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