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					 2011 Midwest/Great Plains & Western Outlook Conference



                                   Hog & Pork
                                    Outlook
                                    Louisville,
                                   August 15-16

Ron Plain
D. Howard Doane Professor of Agricultural Economics
University of Missouri-Columbia
http://web.missouri.edu/~plainr/
       Annual U.S. Pork Production, 1930-2011

Billion Pounds
25                                      actual           1.5% trend

20

15

10
                                                   2011 U.S. pork production
 5
                                                   expected to be on trend
 0
     1930
            1935
                   1940
                          1945
                                 1950
                                         1955
                                                1960
                                                       1965
                                                              1970
                                                                     1975
                                                                            1980
                                                                                   1985
                                                                                          1990
                                                                                                 1995
                                                                                                        2000
                                                                                                               2005
                                                                                                                      2010
Cost of Production
                                       $ per bushel




                           0
                               1
                                   2
                                         3
                                              4
                                                      5
                                                          6
                                                              7
                    1987
                    1988
                    1989
                    1990
                    1991
                    1992
                    1993




Source: USDA/NASS
                    1994
                    1995
                    1996
                    1997
                    1998
                    1999
                    2000
                    2001
                                                                  Monthly, 1987-2011




                    2002
                    2003
                    2004
                    2005
                    2006
                    2007
                                                                                       Corn, Average Price Received,




                    2008
                    2009
                    2010
                    2011
                 Cost of Slaughter Hog Production
                         Iowa State University Calculations, 1987-2011

$ Per Live Cwt
     70

     65

     60

     55

     50

     45

     40

     35
          1987
                 1988
                        1989
                               1990
                                      1991
                                             1992
                                                    1993
                                                           1994
                                                                  1995
                                                                         1996
                                                                                1997
                                                                                       1998
                                                                                              1999
                                                                                                     2000
                                                                                                            2001
                                                                                                                   2002
                                                                                                                          2003
                                                                                                                                 2004
                                                                                                                                        2005
                                                                                                                                               2006
                                                                                                                                                      2007
                                                                                                                                                             2008
                                                                                                                                                                    2009
                                                                                                                                                                           2010
                                                                                                                                                                                  2011
                                                                                Marketing Month

       Source: John Lawrence, Iowa State University
        Corn Price & Cost of Hog Production
                                                             Monthly, 1987-2011

70                                                                                                                                                                                  7
                                                                                            Hog Cost
65
                                                                                            Corn $                                                                                  6
60
                                                                                                                                                                                    5
55
50                                                                                                                                                                                  4

45                                                                                                                                                                                  3
40
                                                                                                                                                                                    2
35
                                                                                                                                                                                    1
30
25                                                                                                                                                                                  0
     1987
            1988
                   1989
                          1990
                                 1991
                                        1992
                                               1993
                                                      1994
                                                             1995
                                                                    1996
                                                                           1997
                                                                                  1998
                                                                                         1999
                                                                                                2000
                                                                                                       2001
                                                                                                              2002
                                                                                                                     2003
                                                                                                                            2004
                                                                                                                                   2005
                                                                                                                                          2006
                                                                                                                                                 2007
                                                                                                                                                        2008
                                                                                                                                                               2009
                                                                                                                                                                      2010
                                                                                                                                                                             2011
            Source: John Lawrence, Iowa State University
            Corn Price & Cost of Hog Production
                                                               Monthly, 1987-2011

70                                                                                                                                                                                  7
                                                                                            Hog Cost
65
                                                                                            Corn $                                                                                  6
60
                                                                                                                                                                                    5
55
50                                                                                                                                                                                  4

45                                                                                                                                                                                  3
40
                                                                                                                                                                                    2
35
                                                                                                                                                                                    1
30          $6.70 corn implies hog cost at $68/cwt live or $89/cwt car.
25                                                                                                                                                                                  0
     1987
            1988
                   1989
                          1990
                                 1991
                                        1992
                                               1993
                                                      1994
                                                             1995
                                                                    1996
                                                                           1997
                                                                                  1998
                                                                                         1999
                                                                                                2000
                                                                                                       2001
                                                                                                              2002
                                                                                                                     2003
                                                                                                                            2004
                                                                                                                                   2005
                                                                                                                                          2006
                                                                                                                                                 2007
                                                                                                                                                        2008
                                                                                                                                                               2009
                                                                                                                                                                      2010
                                                                                                                                                                             2011
        Source: Shane Ellis, Iowa State University
     Iowa Farrow to Finish Profits, 1997-2011
$ Per Head                             Iowa State University Calculations
  50

  30

  10

  -10

  -30

  -50

  -70
        1997

                  1998

                         1999

                                2000

                                       2001

                                              2002

                                                     2003

                                                            2004

                                                                   2005

                                                                          2006

                                                                                 2007

                                                                                        2008

                                                                                               2009

                                                                                                      2010

                                                                                                             2011
               Source: Shane Ellis, Iowa State University
                                Monthly Profit Per Pig
Dollars                                      1997-02           2007-11
60
40
20
 0
-20
-40
-60
-80
      97&07




                        98&08




                                     99&09




                                                       00&10




                                                                         01&11




                                                                                 02&12
              Source: Shane Ellis, Iowa State University
                    Correlation of Profit & Lagged Hog Slght
20
                                                         %ChDaHogSlt Lag 5 Qtr                     Profit


10


 0


-10


-20
      82-1

             84-1

                      86-1

                             88-1

                                    90-1

                                           92-1

                                                  94-1

                                                         96-1

                                                                98-1

                                                                       00-1

                                                                              02-1

                                                                                     04-1

                                                                                            06-1

                                                                                                   08-1

                                                                                                          10-1
International Trade
                                          U.S. Meat Exports, 2000-2011
                   800000

                   700000             Beef         Pork         Broiler         Turkey
Tthousand pounds




                   600000

                   500000

                   400000

                   300000

                   200000

                   100000

                       0
                            Jan- Jul Jan- Jul Jan- Jul Jan- Jul Jan- Jul      Jul      Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan
                             00       01       02       03       04      Jan-     Jan-     07      08      09      10      11
                                                                          05       06
                         U.S. Pork Imports & Exports
                 5,000
                 4,500                                      Imports                 Exports
                 4,000
                 3,500
Million Pounds




                 3,000
                 2,500
                 2,000
                 1,500
                 1,000
                  500
                    0
                         1980
                                1982
                                       1984
                                              1986
                                                     1988
                                                            1990
                                                                   1992
                                                                          1994
                                                                                 1996
                                                                                        1998
                                                                                               2000
                                                                                                      2002
                                                                                                             2004
                                                                                                                    2006
                                                                                                                           2008
                                                                                                                                  2010
                     U.S. Pork Imports & Exports, 2000-2011
Mil. lbs.                               Monthly Carcass Weight Equivalent
    600

   500                                           Imports              Exports

   400

   300

   200

   100

      0
                                                             Jan-05


                                                                       Jan-06


                                                                                Jan 07


                                                                                         Jan 08


                                                                                                  Jan 09




                                                                                                                    Jan 11
            Jan-00


                      Jan-01


                               Jan-02


                                        Jan-03


                                                    Jan-04




                                                                                                           Jan-10
                  U.S. Pork Imports & Exports as % of U.S. Pork
                              Production, 2006-2011
                                                                 Monthly Carcass Weight Equivalent
                  30

                  25
% of Production




                  20

                  15

                  10                                                                                      Imports                            Exports
                  5

                  0



                                                                                                                              Oct




                                                                                                                                                         Oct
                                            OCT




                                                                        OCT




                                                                                                   OCT
                       Jan 06


                                      JUL


                                                  Jan 07


                                                                  JUL


                                                                              Jan 08


                                                                                             JUL


                                                                                                         Jan 09
                                                                                                                  Apr
                                APR




                                                           APR




                                                                                       APR




                                                                                                                        Jul


                                                                                                                                    Jan 10
                                                                                                                                             Apr
                                                                                                                                                   Jul


                                                                                                                                                               Jan 11
                                                                                                                                                                        Apr
                       U.S. Pork Exports, 2006-2011
Mil. lbs.                          Monthly Carcass Weight Equivalent
    160
                     Japan           Canada        Mexico
   140
                     Russia          S Korea       China HK
   120

   100

     80

     60

     40

     20

      0
            Jan-06




                          Jan-07




                                          Jan-08




                                                      Jan-09




                                                                  Jan-10




                                                                           Jan-11
                        Frozen Pork & U.S. Pork Exports, 2000-2011
                 700

                 600


                 500
Million pounds




                 400


                 300

                 200

                 100                                                       Cold Storage             Exports

                  0
                       Jan- Jul Jan- Jul Jan- Jul Jan- Jul Jan- Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul
                        00       01       02       03       04      05      06      07      08      09      10      11
Head per mo.
                             U.S. Hog Imports from Canada
  800,000
                              Slaughter Hogs                    Feeders Pigs
  700,000
  600,000
  500,000
  400,000
  300,000
  200,000
  100,000
         0
               1997

                      1998

                             1999

                                    2000

                                           2001

                                                  2002

                                                         2003

                                                                2004

                                                                       2005

                                                                              2006

                                                                                     2007

                                                                                            2008

                                                                                                   2009

                                                                                                          2010

                                                                                                                 2011
Meat Demand
                      U.S. Per Capita Meat Consumption
Pounds
                      Pork           Beef          Broilers            Turkey                Fish
100
 90
 80
 70
 60
 50
 40
 30
 20
 10
  0
      1945

               1950

                      1955

                             1960

                                    1965

                                           1970

                                                  1975

                                                         1980

                                                                1985

                                                                        1990

                                                                               1995

                                                                                      2000

                                                                                               2005

                                                                                                      2010
             Source: USDA/ERS
Pounds                U.S. Per Capita Meat Consumption
250
240
230
220
210
200
190
180
170
160
150
      1945

               1950

                       1955

                              1960

                                     1965

                                            1970

                                                   1975

                                                          1980

                                                                 1985

                                                                        1990

                                                                               1995

                                                                                      2000

                                                                                             2005

                                                                                                    2010
             Source: USDA/ERS
                                       Grains, Feed and Residual
Bil. Bushels
8
7
                                                                                                                            DDGS
6
5                                                                                                                           Wheat

4                                                                                                                           Oats
3
                                                                                                                            Barley
2
                                                                                                                            Sorghum
1
                                                                                                                            Corn
0
    1978

           1980

                  1982

                         1984

                                1986

                                        1988

                                               1990

                                                      1992

                                                             1994

                                                                    1996

                                                                           1998

                                                                                  2000

                                                                                         2002

                                                                                                2004

                                                                                                       2006

                                                                                                              2008

                                                                                                                     2010
Forecast Change in Meat Production

                   --Percent Change--
  Type             2010-11       2011-12
Beef               - 0.7%        - 4.3%
Pork               +1.0%         +1.6%
Chicken            +1.3%         +1.0%
Turkey             +2.4%         +0.4%
All Meats          +0.7%         - 0.4%

 Source: USDA-OCE WASDE, August 2011
            Change in Retail Meat Demand
                        Base Elasticity = - 0.75
% change from
year ago
    10
     8
     6
     4
     2
     0
     -2
     -4
     -6
     -8
             May


             May


             May


             May


             May


             May


             May


             May


             May


             May
           2007>


           2008>


           2009>


           2010>


           2011>
          2002 >




          2005 >


          2006 >
             Sep


             Sep


             Sep


             Sep


             Sep


             Sep


             Sep


             Sep


             Sep
            2003


            2004




          Source: Ron Plain, University of Missouri
                   Change in Pork Demand
% change from           Base Elasticity = - 0.75
year ago



      8

      3

     -2

     -7

    -12
             May


             May


             May


             May


             May


             May


             May


             May


             May


             May
           2007>


           2008>


           2009>


           2010>


           2011>
          2002 >




          2005 >


          2006 >
             Sep


             Sep


             Sep


             Sep


             Sep


             Sep


             Sep


             Sep


             Sep
            2003


            2004




          Source: Ron Plain, University of Missouri
             Change in Pork Export Demand
                          Base Elasticity = - 0.5
% change from
year ago

    110
     90
     70
     50
     30
     10
     -10
     -30
     -50
              May


              May


              May


              May


              May


              May


              May


              May


              May


              May
            2007>


            2008>


            2009>


            2010>


            2011>
           2002 >




           2005 >


           2006 >
           2003 >


           2004 >
              Sep


              Sep


              Sep


              Sep


              Sep


              Sep


              Sep


              Sep


              Sep
           Source: Ron Plain, University of Missouri
                   Change in Hog Demand
                         Base Elasticity = - 0.2
% change from
year ago
     18

     13

      8

      3

     -2

     -7

    -12
             May


             May


             May


             May


             May


             May


             May


             May


             May


             May
           2007>


           2008>


           2009>


           2010>


           2011>
          2002 >




          2005 >


          2006 >
             Sep


             Sep


             Sep


             Sep


             Sep


             Sep


             Sep


             Sep


             Sep
            2003


            2004




          Source: Ron Plain, University of Missouri
                        250
                              300
                                    350
                                          400
                                                450
                                                         500
                   2001 >                                Cents/lb
                     May
                     Sep
                   2002 >
                     May
                     Sep
                   2003 >
                     May
                     Sep




Source: USDA/ERS
                   2004 >
                     May
                     Sep
                   2005 >
                     May
                                                 Bacon




                     Sep
                   2006 >
                     May
                     Sep
                   2007 >
                     May
                                                 Chops




                     Sep
                   2008 >
                     May
                                                                    Retail Prices, Monthly, 2001-2011




                     Sep
                                                 Ham
                                                                                                        Retail Boneless Pork Prices




                   2009 >
                     May
                     Sep
                   2010 >
                     May
                     Sep
                   2011 >
                     May
                                                     Percent Change




                                                -8
                                                     -6
                                                          -4
                                                               -2
                                                                    0
                                                                        2
                                                                            4
                                                                                6




                                          -10
                                   05-1

                                   05-3

                                   06-1

                                   06-3

                                   07-1

                                   07-3

                                   08-1




Source: U.S. Commerce Department
                                   08-3

                                   09-1

                                   09-3

                                   10-1
                                                                                    Growth in Real GDP




                                   10-3

                                   11-1
                             U.S. Unemployment Rate,
                                    Seasonally Adjusted, 1996-2011
          11
          10
          9
          8
Percent




          7
          6
          5
          4
          3
               1996

                      1997

                             1998

                                    1999

                                           2000

                                                  2001

                                                         2002

                                                                2003

                                                                       2004

                                                                              2005

                                                                                     2006

                                                                                            2007

                                                                                                   2008

                                                                                                          2009

                                                                                                                 2010

                                                                                                                        2011
           Source: Bureau of Labor Statistics
Average Duration of Unemployment
         Current Situation
• The government is broke, unemployment
  is high, the stock market has collapsed,
  the economy is barely growing, and
  consumer confidence is the lowest since
  May 1980.
• Needless to say, this is not good for
  domestic meat demand.
Inventory Surveys
                            Thousand Head
D
    ec




              5700
                     5800
                            5900
                                   6000
                                          6100
                                                 6200
         99
                                                        6300
D
    ec
         00
D
    ec
         01
D
    ec
         02
D
    ec
         03
D
    ec
         04
D
    ec
         05
D
    ec
         06
D
    ec
         07
D
    ec
         08
D
    ec
                                                               U.S. Swine Breeding Herd, 1999-2011




         09
D
    ec
         10
                   Canadian Swine Breeding Herd, 2000-2011
                1700
                1650
                1600
Thousand Head




                1550
                1500
                1450
                1400
                1350
                1300
                1250
                1200
                   00


                          01


                                 02


                                        03


                                               04


                                                      05


                                                             06


                                                                    07


                                                                           08


                                                                                  09


                                                                                         10


                                                                                                11
                   n


                          n


                                 n


                                        n


                                               n


                                                      n


                                                             n


                                                                    n


                                                                           n


                                                                                  n


                                                                                         n


                                                                                                n
                 Ja


                        Ja


                               Ja


                                      Ja


                                             Ja


                                                    Ja


                                                           Ja


                                                                  Ja


                                                                         Ja


                                                                                Ja


                                                                                       Ja


                                                                                              Ja
           Hog Inventory Reports
                           U.S. June   Canada April
All Hogs & Pigs                100.5       101.4
Kept for Breeding              100.3        99.6
Kept for Marketing             100.6       101.6

Under 50 lbs                   100.1       101.3
50-119 lbs.                     99.8        99.5
120-179 lbs.                   103.3       104.0
180 lbs. and over               99.5

Sep-Nov Farrowings              98.8        98.6
Dec-Feb Farrowings              99.4        97.9
Mar-May Farrowings              98.2       100.7
Jun-Aug Farrowing Intentions    97.4        99.8
Sep-Nov Farrowing Intentions    98.9
            Hog Inventory Reports
                                 U.S. June   Canada April
All Hogs & Pigs                    100.5         101.4
Kept for Breeding                  100.3          99.6
Kept for Marketing                 100.6         101.6
                Which is
Under 50 lbs    important?         100.1         101.3
50-119 lbs.     More sows or        99.8          99.5
120-179 lbs.    fewer litters?     103.3         104.0
180 lbs. and over                   99.5

Sep-Nov Farrowings                   98.8         98.6
Dec-Feb Farrowings                   99.4         97.9
Mar-May Farrowings                   98.2        100.7
Jun-Aug Farrowing Intentions         97.4         99.8
Sep-Nov Farrowing Intentions         98.9
                  Daily Hog Slaughter by Quarter
% change from
yr. ago
   10
    8
    6
    4
    2
    0
   -2
   -4
   -6
   -8
  -10
        DJF99

                DJF00

                        DJF01

                                DJF02

                                        DJF03

                                                DJF04

                                                        DJF05

                                                                DJF06

                                                                        DJF07

                                                                                DJF08

                                                                                        DJF09

                                                                                                DJF10

                                                                                                        DJF11
        -10
              -8
                   -6
                        -4
                             -2
                                  0
                                      2
                                          4
                                              6
                                                  8
                                                      10
                                                           yr. ago
DJF99
                                                           % change from


DJF00

DJF01

DJF02

DJF03

DJF04

DJF05

DJF06

DJF07

DJF08
                                                                           Breeding Herd by Quarter




DJF09

DJF10

DJF11
   Hog Slaughter & Breeding Herd by Quarter
% change from
yr. ago
   10
    8                   Br Herd                  D Hog Slt
    6
    4
    2
    0
   -2
   -4
   -6
   -8                                   Correlation = 0.20
  -10
        DJF99

                DJF00

                        DJF01

                                DJF02

                                         DJF03

                                                   DJF04

                                                           DJF05

                                                                   DJF06

                                                                           DJF07

                                                                                   DJF08

                                                                                           DJF09

                                                                                                   DJF10

                                                                                                           DJF11
        -10
              -8
                   -6
                        -4
                             -2
                                  0
                                      2
                                          4
                                              6
                                                  8
                                                      10
DJF99                                                      yr. ago
                                                           % change from


DJF00

DJF01

DJF02

DJF03

DJF04

DJF05

DJF06

DJF07

DJF08

DJF09
                                                                           Sows Farrowed by Quarter




DJF10

DJF11
  Sows Farrowed & Hog Slaughter by Quarter
% change from
yr. ago
   10
    8                      Sows Far               D Hog Slt
    6
    4
    2
    0
   -2
   -4
   -6
   -8                                   Correlation = 0.78
  -10
        DJF99

                DJF00

                        DJF01

                                DJF02

                                         DJF03

                                                 DJF04

                                                         DJF05

                                                                 DJF06

                                                                         DJF07

                                                                                 DJF08

                                                                                         DJF09

                                                                                                 DJF10

                                                                                                         DJF11
        -6
             -4
                  -2
                                             10




                       0
                           2
                               4
                                   6
                                       8
DJF99
                                           % change
                                           from yr. ago

DJF00

DJF01

DJF02

DJF03

DJF04

DJF05

DJF06

DJF07

DJF08

DJF09

DJF10
                                                          U.S. Sows Farrowed by Quarter




DJF11
        -10
              -5
                   0
                       5
                           10
                                   15
JFM99
                                % change
                                from yr. ago

JFM00

JFM01

JFM02

JFM03

JFM04

JFM05

JFM06

JFM07

JFM08

JFM09

JFM10

JFM11
                                               Canada Sows Farrowed by Quarter
  Sows Farrowed-U.S. & Canada Combined
% change
from yr. ago
   6

  4

  2

  0

 -2

 -4

 -6
      DJF99

              DJF00

                      DJF01

                              DJF02

                                      DJF03

                                              DJF04

                                                      DJF05

                                                              DJF06

                                                                      DJF07

                                                                              DJF08

                                                                                      DJF09

                                                                                              DJF10

                                                                                                      DJF11
Slaughter
Thousand
  Head
                  Weekly F.I. Sow Slaughter
70                            2010               2011


65


60


55


50


45
                  2011 sow slaughter is down 0.2%
40
                          Y
              R
   N




                                           UG




                                                         T
                    PR




                                                              V
                                                  P
         B




                                N


                                       L




                                                                  EC
                          A




                                                         C
 JA




                                     JU
              A




                                                SE




                                                             O
       FE




                              JU
                         M




                                                        O
             M


                   A




                                           A




                                                             N


                                                                  D
       Source: USDA/AMS
Thousand
  Head
                     Slaughter of U.S. Sows
60
                     2010              2011

55


50


45


40

             2011 slaughter of U.S. sows is up 2.8%
35
                             Y
             R
  N




                                              UG




                                                          T
                 PR




                                                               V
                                                     P
        B




                                   N


                                         L




                                                                   EC
                             A




                                                          C
JA




                                       JU
             A




                                                   SE




                                                              O
      FE




                                 JU
                            M




                                                         O
            M


                 A




                                              A




                                                              N


                                                                   D
      Source: USDA/AMS
                             Weekly Slaughter of U.S. Sows
                 1.1


                 1.0
% of Inventory




                 0.9


                 0.8


                 0.7


                 0.6                        2010               2011


                 0.5
                                        Y
                              R
                   N




                                                         UG




                                                                       T
                                  PR




                                                                            V
                                                                P
                         B




                                              N

                                                     L




                                                                                EC
                                        A




                                                                       C
                 JA




                                                   JU
                              A




                                                              SE




                                                                           O
                       FE




                                            JU
                                       M




                                                                      O
                             M

                                  A




                                                         A




                                                                           N


                                                                                D
                   Source: USDA/AMS & Ron Plain
                         Estimated Gilt Retention & Sow Loss, 2010-11
                                                               GG Cattle & Hog Fax

                         120
Thousand Head Per Week




                         100

                         80

                         60

                         40
                                                                                                                Gilts Retained
                         20                                                                                     Sow Loss

                          0
                                                                           Aug




                                                                                             Nov
                                                   Apr




                                                                                                                             Apr
                                                                                       Oct
                                                                     Jul




                                                                                                                                               Jul
                                       Feb




                                                               Jun




                                                                                 Sep




                                                                                                   Dec


                                                                                                                 Feb




                                                                                                                                         Jun
                               2010




                                                                                                         2011
                                                         May




                                                                                                                                   May
                                             Mar




                                                                                                                       Mar
                                      Source: Ron Plain, University of Missouri
                             Weekly Hog Slaughter
Millions
2.5

2.4                     2009       2010       2011
2.3

2.2

2.1

 2

1.9

1.8

1.7




                                                                        C
                                                            T
       N


             B




                                    N


                                          L



                                               G
                         R



                              AY




                                                                 V
                                                       P
                 AR




                                                            C
                                        JU




                                                     SE




                                                                     DE
            FE
      JA




                                   JU




                                                                NO
                      AP




                                              AU




                                                           O
                             M
                 M




           Source: USDA/AMS
     Actual & Predicted Change in B&G Slaughter
                    U.S. Weekly F.I. Hog Slaughter, 2011
% change from
yr. ago 8
                              Actual            USDA Jun Forecast
       6


       4


       2


       0


      -2


      -4
                                    May
                        Mar




                                                 Jul
                              Apr




                                                                    Oct
                                                       Aug
                  Feb




                                          Jun




                                                             Sep




                                                                          Nov

                                                                                Dec
           2011
    Hog Slaughter Plant Closings
•   February 2000 AVA Pork-Shamokin, PA
•   June 2000 Farmland-Dubuque, IA
•   July 2001 Excel-Marshall, MO
•   December 2001 AMPAC/Iowa Pork-Chicago, IL
•   January 2003 Hormel-Rochelle, IL
•   May 2004 RC Pork-Downs, KS
•   September 2005 Smithfield-Smithfield, VA
•   March 2006 Bryan Foods-West Point, MS
•   January 2009 Meadowbrook-Rantoul, IL
•   April 2010 Morrell-Sioux City, IA

     Triumph plans to build in East Moline, someday
$/head               Gross Hog Packing Margin

35
30
25
20
15
10
 5
 0
         20


                 20


                         20


                                 20


                                         20


                                                 20


                                                         20


                                                                 20


                                                                         20
            02


                    03


                            04


                                    05


                                            06


                                                    07


                                                            08


                                                                    09


                                                                            10
     Source: Ron Plain
                    Weekly Gross Pork Packer Margin, 200
                              Pound Carcass
             60

             50

             40
$ per Head




             30

             20

             10
                                           Avg 02-09         2010     2011
              0
                  JAN                APR                 JUL            OCT

                   Calculation: Byproduct + Cutout – Negotiated net
Productivity Growth
           U.S. Pigs Per Litter by Quarter
% change
from yr. ago
    3

  2.5

    2

  1.5

    1

  0.5

    0

 -0.5

   -1
        DJF99

                DJF00

                        DJF01

                                DJF02

                                        DJF03

                                                DJF04

                                                        DJF05

                                                                DJF06

                                                                        DJF07

                                                                                DJF08

                                                                                        DJF09

                                                                                                DJF10

                                                                                                        DJF11
                              Barrow & Gilt Live Weights
                              Iowa-Minnesota Weekly Average
Pounds
277
275                                                                        2008

273
                                                                           2009
271
269                                                                        2010
267
265                                                                        2011

263
261
259
257
                               AY
      N




                  AR




                                               G
                                          L




                                                           T
                          R




                                                                       C
                                                                V
                                                      P
             B




                                     N

                                         JU




                                                           C
  JA




                                                               NO
                                                   SE
                       AP




                                                                    DE
                                              AU
          FE




                                    JU
                              M




                                                          O
                 M




       Source: USDA/AMS
                                  Barrow & Gilt Live Weights
Pounds                            Iowa-Minnesota Annual Average
280


270                                  Actual                    Trend

260


250


240


230


220
      1981

             1983

                    1985

                           1987

                                   1989

                                          1991

                                                 1993

                                                        1995

                                                                 1997

                                                                        1999

                                                                               2001

                                                                                      2003

                                                                                             2005

                                                                                                    2007

                                                                                                           2009

                                                                                                                  2011
                              Weekly Pork Production
                 500
                 480
                 460
                 440
Million Pounds




                 420
                 400
                 380
                 360
                 340
                 320                        2002-09    2010   2011
                 300
                       Jan            Apr             Jul       Oct

                       Source: USDA AMS
Prices
                       Cents Per Pound




         200
               220
                     240
                           260
                                 280
                                       300
                                             320
                                                   340
                                                         360
Jan 00


Jan 01


Jan 02


Jan 03


Jan 04


Jan 05


Jan 06


Jan 07


Jan 08


Jan 09
                                                               U.S. Retail Pork Prices, 2000-2011




Jan 10


Jan 11
                                Retail Pork Prices
                                2000-08   2009         2010      2011
              350
              340
              330
              320
Cents/pound




              310
                                                              Record high
              300
              290
              280
              270
              260
              250
                    Jan Feb Mar Apr May Jun      Jul    Aug Sep Oct Nov Dec


                Source: BLS & USDA/ERS
                     Hog Cutout Value, Weekly
$ per cwt.
   115
   110
   105
   100
                                                Avg.
    95
                                                2004-08
    90
                                                2009
    85
    80                                          2010
    75
    70                                          2011
    65
    60
    55
    50
    45
      N




                                     T
                     PR




                              L




                                     C
    JA




                            JU




                                    O
                    A




         Source: USDA/AMS
      Barrow & Gilt Negotiated Base Price
$/cwt
                              2002-09        2010        2011
100
 95
 90
 85
 80
 75
 70
 65
 60
 55
 50
        Jan Feb Mar Apr May Jun                  Jul   Aug Sep Oct Nov Dec

      Source: USDA Prior Day Slaughter reports
                National Base Slaughter Hog Price,
$ per cwt.                   Weekly
   105
   100
    95
    90                                                    Avg.
    85                                                    2004-08
                                                          2009
    80
    75                                                    2010
    70
                                                          2011
    65
    60
    55
    50
    45
      N




                                                      T
                      PR




                                        L




                                                      C
    JA




                                      JU




                                                     O
                     A




          Source: USDA Prior Day Purchased reports
              10# Early Weaned Pigs, Delivered,
$ per head                Weekly
  60

  55
  50
                                                  Avg.
  45                                              2004-08
  40                                              2009

  35                                              2010
  30
                                                  2011
  25

  20
  15

  10
     N




                                   T
                 PR




                              L




                                   C
   JA




                            JU




                                  O
                 A




         Source: USDA/AMS
        Pork Cutout and Hog Price, Weekly, 2009-2011
        120
                           Cutout
        110
                           Carcass
        100
$/cwt




         90

         80

         70

         60

         50
                     Apr




                                              Apr




                                                                       Apr
                                 Oct




                                                          Oct
                           Jul




                                                    Jul
              2009




                                       2010




                                                                2011
              Source: USDA/AMS
    Hog Base Price as Percent of Pork Cutout, Weekly,
                        2008-2011
          110


          105


          100
Percent




           95


           90


           85


           80
                2008




                               2009




                                      2010




                                             2011
                  Source: USDA/AMS
My Forecast
   Commercial Hog Slaughter Forecast
                       Million Head
                                                 ------Change------
           2010        2011        2012
                                                  10-11       11-12.
Qtr 1    27.630*       27.486*     27.450        - 0.5% - 0.1%

                                                 + 0.2% +0.7%
Qtr 2    26.074*       26.113*     26.300
Qtr 3    26.930*       27.250      27.100        + 1.2% - 0.5%

Qtr 4    29.626*       29.250      29.980        - 1.3% +2.5%

Year    110.260*     110.099 110.830             - 0.1% +0.7%
    Note: Q1 10 & Q4 11 & Q3 12 have only 63 slaughter days
          *actual
    Iowa-Minn Hog Price Forecast
Negotiated Base Price Per Carcass Hundredweight

        2009         2010          2011        2012
Qtr 1   $57.23*     $66.81*       $78.95*      $80-84
Qtr 2   $57.32*     $79.04*       $91.80*      $87-91
Qtr 3   $51.43*     $79.44*       $95-98       $86-90
Qtr 4   $54.98*     $65.20*       $80-84       $76-80
Year    $55.23*     $72.67*       $86-88       $82-85
         *actual price – prior day purchased
 Iowa-Minn Live Hog Price Forecast
       Negotiated Live Base Price Equivalent

        2009          2010           2011   2012
Qtr 1 $43.49* $50.78* $60.00* $61-64
Qtr 2 $43.56* $60.07* $69.77* $66-69
Qtr 3 $39.09* $60.37* $72-75                $65-68
Qtr 4 $41.78* $49.56* $61-64                $58-61
Year   $41.97* $55.19* $66-68               $62-65
       *actual carcass price x 76%
                                 U.S. Hog Net Carcass Price,
                                          Monthly Average, 2002-2011
                  120
                  110                               Cash         Futures
                  100
Dollars Per Cwt




                   90
                   80
                   70
                   60
                   50
                   40
                   30
                        Jan 02


                                 Jan 03


                                           Jan 04


                                                      Jan 05


                                                               Jan 06


                                                                        Jan 07


                                                                                 Jan 08


                                                                                          Jan 09


                                                                                                   Jan 10


                                                                                                            Jan 11


                                                                                                                     Jan 12


                                                                                                                              Jan 13
                  Thru Feb 2013 all hog futures contracts are above $80 per cwt
Major Uncertainties
• Domestic meat demand
• Exchange rates & exports
• Feed costs
• Governmental policy
  – Bio fuels
  – GIPSA
  – Animal rights
Any Questions?
                      Omaha Corn Prices, Weekly, 2008-2011
           8


           7


           6
$/Bushel




           5


           4


           3


           2
               2008




                               2009




                                           2010




                                                        2011
                  Source: USDA/AMS
                         Frozen Pork, 2000-2011, Start of the Month
                 700

                 650

                 600
Million Pounds




                 550

                 500

                 450

                 400

                 350

                 300
                       Jan JUL Jan JUL Jan JUL Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul
                        00      01      02      03      04     05      06      07      08      09      10      11
                             U.S. Pork Exports, 2000-2011
Mil. lbs.                           Monthly Carcass Weight Equivalent
  600


  500


  400


  300


  200


  100


    0
        Jan-00



                 Jan-01



                          Jan-02



                                   Jan-03



                                            Jan-04



                                                     Jan-05



                                                              Jan-06



                                                                       Jan 07



                                                                                Jan 08



                                                                                         Jan 09



                                                                                                  Jan-10



                                                                                                           Jan 11
                                                      % Change Year Ago




                                                      -5
                                                           0
                                                                5
                                                                     10
                                                                          15




                                                -10
                                            2002
                                             Apr
                                              Jul
                                             Oct
                                            2003
                                             Apr
                                              Jul
                                             Oct
                                            2004
                                             Apr
                                              Jul
                                             Oct
                                            2005
                                             Apr
                                              Jul
                                             Oct
                                            2006
                                             Apr
                                              Jul
                                             Oct
                                            2007
                                             Apr



Source: Ron Plain, University of Missouri
                                              Jul
                                             Oct
                                                                               Base Elasticity = -0.75




                                            2008
                                             Apr
                                              Jul
                                             Oct
                                            2009
                                             Apr
                                              Jul
                                             Oct
                                            2010
                                             Apr
                                              Jul
                                                                                                         Change in Domestic Beef Demand




                                             Oct
                                            2011
                                             Apr
  Sows Farrowed & Breeding Herd by Quarter
% change from
yr. ago
   10
    8                      Sows Far                     Br Herd
    6
    4
    2
    0
   -2
   -4
   -6
   -8
  -10
        DJF99

                DJF00

                        DJF01

                                DJF02

                                        DJF03

                                                DJF04

                                                         DJF05

                                                                 DJF06

                                                                         DJF07

                                                                                 DJF08

                                                                                         DJF09

                                                                                                 DJF10

                                                                                                         DJF11
        Sows Farrowed, Breeding Herd & Hog
               Slaughter by Quarter
% change from
yr. ago
   10
    8
    6
    4
    2
    0
   -2
   -4
   -6
   -8                                   Sows Far                  Br Herd                  D Hog Slt
  -10
        DJF99

                DJF00

                        DJF01

                                DJF02

                                          DJF03

                                                  DJF04

                                                          DJF05

                                                                   DJF06

                                                                           DJF07

                                                                                   DJF08

                                                                                           DJF09

                                                                                                   DJF10

                                                                                                           DJF11
                            Thousand Head
D
    ec




              5700
                     5800
                            5900
                                   6000
                                          6100
                                                 6200
         99
                                                        6300
D
    ec
         00
D
    ec
         01
D
    ec
         02
D
    ec
         03
D
    ec
         04
D
    ec
         05
D
    ec
         06
D
    ec
         07
D
    ec
         08
D
    ec
                                                               U.S. Swine Breeding Herd, 1999-2011




         09
D
    ec
         10
                               Thousand Head
M




              2500
                     2600
                            2700
                                   2800
                                          2900
                                                 3000
                                                        3100
                                                               3200
    ar                                                                3300
       00
M
    ar
       01
M
    ar
       02
M
    ar
       03
M
    ar
       04
M
    ar
       05
M
    ar
       06
M
    AM
         07
M
    AM
         08
M
                                                                             U.S. Sows Farrowed, 2000-11




    AM
         09
M
    AM
      10
M
    AM
         11
                                  Barrow & Gilt Carcass Weights
Pounds                                           U.S. Annual Average
210
205
200                                       Actual                      Trend

195
190
185
180
175
170
165
160
      1977

             1979

                    1981

                           1983

                                   1985

                                          1987

                                                 1989

                                                        1991

                                                               1993

                                                                       1995

                                                                              1997

                                                                                     1999

                                                                                            2001

                                                                                                   2003

                                                                                                          2005

                                                                                                                 2007

                                                                                                                        2009

                                                                                                                               2011
     Barrow & Gilt Negotiated Live Price
$/cwt
80                   2004-07      2008          2009     2010    2011
75
70
65
60
55
50
45
40
35
     Jan   Feb    Mar    Apr May Jun            Jul    Aug Sep   Oct Nov   Dec

     Source: USDA Prior Day Purchased reports
 MPR Negotiated Carcass Hog Prices, WCB
      minus ECB, Weekly, 2009-10
$/cwt
6

5
4

3
2
1

0
-1
-2

-3
               May




                                                 May
                      Sep




                                                              Sep
      Feb




                                           Feb
      Apr




                                                 Apr
      Mar




                                           Mar
                              Nov




                                                              Nov
     2009




                                    Dec
                                          2010




                                                                    Dec
                      Oct




                                                              Oct
                      Aug




                                                       Aug
                Jul




                                                        Jul
               Jun




        Source: USDA/AMS Prior Day Purchased     Jun
  U.S. Pork Exports, Jan-May 2011
                 Change From Year Ago
   Country          000 lbs     Percent
Japan                80,639     14.8%
Mexico               10,799       2.6%
S. Korea            157,270    147.3%
Canada               18,135      10.4%
China & HongKong     49,624     37.4%
Australia            17,748     25.6%
Russia               39,504    125.3%
TOTAL               315,257     17.9%
  Source: USDA/ERS
                 U.S. Hog Imports & Exports
Mil. head
    12

                                             Imports               Exports
    10

     8          2010 hog imports were down 10%

     6

     4

     2

     0
         1980

                 1982

                        1984

                               1986

                                      1988

                                             1990

                                                    1992

                                                           1994

                                                                  1996

                                                                         1998

                                                                                2000

                                                                                       2002

                                                                                              2004

                                                                                                     2006

                                                                                                            2008

                                                                                                                   2010
Pounds                U.S. Per Capita Meat Consumption
250
240
230
220
210
200
190
180
170
160
150
      1945

               1950

                       1955

                              1960

                                     1965

                                            1970

                                                   1975

                                                          1980

                                                                 1985

                                                                        1990

                                                                               1995

                                                                                      2000

                                                                                             2005

                                                                                                    2010
             Source: USDA/ERS

				
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