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February 20-24, 2017 SWINE MARKET OUTLOOK...Source: USDA/NASS. Urner Barry pre-report estimates USDA...
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Lee Schulz, Department of Economics, Iowa State University
(515) 294-3356; [email protected]
SWINE MARKET
OUTLOOK
2017 IOWA PORK REGIONAL
CONFERENCESFebruary 20-24, 2017
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U.S. Corn Supply and Use
Source: USDA/WAOB
2013 2014 2015 2016 2017
Area Planted (mil. acres) 95.4 90.6 88.0 94.0 90.0
Yield (bu./acre) 158.1 171.0 168.4 174.6 170.8
Production (mil. bu.) 13,829 14,216 13,602 15,148 14,060
Beg. Stocks (mil. bu.) 821 1,232 1,731 1,737 2,320
Imports (mil. bu.) 36 32 67 55 50
Total Supply (mil. bu.) 14,686 15,479 15,401 16,940 16,430
Feed & Residual (mil. bu.) 5,040 5,280 5,131 5,600 5,500
Ethanol (mil. bu.) 5,124 5,200 5,206 5,350 5,325
Food, Seed, & Other (mil. bu.) 1,369 1,401 1,429 1,445 1,440
Exports (mil. bu.) 1,920 1,867 1,898 2,225 1,950
Total Use (mil. bu.) 13,454 13,748 13,664 14,620 14,215
Ending Stocks (mil. bu.) 1,232 1,731 1,737 2,320 2,215
Season-Average Price ($/bu.) 4.46 3.70 3.61 3.40 3.30
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U.S. Soybean Supply and Use
Source: USDA/WAOB
2013 2014 2015 2016 2017
Area Planted (mil. acres) 76.8 83.3 82.7 83.4 85.5
Yield (bu./acre) 44.0 47.5 48.0 52.1 47.9
Production (mil. bu.) 3,358 3,927 3,926 4,307 4,050
Beg. Stocks (mil. bu.) 141 92 191 197 420
Imports (mil. bu.) 72 33 24 25 30
Total Supply (mil. bu.) 3,570 4,052 4,140 4,528 4,500
Crush (mil. bu.) 1,734 1,873 1,886 1,930 1,935
Seed & Residual (mil. bu.) 107 146 122 128 130
Exports (mil. bu.) 1,638 1,842 1,936 2,050 2,100
Total Use (mil. bu.) 3,478 3,862 3,944 4,108 4,165
Ending Stocks (mil. bu.) 92 191 197 420 336
Season-Average Price ($/bu.) 13.00 10.10 8.95 9.50 9.35
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Corn Yields
Top: 2016 Yield
Bottom: Change from last year
Units: Bushels/acre
Source: USDA/NASS
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Soybean Yields
Top: 2016 Yield
Bottom: Change from last year
Units: Bushels/acre
Source: USDA/NASS
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South American Weather
Source: NOAA, Climate Prediction Center
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World Corn Production
Source: USDA/WAOB
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World Soybean Production
Source: USDA/WAOB
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Corn Export Sales
Source: USDA/FAS
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Change in Corn Export Sales
Source: USDA/FAS
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Soybean Export Sales
Source: USDA/FAS
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Change in Soybean Export Sales
Source: USDA/FAS
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3.60
3.99
4.07
Current Corn Futures
Source: CME Group
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9.8910.07
9.65
Current Soybean Futures
Source: CME Group
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2016/17 Crop Margins @ Actual Yields
Source: Iowa State University
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2017/18 Crop Margins
Source: Iowa State University
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Relative Changes in Pork & Hog PricesIA/MN CASH/
PORK TOTAL WTD FORMULA
RETAIL PORK AVG BASE 10-12 LB
PRICE CUTOUT LEAN HOG PIG
$/lb $/cwt $/cwt $/head
2008 $2.94 $69.23 $65.12 $33.99
2009 $2.92 $58.04 $57.04 $32.15
2010 $3.11 $81.01 $72.51 $41.76
2011 $3.43 $93.82 $86.56 $38.09
2012 $3.47 $84.60 $83.54 $38.45
2013 $3.64 $92.71 $86.83 $42.42
2014 $4.02 $110.19 $100.82 $59.32
2015 $3.85 $79.27 $69.31 $38.10
2016 $3.75 $78.51 $63.76 $36.55
YR/YR Change (%)
2009 -0.6% -16.2% -12.4% -5.4%
2010 6.6% 39.6% 27.1% 29.9%
2011 10.3% 15.8% 19.4% -8.8%
2012 1.0% -9.8% -3.5% 0.9%
2013 5.1% 9.6% 3.9% 10.3%
2014 10.3% 18.9% 16.1% 39.8%
2015 -4.1% -28.1% -31.3% -35.8%
2016 -2.7% -1.0% -8.0% -4.1%
Source: USDA/ERS, USDA/AMS
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Source: CME Group
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0
20
40
60
80
100
120
140
160
2008 2009 2010 2011 2012 2013 2014 2015 2016
Mil. Pounds
US PORK EXPORTS TO MAJOR MARKETSCarcass Weight, Monthly
Japan South Korea Hong Kong China-Mainland
Data Source: USDA-ERS & USDA-FAS
Livestock Marketing Information Center02/08/17
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Source: Trade Atlas
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Source: CME Group
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2013 = +$6.21 [-$25.60 to +$24.57]
2014 = +$61.85 [+$13.15 to +$107.25]
2015 = +$7.93 [-$18.40 to +$26.25]
2016 = -$1.26 [-$35.52 to +$32.92]
2017f = +$11.09 [-$9.00 to +$25.93]
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Closeout Total Cost Lean Hog Price Net Return Net Return
Month Year $/carcass cwt $/carcass cwt $/carcass cwt $/head
2013 87.34 90.41 3.07 6.21
2014 75.34 105.89 30.54 61.85
2015 64.70 68.61 3.91 7.93
Jan-Mar 2016 61.24 60.41 -0.83 -1.68
Apr-Jun 2016 62.01 73.08 11.07 22.42
Jul-Sep 2016 62.91 63.62 0.71 1.43
Oct-Dec 2016 60.21 46.77 -13.44 -27.22
2016 61.59 60.97 -0.62 -1.26
Jan-Mar 2017f 60.72 66.84 6.12 12.40
Apr-Jun 2017f 63.17 72.44 9.27 18.77
Jul-Sep 2017f 65.13 73.90 8.78 17.77
Oct-Dec 2017f 65.13 62.88 -2.25 -4.56
2017f 63.54 69.02 5.48 11.09
Jan-Mar 2018f 65.32 63.40 -1.92 -3.89
Apr-Jun 2018f 65.97 70.86 4.89 9.90
Historical and Projected Iowa Farrow to Finish Returns (as of 2/17/17)(http://www2.econ.iastate.edu/estimated-returns/)
* Projected using basis adjusted futures prices.
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Source: USDA/NASS. Urner Barry pre-report estimates
USDA Quarterly Hogs and Pigs Report – United StatesDecember 23, 2016
2016 as % Pre-Report Pre-Report Actual -
2015 2016 of 2015 Range Estimate Estimate
Inventories on Dec 1 *
All hogs and pigs 68,919 71,500 103.7 100.7 - 102.0 101.7 2.0
Kept for breeding 6,002 6,090 101.5 99.8 - 100.6 100.2 1.3
Market 62,917 65,410 104.0 100.8 - 102.5 102.0 2.0
Under 50 pounds 20,008 20,882 104.4 100.3 - 102.2 101.4 3.0
50-119 pounds 17,262 18,037 104.5 100.6 - 103.0 101.8 2.7
120-179 pounds 13,370 13,911 104.0 100.5 - 103.0 102.0 2.0
180 pounds and over 12,276 12,580 102.5 101.4 - 104.1 102.8 -0.3
Farrowing **
Sep – Nov sows farrowed 2,929 3,043 103.9 100.0 - 101.0 100.4 3.5
Dec – Feb intentions 2,927 2,968 101.4 97.0 - 100.4 99.6 1.8
Mar – May intentions 2,968 2,997 101.0 99.5 - 102.0 100.5 0.5
Sep – Nov Pig Crop * 30,848 32,333 104.8 100.9 - 102.1 101.5 3.3
Sep – Nov Pigs per Litter 10.53 10.63 100.9 100.7 - 101.6 101.1 -0.2
* 1,000 head ** 1,000 litters
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H-N-09
12/23/16
5.0
5.5
6.0
6.5
7.0
7.5
1991 1994 1997 2000 2003 2006 2009 2012 2015
Mil. Head
DECEMBER 1 HOG BREEDING HERDU.S. Inventory
Data Source: USDA-NASS
Livestock Marketing Information Center
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Source: Swine Health Monitoring Project
Number of sows 2,275,939
Number of farms 789
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Source: Swine Health Monitoring Project
Number of sows 2,829,183
Number of farms 1026
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Source: USDA/AMS & APHIS
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Source: USDA/AMS
National Direct Delivered Feeder Pig Report:
Week Ending February 17, 2017
Weekly Summary of prices on a delivered farm to farm basis
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H-N-10
12/23/16
40
45
50
55
60
65
70
1991 1994 1997 2000 2003 2006 2009 2012 2015
Mil. Head
DECEMBER 1 MARKET HOGSU.S. Inventory
Data Source: USDA-NASS
Livestock Marketing Information Center
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Source: USDA/AMS
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Source: USDA/ERS
Retail (57.9%), ‘14 = 53.3%, ‘15 = 62.1%, ‘16 = 60.0%, ‘17 = 57.5%
Farmer (29.3%), ‘14 = 32.8%, ‘15 = 22.7%, ‘16 = 21.4%, ’17 = 22.1%
Packer (13.6%), ‘14 = 13.9%, ‘15 = 15.1%, ‘16 = 18.6%, ‘17 = 20.4%
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Source: Steve Meyer. Published in National Hog Farmer Magazine, July 19, 2016.
Source: Seaboard Triumph Foods plans to expand for second shift at Sioux City plant, February 17, 2017
U.S. Packing Capacity Under ConstructionNew pork packing Fall 2016 Summer/Fall 2017 Summer/Fall 2018
plants Daily Annual Daily Annual Daily Annual
Pleasant Hope, MO 2,500 625,000 2,500 625,000 2,500 625,000
Windom, MN 4,000 1,000,000 4,000 1,000,000 4,000 1,000,000
Sioux City, IA 12,000 3,000,000 24,000 6,000,000
Coldwater, MI 10,000 2,500,000 10,000 2,500,000
Wright County, IA 10,000 2,500,000
Total 6,500 1,625,000 28,500 7,125,000 50,500 12,625,000
Head per week 31,250 137,019 242,788
% of '15 avg = 2.195 mil 1.4% 6.2% 11.1%
% of '15 max = 2.507 mil 1.2% 5.5% 9.7%
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Source: USDA/AMS. * Steve Meyer, EMI.
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Source: USDA/AMS
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Source: USDA/AMS
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2013 = +$4.77 [-$14.80 to +$22.07]
2014 = +$39.48 [+$1.62 to +$84.64]
2015 = -$14.32 [-$30.32 to +$4.70]
2016 = -$13.10 [-$45.69 to +$17.05]
2017f = +$1.74 [-$16.04 to +$20.19]
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BE BE
Place Market Net LH SEW BE LH SEW
Mo-Yr Mo-Yr Return* FCOG** Price Price* FCOG** Price Price*
2013 4.77 54.86 90.41 36.78 56.71 88.06 41.55
2014 39.48 46.53 105.89 54.90 61.83 86.39 94.38
2015 -14.32 40.48 68.61 48.83 34.93 75.69 34.51
Jul-Sep 2015 Jan-Mar 2016 -5.76 37.84 60.41 30.46 35.61 63.25 24.70
Oct-Dec 2015 Apr-Jun 2016 9.31 38.60 73.08 39.09 42.21 68.48 48.40
Jan-Mar 2016 Jul-Sep 2016 -19.23 38.97 63.62 47.51 31.51 73.11 28.28
Apr-Jun 2016 Oct-Dec 2016 -36.73 37.27 46.77 35.28 23.04 64.91 -1.45
2016 -13.10 38.17 60.97 38.08 33.09 67.44 24.98
Jul-Sep 2016 Jan-Mar 2017f 8.24 38.10 66.84 28.82 41.29 62.77 37.06
Oct-Dec 2016 Apr-Jun 2017f 10.52 39.62 72.44 33.93 43.70 67.24 44.46
Jan-Mar 2017 Jul-Sep 2017f 1.68 40.88 73.90 42.50 41.53 73.07 44.18
Apr-Jun 2017 Oct-Dec 2017f -13.47 40.56 62.88 36.15 35.34 69.53 22.68
2017f 1.74 39.79 69.02 35.35 40.47 68.15 37.10
Jul-Sep 2016 Jan-Mar 2018f -8.95 40.67 63.40 32.40 37.21 67.82 23.45
Oct-Dec 2016 Apr-Jun 2018f 3.14 41.18 70.86 34.11 42.39 69.31 37.25
Historical and Projected Iowa Wean to Finish Returns (as of 2/17/17)(http://www2.econ.iastate.edu/estimated-returns/)
Net return and SEW price is $/head and all other values are $/carcass cwt. ** FCOG = Feeding cost of gain. f Projected using basis adjusted futures prices.
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0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2002 2004 2006 2008 2010 2012 2014 2016
Percent
HOGS SOLD BY TRANSACTIONNationalMonthly
NegotiatedPurchases
OtherMarketFormulaSwine orPork MktFormulaOtherPurchase
Packer Sold
PackerOwned
Data Source: USDA-AMS
Livestock Marketing Information Center
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Negotiated: Cash or spot market purchase by a packer of livestock from a producer under
which the base price for livestock is determined by seller-buyer interaction and agreement
on a delivery day. The livestock are scheduled for delivery to the packer no more than 14
days after the date on which the livestock are committed to the packer.
Other Market Formula: A purchase of swine by a packer in which the pricing mechanism is
a formula price based on any market other than the market for swine, pork, or a pork
product. The term “other market formula purchase” includes a formula purchase in a case in
which the price formula is based on one or more futures or options contracts.
Swine or Pork Market Formula: A purchase of swine by a packer in which the pricing
mechanism is a formula based on a market for swine, pork, or a pork product, other than a
future or option for swine, pork, or a pork product. E.g., WCB + $1.75 or Cutout - $9.00.
Other Purchase Arrangement: A purchase of swine by a packer that is not a negotiated
purchase, swine or pork market formula, or other market formula, and does not involve
packer-owned swine. E.g., COP, Corn price matrix.
HOGS SOLD BY TRANSACTION
Data Source: USDA/AMS
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Data Source: USDA/AMS
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Year Negotiated
Other Mkt
Formula
Swine/pork
Mkt Formula
Other Purchase
Arrangement
Total
Wtd Avg
2002 $45.41 $49.24 $45.10 $53.36 $47.73
2003 $51.85 $54.31 $51.13 $55.84 $52.77
2004 $69.82 $61.15 $68.33 $67.11 $67.18
2005 $66.94 $61.98 $65.46 $64.77 $64.96
2006 $62.69 $59.41 $61.99 $62.52 $61.63
2007 $61.89 $64.85 $61.72 $64.10 $62.70
2008 $63.64 $69.37 $63.21 $68.04 $65.12
2009 $55.18 $63.79 $54.78 $61.59 $57.04
2010 $72.61 $71.24 $72.69 $72.82 $72.51
2011 $87.70 $83.86 $87.23 $86.49 $86.56
2012 $83.47 $83.55 $82.53 $85.73 $83.54
2013 $86.94 $84.04 $86.53 $88.53 $86.83
2014 $102.95 $94.50 $102.85 $100.31 $100.82
2015 $67.51 $71.42 $68.00 $71.93 $69.31
2016 $60.91 $64.48 $62.31 $67.01 $63.80
2017YTD $65.08 $64.27 $65.86 $68.76 $66.52
IOWA/MINNESOTA DAILY DIRECT PRIOR DAY HOG REPORT
BASED ON PLANT DELIVERED, LM_HG204, Annual Average Price
Data Source: USDA/AMS
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M-S-03A
02/05/17
0
20
40
60
80
100
120
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Bil. Pounds
Tho
usa
nd
s
COMMERCIAL MEAT & POULTRY PRODUCTIONBy Type of Meat, Annual
Beef Pork Lamb & Veal Chicken Turkey
Beef: + 2015.Q4
Pork: + 2015.Q1
Total Poultry: +2012.Q4
Data Source: USDA-NASS, Compiled & Analysis by LMIC
Livestock Marketing Information Center
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Year Comm’l % Chg. Avg Carcass % Chg. Comm’l Pork % Chg.
Quarter Slaughter Year Ago Weight Year Ago Production Year Ago
2015 (1,000 hd) (lbs) (mil. Lbs)
I 28,724 5.9 215 0.8 6,162 6.5
II 27,850 8.9 213 -1.1 5,925 7.6
III 28,477 11.4 210 -1.3 5,958 9.8
IV 30,375 6.2 213 -0.9 6,457 5.3
Year 115,425 8.0 213 -0.6 24,501 7.3
2016
I 29,259 1.9 213 -0.9 6,230 1.1
II 28,111 0.9 213 -0.2 5,962 0.6
III 29,317 2.9 208 -0.6 6,099 2.4
IV 31,516 3.8 211 -0.6 6,647 2.9
Year 118,203 2.4 211 -0.6 24,939 1.8
2017
I 29,903 2.2 213 0.1 6,374 2.3
II 29,137 3.6 212 -0.3 6,175 3.6
III 29,555 0.8 209 0.1 6,165 1.1
IV 32,305 2.5 212 0.2 6,839 2.9
Year 120,900 2.3 211 0.0 25,553 2.5
2018
I 30,376 1.6 214 0.2 6,486 1.8
II 29,591 1.6 212 0.1 6,276 1.6
III 29,852 1.0 209 0.2 6,238 1.2
IV 33,232 2.9 212 0.1 7,039 2.9
Year 123,051 1.8 212 0.1 26,039 1.9
LMIC Pork Production and Price Quarterly Forecasts (2/17/17)Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC
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‘Shortage’ is a loaded term in economic thinking…
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Data Source: USDA/ERS, BLS
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Data Source: USDA/ERS, BLS
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Source: USDA/AMS
NATIONAL RETAIL REPORT - BEEF
THIS WEEK LAST WEEK LAST YEAR
Feature rate 74.3% 76.3% 81.3%
Special rate 9.2% 16.5% 15.9%
NATIONAL RETAIL REPORT - PORK
THIS WEEK LAST WEEK LAST YEAR
Feature rate 87.8% 84.5% 71.4%
Special rate 17.0% 19.3% 19.1%
NATIONAL RETAIL REPORT - CHICKEN
THIS
WEEK
LAST
WEEK
LAST
YEAR
Feature rate 64.9% 75.4% 72.3%
Special rate 8.2% 17.4% 6.8%
NATIONAL RETAIL REPORT - TURKEY
THIS
WEEK
LAST
WEEK
LAST
YEAR
Feature rate 42.3% 30.0% 27.3%
Special rate 1.8% 0.9% 1.8%
Advertised Prices at Major Retail Supermarket Outlets
02/17 thru 02/23
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H-P-12
04/10/16
90
91
9293
9495
9697
9899
0001
0203
0405
06 0708 09
10
1112
13
14
15
2.50
2.70
2.90
3.10
3.30
3.50
3.70
3.90
45 46 47 48 49 50 51 52 53
$ Per Pound
Pounds Per Capita
PORK PRICE-QUANTITY RELATIONSHIPAnnual, Retail Weight, Deflated Retail Price
Data Source: Bureau of Economic Analysis & USDA-ERS, Compiled and Analysis by LMIC
Livestock Marketing Information Center
2016
50.1 lbs per capita & -4.0% Pork Price
= -3.0% Demand Change
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2016: Per Capita Consumption = +0.7% (Year‐over‐Year)
Real Pork Prices = ‐4.0%
IF Real All Fresh Beef Prices ‐1.0% = 0% Demand Change
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0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
Hog Production Costs by Country (Euro/kg hot weight)
Source: InterPig
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Source: Policy Analysis Computing & Information Facility In Commerce
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Source: Policy Analysis Computing & Information Facility In Commerce
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Dec-16/Nov-16 Dec-16/Dec-15 Year-to-Date
Country Percent Percent 1,000 lbs Percent
Japan -21% -6% -62,218 -5%Mexico 8% 23% 50,480 3%Canada -2% 6% 8,488 2%South Korea 20% 14% -87,182 -18%China (Mainland) -12% 67% 245,965 98%Hong Kong 5% -26% 22,267 18%Australia 21% 10% 10,562 6%Philippines -16% -1% 3,560 5%China (Taiwan) 101% 10% -18,565 -49%Colombia -21% 164% 9,820 9%Honduras -41% 12% 10,879 17%Dominican Republic 10% 29% 9,134 14%Guatemala -44% -3% 2,162 6%Chile -65% 113% 5,675 14%
Other Countries 8% 28% 13,111 7%
Total -3% 15% 224,138 4%
U.S. Pork Exports, Jan-Dec 2016
Source: USDA/ERS
(Volume excluding by-
products & variety meats)
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USDA Long‐term Pork Projections, February 2017http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1192
Exports
2016 to 2021: +13%
2016 to 2026: +25%
Item Units 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Beginning stocks Mil. lbs. 559 590 625 635 635 635 640 645 650 660 670 680
Commercial production Mil. lbs. 24,501 24,946 25,800 25,653 26,009 26,447 26,788 27,156 27,330 27,685 28,055 28,443
Chg from previous yr Percent 7.3 1.8 3.4 -0.6 1.4 1.7 1.3 1.4 0.6 1.3 1.3 1.4
Farm production Mil. lbs. 16 16 16 16 16 16 16 16 16 16 16 16
Total production Mil. lbs. 24,517 24,961 25,816 25,669 26,025 26,463 26,804 27,172 27,346 27,701 28,071 28,459
Imports Mil. lbs. 1,116 1,106 1,095 1,000 1,040 1,058 1,072 1,086 1,093 1,107 1,122 1,138
Total supply Mil. lbs. 26,192 26,657 27,536 27,304 27,700 28,156 28,516 28,903 29,089 29,468 29,863 30,277
Exports Mil. lbs. 5,009 5,179 5,440 5,445 5,566 5,778 5,843 5,946 6,082 6,200 6,330 6,458
Ending stocks Mil. lbs. 590 625 635 635 635 640 645 650 660 670 680 690
Total consumption Mil. lbs. 20,593 20,853 21,461 21,224 21,499 21,738 22,028 22,307 22,347 22,598 22,853 23,129
Per capita, retail weight Pounds 49.7 49.9 51.0 50.0 50.3 50.4 50.7 51.0 50.7 50.9 51.1 51.4
Chg from previous yr Percent 8.5 0.5 2.2 -2.0 0.5 0.3 0.6 0.5 -0.6 0.4 0.4 0.5
Prices:
Hogs, farm $/cwt 53.53 49.10 43.60 42.67 43.57 44.63 46.60 47.91 49.73 50.67 51.56 52.41
National base, live equiv $/cwt 50.23 45.65 40.00 40.64 41.50 42.50 44.38 45.63 47.36 48.26 49.11 49.91
National base, lean equiv $/cwt 66.97 60.87 53.33 54.18 55.33 56.67 59.17 60.84 63.15 64.35 65.48 66.55
Feed price ratio: Hog-corn Ratio 14.5 13.6 13.2 12.9 13.0 13.3 13.5 13.7 14.0 14.1 14.1 14.4
Hog inventory,
December 1, previous yr 1,000 head 67,776 68,919 69,925 69,900 70,429 71,080 71,586 72,132 72,390 72,918 73,467 74,043
Hog Inventory
2016 to 2021: +4%
2016 to 2026: +7%
Lean Hog Prices, $/cwt
2017 to 2021
Avg = $59.91 Min = $53.33, Max = $66.55
Commercial Prod.
2016 to 2021: +7%
2016 to 2026: +14%
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Thank You!More information available at:
Iowa Farm Outlook & News www.econ.iastate.edu/ifo/
Ag Decision Maker www.extension.iastate.edu/agdm/
ISU Estimated Livestock Returnswww.econ.iastate.edu/estimated-returns/
ISU Livestock Crush Marginswww.econ.iastate.edu/margins/
http://www.iowabeefcenter.org/ http://www.ipic.iastate.edu/