0

4.020

08

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

*

Billi

on P

ound

s

+5.7%

• Beef exports forecast to reach 3.0 billion pounds this year.

Cattle Prices Forecast Lower In 2018

$60

$70

$80

$90

$100

$110

$120

$130

$140

$150

$16020

08

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

*

$/CW

T

5-area steer price

-1.9%

Hog Inventories, Breeding Herd Higher On December 1, 2017

• All hogs and pigs estimated at 73.2 million head, up 2.4 percent.

• Breeding herd continues to expand. Up 1.1 percent year over year.

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

50.0

55.0

60.0

65.0

70.0

75.0

1990

1991

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Mill

ion

Hea

d

Hog Inventory Dec 1 Breeding Herd

Dec 1 Hog Inventory Breeding Herd

Producers Intend To Farrow More Sows

2.7

2.8

2.8

2.9

2.9

3.0

3.0

3.1

3.1

3.2

QI QII QIII QIV

Mill

ion

Head

2015 2016 2017 2018*

+2.8% +2.3%

*Forecast - 2018 Q1 & Q2 reported intentions. Q3 & Q4 forecasts.

Productivity Growth Increasing

8.5

9

9.5

10

10.5

1120

11 II III IV20

12 II III IV20

13 II III IV20

14 II III IV20

15 II III IV20

16 II III IV20

17 II III IV20

18* II III IV

Head

Pork Production Forecast Record High in 2018

20

21

22

23

24

25

26

27

2820

08

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

*

Billi

on P

ound

s

+5.1%

• Pork production is forecast to reach 26.9 billion pounds in 2018.

Strong Pork Exports Expected in 2018

• Pork exports are forecast at 5.9 billion pounds, up 4.8 percent year over.

• Lower pork prices, weaker U.S. dollar, and strong global demand to underpin U.S. pork exports.

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.020

08

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

*

Billi

on P

ound

s

+4.8%

Hog Prices Forecast Lower in 2018

$30 $35 $40 $45 $50 $55 $60 $65 $70 $75 $80

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

*

$/CW

T

National Base, Live equiv 51-52% lean

-4.9%

Broiler Laying Flock Above 2016 Levels

50

51

52

53

54

55

56

57

58

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

Mill

ion

Bird

s

2014 2015 2016 2017

• U.S. laying flock above 2016 levels.

• Increasing broiler laying birds are partially offsetting declines in egg laying rates and chick placements.

Chick Placements Declining in early 2018

160

165

170

175

180

185

190

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

Mill

ion

Bird

s

U.S. Total Chicks Placed

2015 2016 2017 2018

Heavier Bird Weights Supporting Higher Production in 2018

• Higher proportion of heavier weight birds, supporting increase in average bird weights.

5.6

5.7

5.8

5.9

6.0

6.1

6.2

6.3

6.4

6.5

2016 2017 2018

Poun

ds, L

ivew

eigh

t

Broiler Production Forecast Record High in 2018

+2.3%

30

32

34

36

38

40

42

4420

08

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

*

Billi

on P

ound

s

• Broiler production is forecast to reach 42.6 billion pounds this year.

Broiler Exports Forecast To Reach 7.0 Billion pounds in 2018

5.8

6.0

6.2

6.4

6.6

6.8

7.0

7.2

7.4

7.620

08

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

*

Billi

on P

ound

s

+2.5%

• Exports continuing to make progress from 2015 HPAI disruptions in trade.

• 2018 exports are forecast to increase 2.5 percent year-over.

• Improved shipments to developing markets in Sub-Saharan Africa, Caribbean, and Central America.

Broiler Prices Forecast Lower In 2018

6065707580859095

100105110

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

*

Cent

s Pe

r Pou

nd

National composite weighted avg.

-3.0%

Turkey Poult Placements Below Year-Ago

17

18

19

20

21

22

23

24

25

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

Mill

ion

Bird

s

2015 2016 2017 2018

Turkey Eggs In Incubators Below Year-Ago

20

22

24

26

28

30

32

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

Mill

ion

Eggs

2015 2016 2017 2018

Turkey Production Fractionally Lower in 2018

5.3

5.4

5.5

5.6

5.7

5.8

5.9

6.0

6.1

6.2

6.320

08

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

*

Billi

on P

ound

s

-0.2% • Turkey production is forecast to decline below 2017 in Q1 and Q2.

• Production is expected to recover in the last half of the year as supplies and demand move into balance.

Turkey Exports Silver Lining in 2018

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.920

08

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

*

Billi

on P

ound

s

+3.9%

• Exports to Mexico expected to remain firm in 2018.

Turkey Prices Forecast Lower In 2018

60

70

80

90

100

110

120

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

Cent

s Pe

r Pou

nd

National turkey hen price

-5.0%

Egg Production Forecast Higher In 2018

0.01.02.03.04.05.06.07.08.09.0

10.020

08

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

*

Billi

on D

ozen

Table Hatching

+2.1%

• Favorable margins to support producer intentions to expand egg production in 2018.

Strong Demand Underpins Higher Egg Price Forecast in 2018

60

80

100

120

140

160

180

200

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

Cent

s Pe

r Doz

en

New York wholesale egg price

+16.2%

Additional information about USDA 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

• http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1350

• Foreign Agricultural Service (FAS)Livestock and Poultry: World Markets and Trade

• http://www.fas.usda.gov/data/livestock-and-poultry-world-markets-and-trade